Hedge Funds Cut Bullish Oil Bets Aggressively

– The US has imposed 25% tariffs on imported steel and aluminium, and even though President Trump’s threats of doubling that rate for Canada were subsequently cleared, the measure is bound to have a profound impact on US metallurgy.  

– Canada remains the largest supplier of steel mill products and aluminium to the United States, accounting for a little more than a quarter of steel imports in 2024 with a total of 6.6 million tonnes.

– The impact on aluminium might be even bigger, as half of all aluminium consumed in the US is imported, with Canada representing 65% of those deliveries and tariff-stricken China coming in second place.

– Prices of both steel and aluminium hovered around record levels in the US, with the Midwest duty-paid aluminium premium soaring to $990 per metric tonne, a 70% rise since early 2025, whilst the US steel premium posted a 37% increase over the same period. 

Hedge Funds Shed Interest in Crude as Gold and Copper Soar to Prominence

– Market sentiment in the oil markets is the most bearish it has been in more than a decade as hedge funds cut their gross long positions to a mere 172,576 contracts in the week ended March 4, a 40% drop compared to 2024 highs.

– With Trump’s tariff threats failing to disrupt oil trade between the US and Canada, yet adversely impacting global oil demand outlooks, ICE Brent posted its largest weekly decline in positioning since July, a…

1. US Steel Tariffs Slap Hard, Until They Don’t

– The US has imposed 25% tariffs on imported steel and aluminium, and even though President Trump’s threats of doubling that rate for Canada were subsequently cleared, the measure is bound to have a profound impact on US metallurgy.  

– Canada remains the largest supplier of steel mill products and aluminium to the United States, accounting for a little more than a quarter of steel imports in 2024 with a total of 6.6 million tonnes.

– The impact on aluminium might be even bigger, as half of all aluminium consumed in the US is imported, with Canada representing 65% of those deliveries and tariff-stricken China coming in second place.

– Prices of both steel and aluminium hovered around record levels in the US, with the Midwest duty-paid aluminium premium soaring to $990 per metric tonne, a 70% rise since early 2025, whilst the US steel premium posted a 37% increase over the same period. 

2. Hedge Funds Shed Interest in Crude as Gold and Copper Soar to Prominence

– Market sentiment in the oil markets is the most bearish it has been in more than a decade as hedge funds cut their gross long positions to a mere 172,576 contracts in the week ended March 4, a 40% drop compared to 2024 highs.

– With Trump’s tariff threats failing to disrupt oil trade between the US and Canada, yet adversely impacting global oil demand outlooks, ICE Brent posted its largest weekly decline in positioning since July, a drop equivalent to 41.5 million barrels.

– OPEC+ has added insult to the oil market’s injury by confirming its plans to start unwinding production from April onwards, previously agreeing on returning 138,000 b/d of shut-in output next month.

– Despite the negative outlook, short-term crude oil futures remain backwardated, signalling missing supply volumes right now, with the ICE Brent M1-M3 spread rising above $1 per barrel this week, for the first time since early February.

3. US Oil Industry Talks of a Looming Shale Peak

– The US oil industry has gathered for its annual CERAWeek conference in Houston this week, however Donald Trump’s ‘drill baby drill’ campaign rallying cry did not resonate widely across top energy executives.   

– Continental Resources founder Harold Hamm stated that shale output will plateau soon, whilst Oxy chief executive Vicki Hollub warned that US oil production would peak between 2027 and 2030, a claim supported by ConocoPhillips’ Ryan Lance.

– A 2024 industry survey by the Federal Reserve Bank of Dallas indicated that oil drillers need prices of at least $60 per barrel to drill a new well, with previously prime acreage in Midland and Delaware now needing breakevens of $62-64 per barrel. 

– The EIA expects a robust 390,000 b/d year-over-year increase in US crude production this year, however by 2026 the annual increments fall below 150,000 b/d, with monthly output volumes reaching a peak in January 2026 and trending lower from then onwards. 

4. Leaving Shale Oil in the 2010s, Shale Gas Is the New US Champion  

– Several cold snaps in January-February, rising LNG feedgas demand and US-Canada tariff woes kept Henry Hub prices above $4 per mmBtu, and even despite a slight Friday correction the market sentiment around US natural gas remains firmly bullish.

– The EIA now expects US gas inventories to fall below 1.7 TCf by the end of March, 10% lower than the 5-year average just as LNG feedgas demand remains extraordinarily robust, balancing between 15.6 and 15.9 Bcf/d this week. 

– Heading into the summer season with lower-than-assumed stocks, the EIA now forecasts Henry Hub prices to average $4.20 per mmBtu this year, a hefty 11% higher than its own forecast in February. 

– With an average breakeven of $3.0-3.1 per mmBtu in Haynesville, almost all drillers in the US are now in the money should they decide to gradually bring back production that was shut in last year. 

5. Defying Oversupply Concerns, Tin Rises Again Thanks to Congo

– The best-performing metal of 2025, tin, was poised for a long-anticipated decline as Myanmar is mulling the resumption of production there, but Congolese mayhem sent the metal soaring this week.  

– The Bisie mine in Eastern Congo, the world’s third largest producing asset, halted production after the Rwandan-backed M23 militant group continues to expand its control over the region, prompting the operator Alphamin Resources to evacuate staff.

– Tin prices rose a whopping 7.5% on Thursday, following which the 3-month LME contract continued its steep ascent and surpassed $37,000 per metric tonne on Friday, its highest since June 2022.

– The shortfall in global tin supplies could reach 30,000 metric tonnes this year in case production at the Bisie site is halted for good and not even the return of Myanmar could swing the balance back to oversupply. 

6. Trade-Ins and Falling Prices Lure Chinese Consumers to EVs

– Chinese car sales remain robust despite macroeconomic headwinds, with industry association CPCA seeing a 1.3% year-over-year increase after January-February 2025, overwhelmingly driven by strong EV sales.  

– Apart from hidden subsidies to EV producers, Beijing has been recently subsidizing the consumer, too, scrapping the need to pay sales tax in 2024 and continuing with its trade-in subsidy of ¥20,000 (roughly $3,000) per car.

– The trade-in scheme for internal combustion cars has already covered 1 million vehicles over the first two months of this year, with Beijing expecting a total of 15 million cars to be handed in for EVs. 

– In total, EVs and plug-in hybrids accounted for 48.8% of total Chinese car sales in February, failing to outsell gasoline cars for the third consecutive month as prices for the latter follow plunging EV quotes. 

7. US Sanctions on China Serve as Sombre Reminder for America’s Shippers

– Shipbuilding has become the new battleground between the United States and China, but the outlook for US shippers remains shaky as Beijing now controls 51% of global shipbuilding activity. 

– The share of the US in the shipbuilding market is minimal – 0.1% in 2023 – as the 1920 Jones Act continues to limit domestic shipping to vessels built, crewed and registered by Americans.

– The Trump administration has threatened to slap fines of up to $1.5 million for Chinese-made container ships in case they call on US ports, with China controlling an even larger share of the container market, at 81%.

– Such levies could create considerable problems for US importers as 21% of all goods imported into the United States arrived on Chinese-built vessels last year, squeezing the pool of non-sanctionable tankers.