Tuesday, November 14, 2017

It Looks Like The Oil Is Topping Now

According to the latest Commitments of Traders report, Money Managers trading Crude Oil (light sweet) futures increased their net long position in these futures to 340.2 thousand contracts or 13.1% (calculated as the net long position divided by the total open interest):

In that way the LONG oil trade entered the over bullish area.

Note that each time there was excessive optimism among Money Managers (the area marked in light green) oil prices were topping.

It looks like the recent jump in oil prices was driven by the shorts cutting their bets in panic (for example during the week that ended on October 31):

Finally, last week the longs took control over the market (increasing their position by 24.0 thousand contracts) supported by the shorts still cutting their exposure (a cut of 18.3 thousand contracts).

In my opinion, a prudent trader / speculator should avoid the LONG trade in oil now...

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