Oil: a bullish counterattack is around the corner?

The Commodity Futures Trading Commission (CFTC) reported, for the week ending last Tuesday, that the Commitments of Traders (COT) reports showed.

Non-commercial large speculators decreased their net position to purchase oil contracts by 26.3 thousand contracts to 236 thousand for the sixth consecutive week. This is the lowest net position since August 22.

Hedger operators have been decreasing their net position for selling oil contracts for the past 4 out of 5 weeks, with the most recent reduction being 32.1 thousand contracts, bringing the total to 276.7 thousand.

The open interest rose by 17 thousand contracts, bringing the total to 1.689 million.

The ratio of the number of contracts to buy to the number of contracts to sell for the bullish index of large speculators decreased by 0.53 over the week, bringing it down to 2.63.

Data from the COT report indicates a growing bearish sentiment in the oil market. For more than a month, traders have been decreasing their net position as prices rise. Additionally, the net position of large speculators has been minimal for the past 2.5 months. Over the past week, large funds have increased their sales by 20%, while purchases have also decreased. If this trend continues, it could lead to a decrease in oil prices.

Net position has dropped to its August low, giving bulls an opportunity to attempt a comeback.

WTI

The most recent COT report was postponed due to US holidays. COT reporting data is essential and is mainly used for medium to long-term trading. Generally, large speculators, NON-COMMERCIAL (banks, investment funds) trade in line with the trend (blue line). Small speculators, NONREPORTABLE POSITIONS, however, do not usually have a great impact on the market (red line). Hedgers, COMMERCIAL (operators, large companies) usually trade against the trend (black line). The net position is the difference between the number of buy and sell contracts. Open interest is the total of all open positions in the market.