Quiet markets have resulted in substantial price impacts from the recent whipsaws in Commodity Trading Advisor (CTA) positioning, Senior Commodity Strategist Daniel Ghali notes.

Prices are staging a recovery

“Massive algo buying activity at the turn of the week morphed into large-scale selling activity. Prices are staging a recovery this morning, but under the hood, the combination of likely CTA selling, a renewed slump in energy supply risk premia and deteriorating commodity demand sentiment still point to lower prices.”

“CTAs could sell up to -12% of their max size as they completely liquidate recent longs and build a net short.”