Oil: bulls hit the brakes

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 increased their net position to purchase oil contracts by 1.6 thousand contracts, bringing the total to 328.4 thousand. This marks the fourth consecutive week of net position increases, and 10 out of the last 12 weeks. The current net position is the highest it has been since May 31, 2022.

Hedger operators have been increasing their net position for selling oil contracts for 10 out of the last 12 weeks, with the latest figures showing a 6.1 thousand contract increase to 354.8 thousand for COMMERCIAL hedgers.

The open interest decreased by 99,000 contracts, bringing the total to 1.693 million.

The ratio of the number of buy contracts to the number of sell contracts for the bullish index of large speculators decreased from 4.21 to 3.88 over the week, due to an increase in sales.

Data from the COT report indicates that bullish sentiment is on the rise. Over the past 16 months, traders have been steadily increasing their net positions in anticipation of rising prices. Last week, large funds increased their purchases by 3%, suggesting that this trend may continue and contribute to the growth of oil prices.

Traders have significantly decreased the rate of increase in their net position, which could be an indication of a potential reversal. Large speculators have been actively selling, resulting in a decrease in their bullish index.

WTI

COT reporting data is essential for medium to long term trading. Large speculators, NON-COMMERCIAL (banks, investment funds) usually follow the trend (blue line). Small speculators, NONREPORTABLE POSITIONS, usually have little impact on the market (red line). Hedgers, COMMERCIAL (operators, large companies) usually go 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.