
Crude Oil Forecast: Short Covering and WTI Spread Hint at Bounce
I've watched net-long exposure to crude oil decline alongside prices in recent weeks. But with managed funds culling shorts at their fastest pace in a year and volumes now rising alongside prices, perhaps yesterday's bounce on WTI has more to give.
Share this:
View related analysis:
- Nasdaq 100 Forecast: Asset Managers Ramp Up Bearish Tech Bets
- EUR/USD forecast: Its pre-ECB surge did not come without a warning
- Bullish Bets on the Euro and Yen Continue to Rise: COT Report
- AUD/USD weekly outlook: 10 March 2025
View related analysis:
I noted in recent weeks that the downtrend on WTI crude oil has lacked bearish enthusiasm from futures traders. Data from the weekly Commitment of Traders (COT) report shows that the combined volume of large speculators and managed funds have been trending lower alongside prices, which could be compared to driving down a hill while easing off the accelerator. A truly bearish move we see investors accelerate their way down that hill and volumes rise.
So, while large speculators reduced their net-long exposure for a seventh week, they have also trimmed longs six of those seven weeks, and reduced shorts two of the last three.
But more importantly. Managed funds closed shorts again crude oil at their fastest pace in six months last week, by culling 35.8k contracts. That they also trimmed longs by -5.9k contracts shows they’re not ready to turn this ship around, but its rally suggests the downside for oil could be limited from here.
Besides, prices are also approaching a series of historic lows set between 2021 and 2024, so at the very least we could find the bearish trend loses steam if it is to persist.
WTI Crude Oil vs Time Spread
This chart compared WTI crude oil to its own time spread, which in this case is the front-month mines the second month. If the time spread is rising (contango) it suggests expectations of higher oil prices, and if it is lower (backwardation) then expectations are for lower oil prices.
We can see that oil prices generally trend in the same direction as its own times spread, but in this case WTI crude oil time spread appears elevated compared to the WTI crude oil chart. And if the time spread continues to move higher, WTI crude oil prices should in theory follow.
WTI Crude oil Technical Analysis
A double bottom has formed around $65, and Wednesday’s bullish range expansion formed the third candle of the bullish reversal pattern called a Morning Star. A bullish divergence also formed ahead of the minor rally. And with the two rallied from the cycle low on the 4-hour chart being accompanied with rising volumes, I suspect we have seen a near-term change in trend to the bull side.
The bias is to seek dips towards the high-volume node (HVN) at $66.71 in view of a move up to the $68.86 weekly VPOC (volume point of control), a break above which brings $70 into focus near the 50 and 200-day EMAs.
We’d like need a fresh catalyst to prompt decent-sized bulls from the sidelines before we could expect much more of a counter trend move. But if prices turn south and break beneath $65, $60 and the historic lows rom 2021 are the next major support levels for bears to focus on.
-- Written by Matt Simpson
Follow Matt on Twitter @cLeverEdge
How to trade with City Index
You can trade with City Index by following these four easy steps:
- Open an account, or log in if you’re already a customer
• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
- Search for the market you want to trade in our award-winning platform
- Choose your position and size, and your stop and limit levels
- Place the trade
Related tags:
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.

Australian Dollar Outlook: AUD/USD Screams Sentiment Extreme Into Fed, CPI
AUD/USD rebounds despite record bearish futures positioning, with Australian Q3 CPI and the Fed meeting threatening to trigger another short squeeze.

EUR/USD weekly outlook: FOMC and ECB to set the tone
The current backdrop is modestly bearish. On Friday, the EUR/USD closed modestly lower, down for the third consecutive day. The pair also posted a weekly decline after staging a modest recovery attempt in the previous week. Out of the past 8 weeks, the EUR/USD has fallen on 6 occasions. There is not much supporting factors for the single currency right now. So, the upside remains capped.

USD/JPY Forecast: Is Rising Japanese Inflation Supporting the Yen?
As the trading week comes to an end, one of the most relevant developments in the FX market has been the renewed strength of the Japanese yen. This can be seen in the recent performance of USD/JPY, which has fallen nearly 1.0% over the last two trading sessions, highlighting a meaningful recovery in the Japanese currency against the U.S. dollar.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.





