Oil: traders expect a correction?

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 increased their net position to purchase oil contracts by 21.6 thousand contracts, bringing the total to 350.1 thousand. This marks the fifth consecutive week of net position increases, and 11 out of the last 13 weeks. The current net position is the highest it has been since March 8, 2022.

Hedger operators have been increasing their net position for selling oil contracts for 11 weeks out of the last 13, with the latest figures showing a 20.6 thousand contract increase to 375.4 thousand for commercial hedgers.

The open interest rose by 58,000 contracts, bringing the total to 1,751,000.

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 0.06 over the week, reaching 3.94.

Data from the COT report indicates a growing bullish sentiment in the oil market. After a period of stagnation, traders have once again increased their net position in anticipation of rising prices. This net position is now the highest it has been in the past 18 months. Large funds have increased their purchases by 6% in the last week, which could potentially lead to an increase in oil prices.

Traders increased their positions for lower prices simultaneously, and some of them did not exclude the possibility of a correction from the 11-month highs in quotes.

WTI

COT reporting data is essential for medium to long term trading. Generally, large speculators, NON-COMMERCIAL (banks, investment funds) tend to follow the trend (blue line). On the other hand, small speculators, NONREPORTABLE POSITIONS, usually do not have much impact on the market (red line). Hedgers, COMMERCIAL (operators, large companies) usually trade 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.