Oil: net position warns bulls

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

For the second week in a row, large speculators (NON-COMMERCIAL) decreased their net position on the purchase of oil contracts by 27.6 thousand contracts, bringing the total to 322 thousand. This marks a decrease from the highest levels seen since March 8, 2022, when large speculative players had increased their net position for almost 13 weeks.

Operator hedgers decreased their net selling position in oil contracts by 18.9 thousand contracts to 363 thousand after having increased it for 12 of the last 14 weeks. This marks a decrease from the maximum levels seen since March 15, 2022.

The number of open contracts decreased by 34 thousand, bringing the total to 1.753 million.

The ratio of the number of contracts to buy to the number of contracts to sell for the bullish index of large speculators rose by 0.41 to 4.54 this week, as a result of a decrease in sales.

Data from the COT report indicates a growing bearish sentiment in the oil market. Last week, hedgers joined large speculators in reducing their net positions as prices rose. This followed the large speculators' decision to reduce their net positions a week earlier. Both hedgers and large speculators have seen their net positions decline from the highest levels in the past 19 months. This trend 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, 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.