Oil: the bulls are waking up, but the bears are strong

The Commodity Futures Trading Commission (CFTC) COT (Commitments of Traders) reports for the week ending on Tuesday last week showed:

Non-commercial large speculators increased their net buy position on oil by 9.9 thousand contracts, bringing it up to 172.4 thousand. This comes after a decrease in the net position for 4 of the last 6 weeks. The net position is now growing from levels close to those of March 21, which were the lowest since 2013.

Hedgers (COMMERCIAL) have upped their net sell position on oil contracts by 5.5k contracts to 198.4k, following almost 6 weeks of contraction. This marks an increase in their net sell position.

The open interest rose by 31 thousand contracts, bringing the total to 1.952 million.

The ratio of the number of buy contracts to the number of sell contracts for the bullish index of large speculators increased by 0.01 to 2.03 over the week.

The data from COT oil reflects a growing bullish sentiment among traders. They are attempting to increase their net position in order to prevent the renewal of multi-year lows. In the past week, large funds have increased their purchases by 5%. If this trend continues, it could lead to an increase in oil prices.

Traders, particularly hedgers, were actively constructing their positions to lower prices, and some of them did not exclude the possibility of further negative movement.

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.