Take aways: 

• Low vol in commodities leading to no directional bets 
• Chinese smelters cut striking fear in the market
• Chinese copper stock levels about to be drawn
• The broad commodity complex looks increasingly bullish accordingly 

The technical picture suddenly looks very bullish in the commodity landscape as Oil, Copper and Silver have broken higher over the past 24 hours with the broad BCOM index also breaking out of the bearish channel.

Is the sudden bullish price action a sign that the procyclical Chinese activity is back?

Chart 1: Oil is breaking HIGHER

As macro volatility has been grinding lower and lower and equites have gone higher and higher, being short volatility in commodities has been the only game in town. On the demand side we see two big themes that can push metals higher and force the market to take directional bets. Global rate cuts and Chinese stimuli. On the supply side we still have two wars going on and distorted supply chains, which the market seems to be ignoring to a large extent.  

Chart 2: Macro volatility about to sieve into commodities?