Oil: net position is on the verge of failure again

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

After a two-week increase, large speculators (NON-COMMERCIAL) decreased their net position to buy oil contracts by 35.6 thousand contracts, bringing the total to 163.7 thousand. This is close to the December levels and is the lowest since 2013, approaching the levels seen in early July.

Hedger operators decreased their net position for selling oil contracts by 28.9 thousand contracts, bringing the total to 182.2 thousand. This follows a two-week period of increasing the net position.

The open interest rose by 32 thousand contracts, bringing the total to 1.587 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 0.49 over the week, bringing it to 1.92.

Data from the COT report indicates a significant rise in bearish sentiment. Over the past week, traders have almost completely reversed the two-week increase in their net position on rising prices. This has brought the net position back to levels similar to those seen in July, which are the lowest since 2013. Additionally, large speculators have increased their sales by 25% in the same period. If this trend continues, it could lead to a decrease in oil prices.

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, generally do not have a major 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.