Record high shorts

As shown in our daily a couple of days ago, oil futures remain in backwardation, with the curve clearly sloping downward and December delivery still trading below the current spot price. This continues to suggest that forward markets are not really believing in a long lasting oil shock. Today’s chart adds an important confirmation to that view, as short positions in Brent crude from producers, merchants, processors and users have now reached around USD 193 billion, a historical record high and roughly double the level seen at the start of the year, even above the peak reached during the 2022 energy crisis. This is a meaningful signal, because these are not speculative players but companies close to the physical oil market, using current price levels to lock in future revenues and peak profitability rather than taking the risk of betting on oil prices rising much further from here. Taken together, both the shape of the curve and this positioning data point in the same direction, which is an interesting point for investors to take into account.