zman’s Energy Brain

oil, gas, stocks, etc…

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  • Hello and Welcome - I’ve created this blog for the purpose of discussing energy related topics - primarily but not limited to oil and natural gas - and their potential impact on stocks, options, and futures. I am an amateur investor/trader and make no assurances about the opinions expressed on this blog. Please consult your financial advisor before buying, selling, borrowing, or otherwise risking capital based upon ideas taken from this site. Any advice construed from this website is worth what you paid me for it.
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CFTC

I use this indicator, the net (long versus short) positions of non-commercial traders, as a measure of future potential supply and demand.

For the Week Ended February 27, 2007: 

CFTC: Natural Gas Open Interest Plummets While Net Position Recovers To Neutral. Does this bode poorly for near term gas prices? Maybe, maybe not (I know, how useful). I consider this week’s look to be slightly gas price bearish. Here’s why:

  • As I’ve stated in the past I believe the predictive element of CFTC data is somewhat contrarian in nature. In my way of thinking, large net long positions represent potential supply and are therefore actually bearish and visa versa. This week bulls and bears are evenly matched (the net position is near zero).
  • As always when I’m writing about the CFTC I’m examining the non-commercial (speculator) data. After rising to levels of what can only be considered speculative excess last Fall, open interest in NYMEX natural gas futures had its largest one week decline in open interest in seven years. Maybe it’s nothing. Maybe they’re just gathering their firepower to go long when things settle down in the broader markets. I’ll keep a close eye on this because a continued reduction in open interest has often led to falling commodity (gas) prices. But again, we’re at step one in that analysis now.
  • Combining this sudden lack of betting one way or the other with the players abandoning the table for friendlier games (and that’s all this is to the hedgies speculators) I’m struck with a slightly bearish look for gas.

Please click to enlarge cftc-030507.JPG.

5 Responses to “CFTC”

  1. bob marley said

    unfortunately the cftc numbers for nat gas are not relfective of the reality of hedge fund or large spec buying or selling. for example, the numbers show that large spec were net short during almost all of the significant advance of the last several years. obviously that’s not true or even possible. after questioning the cftc directly, i have been told that the reason for the discrepancy has to do with the fact that the passive indexers are counted as commercial traders. not only that, but a significant portion of the large spec open interest is devoted to spreading, or hedging otc nat gas. so the numbers are really and truly messed up. in the last week however, it has been reported that the cftc will attempt to correct some of these problems by amending the way data is collected and categorized.

  2. CK said

    do u have the link to the crude oil cftc data

  3. zmann said

    CK…sure it’s:

    http://www.cftc.gov/dea/options/deanymelof.htm

    crude in New York and WTI is here along with contracts on the products.

  4. Mike said

    Just passing by.Btw, you website have great content!

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  5. Xsohqcqu said

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