Oil: bears set their sights on the June bottom of the net position

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 8.4 thousand contracts, bringing the total to 207.3 thousand. This marks the eighth consecutive week that these large speculative players have reduced their net position, and is the lowest it has been since July 18.

Hedger operators have been decreasing the net position for the sale of oil contracts for 6 out of the last 7 weeks, bringing it down to 230 thousand from 16.8 thousand.

The number of open contracts decreased by 85,000, bringing the total to 1.554 million.

The ratio of the number of contracts to buy to the number of contracts to sell for the large speculators' bullish index stayed the same for the week (2.45).

Data from COT oil reports indicate a growing bearish sentiment. Traders have been cutting their net position as prices have risen for almost two months, although the rate of reduction has slowed in the last week. Additionally, the net position has reached its lowest point in the last 4 months. If this trend continues, it could lead to a decrease in oil prices.

The monthly expiration of futures could potentially distort the most recent report data. Therefore, the data from the upcoming weekly report will be more telling.

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 the same direction as the trend (blue line). Small speculators, NONREPORTABLE POSITIONS, however, usually do not have a major 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.