Money managers have continued to sell off WTI crude futures contracts and are now the most bearish on the U.S. benchmark in 16 years, the latest positioning data from exchanges showed.
At the end of the week to August 12, speculators held the first-ever combined net short across the two major WTI contracts (traded on CME and ICE), Ole Hansen, Head of Commodity Strategy at Saxo Bank, said on Monday in the weekly commentary on the commitment of traders (COT) reports.
ICE-traded WTI—which is often used in Brent–WTI spread trades—sat at a net short of about 53,300 lots as of August 12, the end of the latest reporting week.
On CME, the net long position – the difference between bullish and bearish bet – slumped to just 49,000 lots—the lowest net long position in WTI since April 2009. The net long on the WTI CME contract has now crashed by around 80% since the beginning of the year, Saxo Bank’s Hansen commented.
Trade in Brent, the international benchmark, also saw selling in the past week and the net long position shrank as speculators reduced bullish bets and increased their bearish bets, or shorts.
Together with the additional Brent selling, the combined net long position in crude oil (Brent + WTI) dropped to a three-month low, according to Hansen.
“The positioning in WTI is notably light,” the strategist said, noting that “while the immediate catalyst is unclear, any shift in the technicals or fundamentals could force a sharp short-covering rebound.”
The Brent selling last week was predominantly driven by fresh shorts entering the market, Warren Patterson, Head of Commodities strategy at ING, said on Monday.
Meanwhile, NYMEX WTI also saw aggressive speculative selling, with the net long in managed money declining to the smallest net bullish position that speculators have held in WTI since April 2009, Patterson added.
“Clearly, speculators are already focusing on the bearish outlook for the market,” the ING strategist said.
By Charles Kennedy for Oilprice.com
More Top Reads From Oilprice.com
