Oil: net position reached 2023 support zone

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 17.4 thousand contracts, bringing the total to 151.6 thousand. This marks the eleventh consecutive week of reduced net positions, with the current figure being the lowest since July 3.

Hedger operators have decreased the net position for the sale of oil contracts by 19.3 thousand contracts over the last 10 weeks, bringing the total to 175.3 thousand. This marks 9 weeks out of the last 10 in which the net position for sale has been reduced.

The open interest stayed at 1.650 million contracts.

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 0.16 over the week, bringing it to 1.78.

Data from the COT report indicates a growing bearish sentiment in the oil market. Over the past two months, traders have been reducing their net position as prices have risen. This has resulted in the net position reaching its lowest level in the past 5.5 months. Additionally, large speculators increased their sales by 8% in the last week, while purchases were also reduced. If this trend continues, it could lead to a decrease in oil prices.

Bears must be cautious, as the net position is nearly at the same level as the lows of July and March, which have already seen a recovery (in March) and a turnaround (in July).

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.