News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Mixed
Wall Street
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • Markit US Manufacturing PMI registered its highest pace of expansion in 74 months. The reading came well above market expectations, reflection a post-election lift to confidence and vaccine hopes. https://t.co/kmnhsjwOAk
  • USD Price Outlook: US Dollar Bulls Hold Critical Support Zone -via @DailyFX Link to Analysis: https://www.dailyfx.com/forex/fundamental/us_dollar_index/usd_trading_today/2020/11/23/usd-price-outlook-us-dollar-bulls-hold-critical-support-zone.html $USD $DXY #FX #Forex #Trading https://t.co/zgV4oQnzfN
  • Trump says recommended GSA administration to start transition protocols -BBG
  • Equity price action has stagnated following the drawdown in volatility after the Presidential election. Get your market update from @PeterHanksFX here:https://t.co/GByaij6XkI https://t.co/1OCBI1dVZg
  • GSA ascertains Biden the 'apparent winner' of the election -BBG citing AP
  • General Services Administration (GSA) tells president-elect Joe Biden it's ready to begin transition process -BBG citing CNN
  • Could #ASEAN currencies like $SGD, $IDR, #MYR and #PHP gain momentum against the #USD this week? Check out my latest fundamental outlook update here - https://www.dailyfx.com/forex/fundamental/article/special_report/2020/11/23/US-Dollar-Still-Sinking-What-Are-Upside-Factors-USDINR-Eying-Indian-GDP.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/RJFBnCT0Hp
  • UK is said to be weighing Huawei installation ban in 2021 -BBG
  • NZD/USD quickly pulls back from a fresh 2020 high (0.6968) as upbeat data prints coming out of the US economy spark a bullish reaction in the Greenback. Get your $NZDUSD market update from @DavidJSong here: https://t.co/zghuqNDKXP https://t.co/B5YZ0dWOtR
  • Forex Update: As of 21:00, these are your best and worst performers based on the London trading schedule: 🇬🇧GBP: 0.27% 🇨🇦CAD: 0.05% 🇳🇿NZD: -0.09% 🇨🇭CHF: -0.16% 🇦🇺AUD: -0.23% 🇯🇵JPY: -0.67% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/zBEnHG1OJ9
Crude Oil Traders See Biggest Reduction in Long Positions on Record

Crude Oil Traders See Biggest Reduction in Long Positions on Record

2017-09-04 20:50:00
John Kicklighter, Chief Strategist
Share:

Talking Points:

  • The CFTC’s net speculative positioning data showed a 75,983 contract drop in bullish oil exposure
  • Oil prices themselves have been held to a range that is the smallest 52 week rolling avg in 3 years
  • Volume in oil trading continues to grow despite the lack of direction

See how retail traders are positioning in the FX majors, indices, gold and oil intraday using the IG speculative positioning data on the DailyFX Sentiment page.

Implied volatility levels underlying oil have sunk to the same low levels that have plagued so many other physical and capital market assets across the financial system. Yet, this lack of anticipation and even the lack of a clear trend for this commodity hasn’t tempered speculation behind the the market. In fact, the reality is quite the opposite. We have seen volume steadily rise; while just this past week, net speculative futures positioning posted a record swing in exposure. Does this portend a coming change in this important market or has speculation simply run far ahead of actual market activity?

Taking a look at recent price action for US-based crude oil, the abnormal turnover isn’t obvious at first blush. While there are notable swings over the past year, they are hardly of the violent or persistent nature that we have seen from this and other markets in previous cycles. Recently, the WTI (West Texas Intermediate) standard has been unable to break from a 50 – 42 range over the past three months. Looking further back, the energy benchmark has seen a moving 12-month range that is the smallest since the Summer of 2014 – competing with current conditions for title of the most complacent periods in recent financial history.

Crude Oil Traders See Biggest Reduction in Long Positions on Record

Chart created by John Kicklighter using Tradingview on DailyFX.com

Yet, when we look at a little more historical context; a different view of the market starts to emerge. Despite the reduced range and the dimimished volatility readings from measures like the CBOE’s Oil Volatity Index, we find that volume has climbed to record highs that have more than doubled the averages of the from just three years before. Similarly, open interest (total participation in the market) has soared to a record high in a persistently rising trend.

Crude Oil Traders See Biggest Reduction in Long Positions on Record

Chart created by John Kicklighter using Tradingview on DailyFX.com

There are a number of possible explanations for this dramatic shift in market activity – though there is no way to claim one is the definitive reason. The growing interests among producers from OPEC’s members to emergent US shale producers creates an effort to promote market direction and transferring transactions to other financial centers around the world (more US oil means more US transactions). Crude may capture more of the global speculative interest because it carries more volatility than the likes of equities and doesn’t draw the skepticism surrounding a persistent trend that shares earn. Perhaps this is the evoluation of a market that is slowly being replaced due to inevitable supply and demand constaints (peak oil and alternative energy).

Regardless, we have seen what it can do to positioning and market levels. Below is the CFTC’s Commitment of Traders (COT) report highlighting net speculative positioning in oil specifically. Besides the deviation in long interest and the mundane level of the commdity itself, we have the measure of weekly change in speculative bearing. As it happens, this past week’s net change in the (persistently) long exposure of the market suffered its largest drop on records going back decades to the tune of 75,983 contracts.

Crude Oil Traders See Biggest Reduction in Long Positions on Record

Chart created by John Kicklighter using Data from Bloomberg and the CFTC

Though this past week’s swing in the net long position is the largest on record, there have been a few proximately large bearish dives that have followed otherwise abrupt but limited slides in price action – legs through November and March. Both of those previous instances called short-term bottoms but certainly didn’t rebalance speculation and promote the next trend. This time around, the price slump was far more modest, which likely is supported by fundamental factors such as the additional glut added by Hurricane Harvey as well as the tentative fade of concern related to the North Korea-West tensions. Will that restraint evaporate? Time and volatility will tell.

Crude Oil Traders See Biggest Reduction in Long Positions on Record

Chart created by John Kicklighter using Data from Bloomberg and the CFTC

To receive John’s analysis directly via email, please SIGN UP HERE

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES