Heating Oil COT Brief: Week Ending 2026-06-26

Executive summary

Speculative sentiment in NY Harbor ULSD (Heating Oil) turned notably more bearish this week. Managed Money slashed their net long position to its lowest level in over six months, driven by a combination of long liquidation and fresh short selling. In contrast, Commercial participants (Producer/Merchants) significantly reduced their net short position, covering shorts at the fastest pace in months, bringing their hedging posture to the least bearish level in the observed period. This divergence—speculators selling while commercials buy back hedges—occurred as overall market participation, measured by Open Interest, dipped slightly after a large build the prior week.

Positioning

• Managed Money: The net long position fell to +6,408 contracts. This is a sharp decline from +9,519 contracts the prior week and marks the lowest net long holding for this category in the provided data set (since December 2025). The previous low was +7,689 contracts in late May.
• Producer/Merchant (Commercials): This group holds a net short position of -60,005 contracts. While still a substantial short, this is the smallest net short position held by commercials in the available historical data, down from -63,414 contracts last week and a peak of over -112,000 contracts in late January. This suggests a significant reduction in hedging pressure.
• Swap Dealers: Swap Dealers increased their net long position to +39,221 contracts, up from +37,997. This positions them as the primary counterparty to the commercial shorts, though their own position is well off the +72,975 contract net long seen in mid-January.

Flows and week-over-week changes

• Managed Money: The net position change was a decrease of 3,111 contracts. This was composed of a reduction in long positions by 1,843 contracts and an increase in short positions by 1,268 contracts, a decisively bearish flow.
• Producer/Merchant: This cohort's net position became more bullish by 3,409 contracts. The change was driven by significant short-covering (-2,531 contracts) and a modest addition of new longs (+878 contracts).
• Swap Dealers: This group's net length increased by 1,224 contracts, almost entirely due to covering 1,222 short contracts.

Commercials vs speculators

The classic positioning dynamic shows a widening divergence in opinion. Speculators (Managed Money) are rapidly shedding bullish exposure, reaching a multi-month low in conviction. Conversely, Commercials are aggressively reducing their short hedges, implying either a belief that downside price risk is diminishing or that they are taking advantage of recent price dips to lock in favorable levels. The "smart money" commercial position is becoming structurally less bearish, while the trend-following speculative cohort is turning more negative.

Open interest and participation

• Open Interest: Total open interest decreased slightly to 270,034 contracts, a fall of 1,949 contracts from the prior week. This comes after a substantial build of over 17,000 contracts in the week before, suggesting the market is consolidating after that influx of activity. Current OI is well below the year's peak of over 381,000 contracts but has recovered from the lows near 228,000 seen in April.
• Concentration: The market concentration remains stable. The largest four traders hold 14.1% of the net short position, and the largest eight hold 21.5%. These levels are consistent with recent history and do not signal an unusual concentration of risk.

Price context

The positioning data, captured as of Tuesday, June 23rd, should be viewed in the context of recent price action. In the week leading up to the 23rd, the front-month contract saw a notable decline from a close of 3.3969 on June 12th to a low of 3.1275 on June 18th, before recovering to 3.1606 by the close on the 23rd. The sell-off by Managed Money is consistent with this price weakness. The significant short-covering from Commercials suggests they were active buyers during this dip. In the days following the data capture (June 24-26), the price rallied toward 3.28 before settling the week at 3.2017.

Risks and watchpoints

• Washed-Out Speculators: With the Managed Money net long position at a multi-month low (+6,408 contracts), the risk of further aggressive speculative selling may be reduced. This light positioning means there is significant "dry powder" for a sharp short-covering rally should a bullish catalyst emerge.
• Commercial Buying: The reduction of the Commercial net short position to its lowest level in the dataset is a key watchpoint. If this trend of short-covering continues, it removes a major source of structural selling pressure from the market and could provide a strong underlying bid.
• Divergence: The primary tension to watch is the divergence between bearish speculative flows and the increasingly less-bearish commercial positioning. A resolution could be volatile, depending on whether price action validates the spec view (more selling) or the commercial view (a price floor is being established).