Bearish bets decreased 67% in seven weeks as crude rebounded
Short liquidation biggest on record, according to CFTC data

As crude has soared more than 50 percent since Feb. 11, the number of bets on increased prices has barely budged. Instead, the upward pressure on prices appears to have come from traders cashing out of bearish wagers at an unprecedented pace. The liquidation of short positions during the last seven weeks covered by data from the U.S. Commodity Futures Trading Commission was the largest on record.



The rally has come from shorts getting scared out of their positions, and you’re not seeing a lot of money coming in on the long side," said John Kilduff, partner at Again Capital LLC, a New York hedge fund focused on energy. "It really calls into question the fortitude and staying power of the rally."

...............In the past 10 years, there have been only two other seven-week short-covering streaks, CFTC data show. The first started in September 2009 and the second in December 2012. Both were much smaller than the recent one and were accompanied by oil rallies.

As for oil, money managers slashed bearish bets by 25,435 contracts, or 28 percent, in the report week, bringing them down to a nine-month low of 64,431 positions, the CFTC data show. Bullish wagers increased by 5,844, or 2 percent, to 300,261. The resulting net-long position advanced to 235,830.

"When energy markets get loaded to one side of the boat like that, you can have vicious reversals," said Kilduff.