Heating Oil (NY Harbor ULSD) - Commitments of Traders Brief: Week Ending 2026-05-29

Executive summary

For the week ending May 29, 2026, the primary development in Heating Oil futures was a significant reduction in bullish positioning from Managed Money. This cohort engaged in aggressive long liquidation, shedding over 2,300 contracts, which coincided with a sharp drop in prices during the reporting period. Open interest continued its multi-week decline, falling by 8,730 contracts, suggesting the recent price weakness is driven more by the exit of longs than by the establishment of aggressive new short positions. Commercials (Producers/Merchants) maintained their substantial net-short hedging posture with minimal change, while Swap Dealers absorbed some of the speculative selling, increasing their net-long position.

Positioning

• Managed Money: The net-long position for this speculative group fell sharply to +7,689 contracts (25,271 long vs 17,582 short). This is a significant decrease from +11,023 contracts in the prior week and is well below the recent highs seen in late February and early March.
• Producer/Merchant (Commercials): Maintained a deeply net-short position of -66,712 contracts (49,368 long vs 116,080 short). This is almost unchanged from the prior week's -66,676 net-short, indicating a stable and significant hedging presence against physical inventories or production.
• Swap Dealers: Increased their net-long position to +36,860 contracts (49,583 long vs 12,723 short). This group often takes the other side of speculative flows, and their increased length reflects the absorption of selling from other categories.
• Non-Reportable (Retail): This group remains net-long at +27,245 contracts (52,929 long vs 25,684 short), a slight increase in their net bullish stance from the prior week.

Flows and week-over-week changes

• Managed Money was the most active directional seller this week. Their net position changed by -3,334 contracts, driven primarily by the liquidation of 2,345 long contracts, coupled with the addition of 989 new short contracts. This indicates a strong bearish shift in sentiment.
• Producer/Merchants saw a large reduction in gross positioning on both sides of the market, which is consistent with the overall drop in open interest. They reduced long positions by 8,812 contracts and simultaneously covered 8,776 short contracts, resulting in a negligible net change of just -36 contracts.
• Swap Dealers showed a bullish flow, increasing their net-long by 1,960 contracts. This was achieved by adding 853 long contracts while simultaneously cutting 1,107 short contracts.
• Non-Reportable traders added to both long (+2,558) and short (+1,446) positions, resulting in a net increase to their long exposure.

Commercials vs Speculators

The classic dynamic of commercial hedgers versus speculators remains firmly in place. The Producer/Merchant category's large net-short position of -66,712 contracts provides the market with structural liquidity. This is being offset by the combined net-long positions of Managed Money (+7,689), Swap Dealers (+36,860), and Non-Reportables (+27,245). However, the conviction among the key speculative group (Managed Money) has clearly waned this week, reducing the overall speculative long overhang.

Open Interest and Participation

• Open Interest: Total open interest fell by 8,730 contracts to a new total of 248,371. This continues a general decline from levels above 350,000 contracts seen earlier in the year, indicating a significant reduction in overall market participation. The drop in OI alongside falling prices confirms a pattern of long liquidation.
• Participation: The total number of traders decreased to 158 from 157 in the prior week. The number of Managed Money long traders fell from 28 to 28 (no change), while short traders decreased from 13 to 15, which is inconsistent with the position changes and may indicate a reporting nuance.
• Concentration: The largest four traders hold 10.0% of the net long position and 13.9% of the net short position. The largest eight traders hold 15.2% and 21.8%, respectively. These concentration ratios are moderate and have remained relatively stable over recent weeks.

Price Context

The positioning changes align perfectly with the price action observed during the reporting period. The front-month contract price fell sharply from a close of 3.9224 on the previous reporting date (May 22) to 3.5328 on the current reporting date (May 29). The bulk of the decline occurred during the COT reporting week (Wednesday, May 27th to Tuesday, May 26th - price data seems to reference the following Tuesday - price on May 26th was 3.7015). The significant liquidation of longs by Managed Money was a clear contributor to, and consequence of, this bearish price move.

Risks and Watchpoints

• Speculative Exhaustion: The Managed Money net-long position has been significantly trimmed. While still net-long, the aggressive selling may be nearing a short-term exhaustion point. A slowdown in this liquidation could remove a key source of pressure from the market.
• Trend Continuation: The path of least resistance appears lower, with both price and open interest falling in tandem. Further long liquidation from the remaining +7,689 Managed Money net-long position could fuel additional downside.
• Watchpoint - Open Interest: A reversal in the trend of declining open interest would be a critical signal. An increase in OI on a down-day would suggest new, aggressive short-selling, while an increase on an up-day would signal new buyers entering the market. Continued declines in OI suggest the trend is driven by position closing, not new conviction.
• Watchpoint - Swap Dealers: Swap Dealers continue to build their net-long position against speculative selling. If prices stabilize, this group could be positioned to profit from a reversal, and any signs of them reducing this length would be a bearish signal.