Most of my focus over the last few months has been on the high levels of optimism surrounding the equities market and the low levels of optimism in the metals market.
While that was going on, the Commitment of Traders report for crude oil has slowly been creeping to new records.
This past week showed that for the first time in history, large speculators were net long more than 350,000 contracts. The total numbers were 476,061 contracts held long compared with only 114,995 held short. This puts the percentage of bullish positions to bearish positions at 81 percent.
Of course, on the opposite side of these trades are the commercial hedgers and they have a net short position of over 1 million contracts (also a record) with only 700,234 contracts being held long. This is also the first time the commercial hedgers have built a net short position of over 350,000 contracts.
The most interesting thing is that the bullish bets have continued to build even as oil has experienced some selling in recent weeks.
The net long position by the large speculators is setting records, as it did in March 2012 and April 2011. Both of these periods marked a peak in oil prices followed by sharp selloffs.
Another thing to keep in mind is that the summer driving season is almost over and the demand for oil usually dips after the kids go back to school.
To me, it looks like oil is ready for a dip down below $100 a barrel and there is support around the $92 level.
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