Heating Oil (NY HARBOR ULSD) COT Brief: Week Ending 2026-07-24

Executive summary

In the week ending July 24, 2026, positioning in Heating Oil futures saw speculators increase their bullish bets while commercial hedgers remained heavily net short. Managed Money extended their net long position, driven primarily by significant short-covering as prices rallied during the reporting period. Commercials (Producers/Merchants) slightly trimmed their massive net short hedge, though they remain the dominant short-side force. Overall market participation, as measured by Open Interest, contracted modestly, continuing a multi-month decline to the lowest levels seen in the provided data, suggesting a potential lack of broad conviction despite the recent price strength.

Positioning (net, extremes vs recent weeks)

• Managed Money: The speculative net long position increased to +13,381 contracts. This is up from +10,705 contracts last week but remains well below the peak net long of over +24,000 contracts seen in February.
• Producer/Merchant (Commercials): Maintained a very large net short position of -76,578 contracts. This is a slight reduction from last week's -74,824 net short but still represents a significant hedge against higher prices and is near the largest short exposure seen over the last several months.
• Swap Dealers: Held a substantial net long position of +42,682 contracts, largely unchanged from the prior week. This group continues to absorb a significant portion of the commercial short interest.

Flows and week-over-week changes

The reporting week was characterized by speculative buying and commercial selling, with a net reduction in overall market participation. - Managed Money was the primary net buyer, adding +2,676 contracts to their net long position. This was composed of modest new longs (+362 contracts) but dominated by aggressive short-covering (-2,314 contracts). - Producer/Merchants were net sellers of -1,754 contracts. Their activity involved liquidating both long positions (-5,034 contracts) and short positions (-3,280 contracts), with the larger reduction in longs driving the net change. - Swap Dealers were marginal net buyers of +253 contracts, adding both long (+1,338) and short (+1,085) positions.

Commercials vs speculators

The classic positioning dynamic remains firmly in place, with commercials heavily short and speculators net long. - Commercial short positions of 124,547 contracts dwarf their long positions of 47,969. As a percentage of total open interest, commercial shorts account for a commanding 48.0%, underscoring their role as the market's primary hedgers. - Managed Money's net long position of +13,381 contracts provides the main speculative counterweight. However, the size of the Commercial net short is so substantial that Swap Dealers (+42,682 net long) and Non-reportable traders (+24,182 net long) are required to balance the market.

Open interest and participation

• Total Open Interest declined by 3,639 contracts to 259,203, the lowest level in the provided dataset which extends back to late 2025. This continued slide from highs above 380,000 contracts in January-February suggests capital is leaving the market, which can sometimes undermine the sustainability of a price trend.
• The total number of traders also fell to 165, down from over 200 earlier in the year, reinforcing the theme of declining participation.
• Concentration levels are moderate. The four largest traders account for 13.5% of the net short side and 10.1% of the net long side.

Price context

The price of the front-month contract moved higher during the reporting period (from the close of July 17 to July 24). The closing price rose from $4.0779 on July 17 to $4.177 on July 24. - The Managed Money activity is consistent with this bullish price action. The significant covering of 2,314 short contracts suggests that rising prices forced some speculators to abandon their bearish bets, contributing to the upward momentum. - The reduction of long hedges by Commercials (-5,034 contracts) can be interpreted as them selling into strength, taking advantage of higher prices to lock in hedges.

Risks and watchpoints

• Fading Participation: The most significant watchpoint is the steadily declining Open Interest. A healthy, sustainable bull market is typically accompanied by rising OI as new buyers enter. The current environment of rising prices on falling OI could indicate a fragile rally driven more by short-covering than new conviction buying.
• Managed Money Positioning: While the net long has increased, at +13,381 contracts it is far from stretched compared to levels seen earlier in the year. This suggests speculators have the capacity to add to bullish positions if fundamental or technical factors provide a catalyst. The key will be a shift from short-covering to fresh long initiation.
• Commercial Hedge Wall: The very large Producer/Merchant net short position of -76,578 contracts represents a significant wall of potential selling. These hedgers may increase their short positions on any further price rallies, which could cap upside potential.