US CFTC data shows oil non-commercial net positions fell to 202.2k. The previous level was 213.5k.
This is a decrease of 11.3k positions. The figures refer to the latest reporting period from the CFTC.
Speculative Positioning Turns Less Supportive
We are seeing a notable decrease in bullish sentiment among large speculators in the oil market. Net long positions have been reduced, which suggests that the conviction behind the recent price rally is starting to fade. This is often an early indicator that a price trend may be losing its upward momentum.
This shift in positioning follows last Wednesday’s EIA report, which unexpectedly showed a crude inventory build of 2.8 million barrels, signaling a potential softening in demand. This supply data, combined with manufacturing PMI figures from China coming in slightly below expectations last week, is causing some concern. The market is now more sensitive to signs of a global economic slowdown.
Additionally, recent commentary from Federal Reserve officials suggests they are not in a rush to cut interest rates, keeping the US dollar strong. A strong dollar makes oil more expensive for holders of other currencies, which can dampen demand. We see traders adjusting their positions in response to this less favorable macroeconomic backdrop.
We remember looking at a similar drop in speculative positioning back in early 2025, which occurred just before a price correction of nearly 10% over the following month. That pullback was also driven by worries over economic demand and a surprise inventory build. History suggests that such sharp drops in net longs should not be ignored.
Risk Management For The Next Few Weeks
For the coming weeks, we should consider protecting our long-side exposure. Buying some downside protection, such as WTI put options with a May expiry, could be a prudent strategy. This allows us to maintain our core view while hedging against a potential short-term price decline toward the $80 support level.
