Oil: long-term players prepare for asset plunge

The Commodity Futures Trading Commission (CFTC) COT (Commitments of Traders) reports for the week ending on Tuesday last week showed:

Non-commercial large speculators increased their net buying position on oil contracts by 1.8 thousand contracts, bringing the total to 216.6 thousand. This slight increase follows two weeks of decline, and marks a rise from the lowest levels seen since the start of April.

Hedger operators have decreased their net sell position on oil contracts for the third consecutive week, bringing it down to 239.5k contracts - a 13.4k contract decrease from the previous week. This is the lowest net position since the start of April.

The number of open contracts decreased by 22 thousand, bringing the total to 1.886 million.

The ratio of the number of buy contracts to the number of sell contracts for the bullish index of large speculators decreased by 0.19 over the week, settling at 2.78 due to an increase in sales.

The data from the COT report on oil indicates that major speculators have become more optimistic. Large funds have been actively buying and selling, resulting in a slight rise in the net position on rising prices. This is a change from the past 5 weeks, when the net position was minimal. If this trend continues, it could lead to an increase in oil prices.

Hedgers who trade in the long-term have been feeling the bearish effects of oil prices. For the third week in a row, they have been decreasing their net position as prices have risen. This has brought the prices to the lowest levels seen in the past month. If large speculators join the hedgers in the coming week, it is likely that oil prices will continue to drop.