Slight Increase in Net Long Positions
The slight increase in net long positions shows that speculators are cautiously adding to their bullish oil bets. This is not a dramatic shift, but it suggests the positive sentiment that began building in the final quarter of 2025 is continuing. We should see this as a sign that momentum is slowly building for a move higher.
This bullishness is supported by recent economic reports. Looking back at December 2025, consumer spending was stronger than expected, and the latest jobs report from last week showed continued resilience in the U.S. economy. Globally, China’s industrial output for the fourth quarter of 2025 grew by 4.8%, beating forecasts and signaling a sustained need for energy imports.
On the supply side, discipline remains a key factor for the market. OPEC+ stuck to its production cut agreement in its December 2025 meeting, creating a stable floor for prices, much like we saw them do throughout 2024. Furthermore, U.S. crude oil inventories have now drawn down for three consecutive weeks, with the latest Energy Information Administration data showing a 2.5 million barrel decline, tightening the market further.
Derivative Strategies
For our derivative strategies, this environment favors selling cash-secured puts below the current market price on March futures contracts to take advantage of elevated volatility and a firm price floor. We can also look at initiating bull call spreads on April WTI contracts, targeting a move towards the $85 level last seen in October 2025. This defined-risk strategy allows us to profit from a gradual price increase while protecting us from any sudden reversals.
