Oil users suggest crude could tumble

Traders in oil contracts have signalled that they expect the price of crude to fall.

While most commodities have struggled this year, oil has been resilient. Prices eased slightly since February on the back of weaker global growth and fewer geopolitical tensions, but with Brent crude trading at almost $110 a barrel this week, they remain relatively high by historical standards.

Can this surprising strength continue? Probably not, suggests Steve Briese, who writes the Bullish Review of Commodity Insiders, a market-timing newsletter. Briese points to recent trends in the Commodity Futures Trading Commission's weekly Commitment of Traders (COT) report, which summarises the net positions held by futures traders in America. Right now it shows commercial traders producers and users of oil have record net short positions, offset by record long positions held by speculators.

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