US CFTC data shows net non-commercial positions in oil fell to 117.8K. This compares with 124.6K in the previous report.
We’re seeing a notable shift as large speculators are reducing their bullish bets on crude oil. This drop in net long positions indicates that conviction for higher prices is weakening among hedge funds and other major traders. The move suggests a more cautious or even bearish sentiment is building in the market.
Speculative Positioning Signals
This pullback in positioning aligns with recent economic data, as the latest global manufacturing PMI figures for January 2026 showed a slight contraction, dipping to 49.7. This follows a trend we observed in the final quarter of 2025, where signs of slowing industrial demand, particularly from Asia, began to surface. Weaker factory output typically translates to lower energy consumption, justifying the reduced speculative length.
On the supply side, U.S. crude oil inventories have also been a factor, with the most recent EIA report showing a build of 1.8 million barrels, surprising a market that had priced in a small draw. This continues a pattern of resilient U.S. shale production that has consistently offset some of the OPEC+ supply management efforts. The excess supply is making traders nervous about holding aggressive long positions.
Given this backdrop, derivative traders should consider reducing exposure to outright long futures contracts in the immediate term. It may be prudent to hedge existing long positions by purchasing puts or implementing collar strategies to protect against a potential drop towards the $70 per barrel support level for WTI. The increase in speculative shorts suggests that there is momentum for a downward price test.
Looking back, we saw a similar pattern in the fall of 2025 when a decline in speculative net length preceded a brief but sharp price correction. Traders should monitor upcoming inventory reports and Chinese import data very closely for confirmation of this weakening trend. Any failure of prices to hold key technical levels could accelerate this speculative selling in the coming weeks.
