The notable declines in commodity demand expectations continue to threaten the energy complex although CTAs still hold substantial ammunition to deploy on the offer, TDS senior commodity strategist Daniel Ghali note.

Falling demand expectations threaten the energy complex

“While a sharp whipsaw in algo positioning was further supported by the DOE inventory data, the notable declines in commodity demand expectations continue to threaten the energy complex.”

“Barring a resurgence in supply risk premia, downside pressures are likely to continue to build, and notable speculative long positioning suggest that Commodity Trading Advisors (CTAs) still hold substantial ammunition to deploy on the offer.”

“That being said, our simulations suggest that, barring a large downtape, CTAs are less likely to offload their length over the coming week.”