Ok, so it probably doesn’t say anything good about sentiment when money managers just cut their net long position in Brent and WTI to the least bullish in nearly 11 months.
It also doesn’t say much for sentiment when short-only positions just rose 48,661 lots to 377,891, the highest in almost 11 months.
According to CFTC data, the ratio of long to short positions is now roughly 2:1, versus 12:1 in February.
“The bears are not going into hibernation yet. They’re still hungry,” Rob Thummel, portfolio manager at Tortoise Capital Advisors LLC in Lakewood, Kansas, which manages about $16 billion in energy-related investments, told Bloomberg.
“Further money manager long liquidation and fresh gross shorts, both in prompt futures and deferred structure, accelerated the move lower in prices albeit we think the lows are near and would position for upside in 2H’17,” Citi wrote, in a note out earlier today.
Right. “Position for upside.” Good luck with that.
Sarcasm aside, positioning has been something of a contrarian indicator this year – albeit in the wrong direction.
Don’t forget this hilarious juxtaposition from March which shows how specs got caught woefully offsides and ended up getting hosed like a fat girl trying to swing on a log that couldn’t hold her weight:
Are all those Treasury shorts going to learn anything from everyone who was massively long crude?.. pic.twitter.com/4BNbFDzRKy
— Walter White (@heisenbergrpt) March 10, 2017
But if there is indeed something to be said for contrarian indicators, then perhaps oil bulls can take some comfort in the fact that journalists are spending a whole lot of time talking about the crude bear market lately.
That’s a development which, as you can see from the following chart, usually presages a rally:
“Journalists (including myself) are writing lots of bearish headlines — is that a sign that oil is about to rally?” Bloomberg’s Chief Energy Correspondent Javier Blas jokingly asked in a Monday Twitter post.
There you go folks.
That’s what’s left of the bull case for crude. The contrarian journo trade.