Oil: false breakdown of the "ceiling" of the net position in 2023

The CFTC's COT report for the week ending on Tuesday showed that:

Non-commercial large speculators decreased their net buying position on oil contracts by 13.8 thousand contracts, bringing it down to 242.1 thousand. This decrease follows a 6-week period of increasing their net position, which had reached its highest level since November 15, 2022.

Hedger operators reduced their net sell position on oil contracts by 8.2k contracts, bringing it down to 270.1k. This decrease follows a 6-week period of increasing their net sell position.

The open interest decreased by 1,000 contracts, bringing the total to 1.703 million.

The ratio of the number of buy contracts to the number of sell contracts for the bullish index of large speculators decreased by 0.20 over the week, bringing it to 2.88.

The COT oil data indicates a growing bearish sentiment. After a notable 6-week increase, traders started to decrease their net position as prices rose. This net position also dropped from its highest levels in the last 9 months, and is now below the highs of the current year. Large funds decreased their purchases by 2%, while sales increased by 5% for the week. If this trend continues, it could lead to a decrease in oil prices.

WTI

COT report data is essential for medium and long-term trading, and is mainly used by large speculators, NON-COMMERCIAL (banks, investment funds). These traders usually follow the trend (blue line). Small speculators, NONREPORTABLE POSITIONS, however, 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, while open interest is the total of all open positions in the market.