Heating Oil (NY Harbor ULSD) COT Brief: Week Ending April 10, 2026

Executive Summary

This report captures a market in flux following a period of extreme price volatility. Open interest has collapsed to its lowest level in months, indicating a significant exit of participants. Managed Money trimmed their net long position for the third consecutive week, reacting to the recent price peak and subsequent sharp decline by both selling longs and initiating new shorts. The most notable development is from the Commercials (Producers/Merchants), whose net short position has shrunk to the smallest level in the provided dataset. This massive reduction in hedging suggests they are either taking profits on shorts established during the price run-up or are less inclined to hedge at current levels. The overall picture is one of de-risking and liquidation across the board after a parabolic price move.

Positioning

• Managed Money Net Position: +17,766 contracts. This is a moderately bullish stance but represents a continued reduction from the peak net long of over +24,000 contracts seen in late March.
• Producer/Merchant Net Position: -72,268 contracts. This is a historically small net short position for this group, which has consistently held a net short position of over 95,000 contracts for most of 2026. This is the least bearish they have been in months.
• Swap Dealers Net Position: +42,037 contracts. Swap Dealers remain significantly net long, a position that is structurally opposite to the Commercial hedgers.
• Non-reportable (Small Speculator) Net Position: +21,344 contracts. Small speculators also hold a significant net long position.

Flows and Week-over-Week Changes

The reporting week saw a net reduction in risk, driven by liquidation.

• Managed Money: Reduced their net long position by 1,659 contracts. This was composed of a reduction in long positions (-708 contracts) and an increase in short positions (+951 contracts), a decidedly bearish combination of actions.
• Producer/Merchant: Reduced their net short position by 1,073 contracts. This was achieved through a significant liquidation of both long (-5,772 contracts) and short (-4,699 contracts) positions. The larger reduction in long exposure drove the slightly more net short change.
• Swap Dealers: Covered shorts, reducing their short book by 790 contracts while trimming longs by a smaller 188 contracts.
• Open Interest: Declined by 5,915 contracts, continuing a sharp downtrend.

Commercials vs. Speculators

The classic positioning dynamic of speculators (Managed Money) being net long against Commercials (Producer/Merchants) being net short remains. However, the magnitude of these positions has shifted dramatically.

• Commercials have aggressively covered their short hedges over the past month. Their net short position has contracted from over 112,000 contracts at the end of January to just 72,268 contracts now. This is a powerful signal that industrial users and producers are no longer selling/hedging with the same conviction.
• Managed Money, while still net long, have been sellers for the past three weeks. Their peak bullishness was in late March, and they are now reducing exposure as the market's upward momentum has stalled and reversed.

Open Interest and Participation

• Total open interest fell to 228,879 contracts, the lowest level by a significant margin in the provided historical data.
• This marks a staggering 40% decline from the peak open interest of 381,075 contracts seen at the end of January.
• Such a dramatic and sustained fall in open interest alongside a parabolic price rally and subsequent reversal often indicates that the move was fueled by short-covering and position squaring rather than a broad influx of new capital. The market is significantly less populated than it was a few months ago.

Price Context

The positioning changes occurred during a week of historic volatility.

• The price of Heating Oil surged from ~$2.47 at the end of February to a peak of $4.52 on April 6th.
• The COT data, which is as of Tuesday, April 7th, captured the market just off this peak. By the end of the week (April 10th), the price had fallen back to $3.9766.
• Managed Money's selling this week aligns perfectly with the price failing at its highs and beginning to reverse sharply.
• The massive short-covering from Commercials occurred throughout this historic rally, suggesting they were buying back hedges as price accelerated upwards.

Risks and Watchpoints

• Liquidation Cascade: The sharp drop in open interest and recent price reversal create a risk of further long liquidation from the remaining Managed Money and Non-reportable participants if prices continue to fall. The +17,766 net long from Managed Money could quickly unwind.
• Commercial Re-Hedging: Watch for any signs that Commercials are beginning to re-establish their short hedges. If they begin selling again in size, it could signal a belief that the price top is in and could act as a significant headwind for any new rally attempts.
• Thin Market Conditions: With open interest having collapsed, the market may be more susceptible to sharp price swings on lower volume as liquidity has been significantly reduced.