According to the COT data, speculators have an increasingly bearish sentiment on oil prices. Crude oil prices are currently extending overnight gains, enhanced by a weaker US Dollar and the possibility of a pullback in global production levels. West Texas Intermediate (WTI) prices rose 5.21% on Monday, bringing the benchmark to its highest level since September 22. Brent crude prices increased around 4%; however, the global benchmark’s progress is not as much against WTI.
A production cut may be announced this week when the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, meets in Vienna. Speculation is swirling, with production cut estimates ranging from 500,000 to 1,000,000 barrels per day.
Oil prices began falling in June. It also fell in July, August, and September as markets began pricing recession fears predicated on rising global interest rates. The Reserve Bank of Australia (RBA) and the Reserve Bank of New Zealand (RBNZ) will be announcing their rate decisions this week, and the markets expect hiking of rates by both central banks.
The Fed has reiterated its hawkish stance for the past few weeks, pushing major US stock indexes to fresh 2022 lows last week.
The Commitments of Traders report (COT) from the CFTC shows that non-commercial WTI traders reduced their long exposure by 8,655 while shorts increased exposure by 5,143 for the week ending September 28. Thus, reducing net speculative longs to +226,080 remains near the lowest level since 2015.
Both longs and short bets have declined this year. However, the trend in decreasing long positioning started before shorts reversed, which increased starting in May, around a month before prices peaked in June at 123.66.