JPMorgan has seen a significant change in futures positioning by various market participants since the pandemic.
The bank highlighted a structural shift, with the managed money category showing a tendency to hold more net long positions, while the supply of net short positions by the producer/user category has decreased.
The change in market dynamics was considered by JPMorgan, which noted that discretionary speculative investors have shown a strong preference for holding overweight positions in oil futures.
This trend was especially evident in September 2023 and continued into early April 2024. Despite these overweight positions, the market did not exhibit extreme levels that would normally trigger reversal or profit-taking signals from momentum traders such as Commodity Trading Advisors (CTAs).
JPMorgan’s analysis shows that market behavior in terms of futures positioning has changed compared to the pre-pandemic period. This could indicate a new pattern in the way different types of traders interact with the oil futures market.
The bank’s findings are based on the behavior of discretionary speculative investors, who have not yet achieved the momentum signals that could indicate an impending shift in their trading strategies.
This implies steady interest in oil futures without the momentum extremes that could lead to significant market moves.
This article was produced with the support of AI and reviewed by an editor. For more information see our General Terms and Conditions.
