Back to COT Dashboard
Market Sentiment
Neutral
Based on the latest 13 weeks of non-commercial positioning data. ℹ️

MINI SING FOB MARINE FUEL 0.5% (Non-Commercial)

13-Wk Max 538 3,192 82 152 -290
13-Wk Min 271 739 -24 -1 -2,883
13-Wk Avg 385 2,096 31 62 -1,711
Report Date Long Short Change Long Change Short Net Position Rate of Change (ROC) ℹ️ Open Int.
December 6, 2022 448 1,100 0 0 -652 -115.18% 2,455
November 22, 2022 538 841 0 0 -303 -4.48% 2,800
November 8, 2022 449 739 0 0 -290 59.50% 2,495
September 27, 2022 456 1,172 0 0 -716 62.92% 3,087
March 1, 2022 407 2,338 67 74 -1,931 -0.36% 4,107
February 22, 2022 340 2,264 28 152 -1,924 -6.89% 3,800
February 15, 2022 312 2,112 0 0 -1,800 22.88% 3,519
February 1, 2022 329 2,663 0 44 -2,334 -1.92% 4,070
January 25, 2022 329 2,619 -24 -1 -2,290 -1.01% 3,948
January 18, 2022 353 2,620 82 42 -2,267 1.73% 3,739
January 11, 2022 271 2,578 0 0 -2,307 19.98% 3,507
December 28, 2021 309 3,192 0 0 -2,883 -13.06% 4,053
November 30, 2021 465 3,015 0 0 -2,550 -13.13% 3,939

Net Position (13 Weeks) - Non-Commercial

Change in Long and Short Positions (13 Weeks) - Non-Commercial

COT Interpretation for FUEL OIL

Comprehensive Guide to COT Reports for Commodity Natural Resources Markets

1. Introduction to COT Reports

What are COT Reports?

The Commitments of Traders (COT) reports are weekly publications released by the U.S. Commodity Futures Trading Commission (CFTC) that show the positions of different types of traders in U.S. futures markets, including natural resources commodities such as oil, natural gas, gold, silver, and agricultural products.

Historical Context

COT reports have been published since the 1920s, but the modern format began in 1962. Over the decades, the reports have evolved to provide more detailed information about market participants and their positions.

Importance for Natural Resource Investors

COT reports are particularly valuable for natural resource investors and traders because they:

  • Provide transparency into who holds positions in commodity markets
  • Help identify potential price trends based on positioning changes
  • Show how different market participants are reacting to fundamental developments
  • Serve as a sentiment indicator for commodity markets

Publication Schedule

COT reports are released every Friday at 3:30 p.m. Eastern Time, showing positions as of the preceding Tuesday. During weeks with federal holidays, the release may be delayed until Monday.

2. Understanding COT Report Structure

Types of COT Reports

The CFTC publishes several types of reports:

  1. Legacy COT Report: The original format classifying traders as Commercial, Non-Commercial, and Non-Reportable.
  2. Disaggregated COT Report: Offers more detailed breakdowns, separating commercials into producers/merchants and swap dealers, and non-commercials into managed money and other reportables.
  3. Supplemental COT Report: Focuses on 13 select agricultural commodities with additional index trader classifications.
  4. Traders in Financial Futures (TFF): Covers financial futures markets.

For natural resource investors, the Disaggregated COT Report generally provides the most useful information.

Data Elements in COT Reports

Each report contains:

  • Open Interest: Total number of outstanding contracts for each commodity
  • Long and Short Positions: Broken down by trader category
  • Spreading: Positions held by traders who are both long and short in different contract months
  • Changes: Net changes from the previous reporting period
  • Percentages: Proportion of open interest held by each trader group
  • Number of Traders: Count of traders in each category

3. Trader Classifications

Legacy Report Classifications

  1. Commercial Traders ("Hedgers"):
    • Primary business involves the physical commodity
    • Use futures to hedge price risk
    • Include producers, processors, and merchants
    • Example: Oil companies hedging future production
  2. Non-Commercial Traders ("Speculators"):
    • Do not have business interests in the physical commodity
    • Trade for investment or speculative purposes
    • Include hedge funds, CTAs, and individual traders
    • Example: Hedge funds taking positions based on oil price forecasts
  3. Non-Reportable Positions ("Small Traders"):
    • Positions too small to meet reporting thresholds
    • Typically represent retail traders and smaller entities
    • Considered "noise traders" by some analysts

Disaggregated Report Classifications

  1. Producer/Merchant/Processor/User:
    • Entities that produce, process, pack, or handle the physical commodity
    • Use futures markets primarily for hedging
    • Example: Gold miners, oil producers, refineries
  2. Swap Dealers:
    • Entities dealing primarily in swaps for commodities
    • Hedging swap exposures with futures contracts
    • Often represent positions of institutional investors
  3. Money Managers:
    • Professional traders managing client assets
    • Include CPOs, CTAs, hedge funds
    • Primarily speculative motives
    • Often trend followers or momentum traders
  4. Other Reportables:
    • Reportable traders not in above categories
    • Example: Trading companies without physical operations
  5. Non-Reportable Positions:
    • Same as in the Legacy report
    • Small positions held by retail traders

Significance of Each Classification

Understanding the motivations and behaviors of each trader category helps interpret their position changes:

  • Producers/Merchants: React to supply/demand fundamentals and often trade counter-trend
  • Swap Dealers: Often reflect institutional flows and longer-term structural positions
  • Money Managers: Tend to be trend followers and can amplify price movements
  • Non-Reportables: Sometimes used as a contrarian indicator (small traders often wrong at extremes)

4. Key Natural Resource Commodities

Energy Commodities

  1. Crude Oil (WTI and Brent)
    • Reporting codes: CL (NYMEX), CB (ICE)
    • Key considerations: Seasonal patterns, refinery demand, geopolitical factors
    • Notable COT patterns: Producer hedging often increases after price rallies
  2. Natural Gas
    • Reporting code: NG (NYMEX)
    • Key considerations: Extreme seasonality, weather sensitivity, storage reports
    • Notable COT patterns: Commercials often build hedges before winter season
  3. Heating Oil and Gasoline
    • Reporting codes: HO, RB (NYMEX)
    • Key considerations: Seasonal demand patterns, refinery throughput
    • Notable COT patterns: Refiners adjust hedge positions around maintenance periods

Precious Metals

  1. Gold
    • Reporting code: GC (COMEX)
    • Key considerations: Inflation expectations, currency movements, central bank buying
    • Notable COT patterns: Commercial shorts often peak during price rallies
  2. Silver
    • Reporting code: SI (COMEX)
    • Key considerations: Industrial vs. investment demand, gold ratio
    • Notable COT patterns: More volatile positioning than gold, managed money swings
  3. Platinum and Palladium
    • Reporting codes: PL, PA (NYMEX)
    • Key considerations: Auto catalyst demand, supply constraints
    • Notable COT patterns: Smaller markets with potentially more concentrated positions

Base Metals

  1. Copper
    • Reporting code: HG (COMEX)
    • Key considerations: Global economic growth indicator, construction demand
    • Notable COT patterns: Producer hedging often increases during supply surpluses
  2. Aluminum, Nickel, Zinc (COMEX/LME)
    • Note: CFTC reports cover U.S. exchanges only
    • Key considerations: Manufacturing demand, energy costs for production
    • Notable COT patterns: Limited compared to LME positioning data

Agricultural Resources

  1. Lumber
    • Reporting code: LB (CME)
    • Key considerations: Housing starts, construction activity
    • Notable COT patterns: Producer hedging increases during price spikes
  2. Cotton
    • Reporting code: CT (ICE)
    • Key considerations: Global textile demand, seasonal growing patterns
    • Notable COT patterns: Merchant hedging follows harvest cycles

5. Reading and Interpreting COT Data

Key Metrics to Monitor

  1. Net Positions
    • Definition: Long positions minus short positions for each trader category
    • Calculation: Net Position = Long Positions - Short Positions
    • Significance: Shows overall directional bias of each group
  2. Position Changes
    • Definition: Week-over-week changes in positions
    • Calculation: Current Net Position - Previous Net Position
    • Significance: Identifies new money flows and sentiment shifts
  3. Concentration Ratios
    • Definition: Percentage of open interest held by largest traders
    • Significance: Indicates potential market dominance or vulnerability
  4. Commercial/Non-Commercial Ratio
    • Definition: Ratio of commercial to non-commercial positions
    • Calculation: Commercial Net Position / Non-Commercial Net Position
    • Significance: Highlights potential divergence between hedgers and speculators
  5. Historical Percentiles
    • Definition: Current positions compared to historical ranges
    • Calculation: Typically 1-3 year lookback periods
    • Significance: Identifies extreme positioning relative to history

Basic Interpretation Approaches

  1. Trend Following with Managed Money
    • Premise: Follow the trend of managed money positions
    • Implementation: Go long when managed money increases net long positions
    • Rationale: Managed money often drives momentum in commodity markets
  2. Commercial Hedging Analysis
    • Premise: Commercials are "smart money" with fundamental insight
    • Implementation: Look for divergences between price and commercial positioning
    • Rationale: Commercials often take counter-trend positions at market extremes
  3. Extreme Positioning Identification
    • Premise: Extreme positions often precede market reversals
    • Implementation: Identify when any group reaches historical extremes (90th+ percentile)
    • Rationale: Crowded trades must eventually unwind
  4. Divergence Analysis
    • Premise: Divergences between trader groups signal potential turning points
    • Implementation: Watch when commercials and managed money move in opposite directions
    • Rationale: Opposing forces creating potential market friction

Visual Analysis Examples

Typical patterns to watch for:

  1. Bull Market Setup:
    • Managed money net long positions increasing
    • Commercial short positions increasing (hedging against higher prices)
    • Price making higher highs and higher lows
  2. Bear Market Setup:
    • Managed money net short positions increasing
    • Commercial long positions increasing (hedging against lower prices)
    • Price making lower highs and lower lows
  3. Potential Reversal Pattern:
    • Price making new highs/lows
    • Position extremes across multiple trader categories
    • Changes in positioning not confirming price moves (divergence)

6. Using COT Reports in Trading Strategies

Fundamental Integration Strategies

  1. Supply/Demand Confirmation
    • Approach: Use COT data to confirm fundamental analysis
    • Implementation: Check if commercials' positions align with known supply/demand changes
    • Example: Increasing commercial shorts in natural gas despite falling inventories could signal hidden supply
  2. Commercial Hedging Cycle Analysis
    • Approach: Track seasonal hedging patterns of producers
    • Implementation: Create yearly overlay charts of producer positions
    • Example: Oil producers historically increase hedging in Q2, potentially pressuring prices
  3. Index Roll Impact Assessment
    • Approach: Monitor position changes during index fund roll periods
    • Implementation: Track swap dealer positions before/after rolls
    • Example: Energy contracts often see price pressure during standard roll periods

Technical Integration Strategies

  1. COT Confirmation of Technical Patterns
    • Approach: Use COT data to validate chart patterns
    • Implementation: Confirm breakouts with appropriate positioning changes
    • Example: Gold breakout with increasing managed money longs has higher probability
  2. COT-Based Support/Resistance Levels
    • Approach: Identify price levels where significant position changes occurred
    • Implementation: Mark price points of major position accumulation
    • Example: Price levels where commercials accumulated large positions often act as support
  3. Sentiment Extremes as Contrarian Signals
    • Approach: Use extreme positioning as contrarian indicators
    • Implementation: Enter counter-trend when positions reach historical extremes (90th+ percentile)
    • Example: Enter long gold when managed money short positioning reaches 95th percentile historically

Market-Specific Strategies

  1. Energy Market Strategies
    • Crude Oil: Monitor producer hedging relative to current term structure
    • Natural Gas: Analyze commercial positioning ahead of storage injection/withdrawal seasons
    • Refined Products: Track seasonal changes in dealer/refiner positioning
  2. Precious Metals Strategies
    • Gold: Monitor swap dealer positioning as proxy for institutional sentiment
    • Silver: Watch commercial/managed money ratio for potential squeeze setups
    • PGMs: Analyze producer hedging for supply insights
  3. Base Metals Strategies
    • Copper: Track managed money positioning relative to global growth metrics
    • Aluminum/Nickel: Monitor producer hedging for production cost signals

Strategy Implementation Framework

  1. Data Collection and Processing
    • Download weekly COT data from CFTC website
    • Calculate derived metrics (net positions, changes, ratios)
    • Normalize data using Z-scores or percentile ranks
  2. Signal Generation
    • Define position thresholds for each trader category
    • Establish change-rate triggers
    • Create composite indicators combining multiple COT signals
  3. Trade Setup
    • Entry rules based on COT signals
    • Position sizing based on signal strength
    • Risk management parameters
  4. Performance Tracking
    • Track hit rate of COT-based signals
    • Monitor lead/lag relationship between positions and price
    • Regularly recalibrate thresholds based on performance

7. Advanced COT Analysis Techniques

Statistical Analysis Methods

  1. Z-Score Analysis
    • Definition: Standardized measure of position extremes
    • Calculation: Z-score = (Current Net Position - Average Net Position) / Standard Deviation
    • Application: Identify positions that are statistically extreme
    • Example: Gold commercials with Z-score below -2.0 often mark potential bottoms
  2. Percentile Ranking
    • Definition: Position ranking relative to historical range
    • Calculation: Current position's percentile within 1-3 year history
    • Application: More robust than Z-scores for non-normal distributions
    • Example: Natural gas managed money in 90th+ percentile often precedes price reversals
  3. Rate-of-Change Analysis
    • Definition: Speed of position changes rather than absolute levels
    • Calculation: Weekly RoC = (Current Position - Previous Position) / Previous Position
    • Application: Identify unusual accumulation or liquidation
    • Example: Crude oil swap dealers increasing positions by >10% in a week often signals institutional flows

Multi-Market Analysis

  1. Intermarket COT Correlations
    • Approach: Analyze relationships between related commodity positions
    • Implementation: Create correlation matrices of trader positions across markets
    • Example: Gold/silver commercial positioning correlation breakdown can signal sector rotation
  2. Currency Impact Assessment
    • Approach: Analyze COT data in currency futures alongside commodities
    • Implementation: Track correlations between USD positioning and commodity positioning
    • Example: Extreme USD short positioning often coincides with commodity long positioning
  3. Cross-Asset Confirmation
    • Approach: Verify commodity COT signals with related equity or bond positioning
    • Implementation: Compare energy COT data with energy equity positioning
    • Example: Divergence between oil futures positioning and energy equity positioning can signal sector disconnects

Machine Learning Applications

  1. Pattern Recognition Models
    • Approach: Train models to identify historical COT patterns preceding price moves
    • Implementation: Use classification algorithms to categorize current positioning
    • Example: Random forest models predicting 4-week price direction based on COT features
  2. Clustering Analysis
    • Approach: Group historical COT data to identify common positioning regimes
    • Implementation: K-means clustering of multi-dimensional COT data
    • Example: Identifying whether current gold positioning resembles bull or bear market regimes
  3. Predictive Modeling
    • Approach: Create forecasting models for future price movements
    • Implementation: Regression models using COT variables as features
    • Example: LSTM networks predicting natural gas price volatility from COT positioning trends

Advanced Visualization Techniques

  1. COT Heat Maps
    • Description: Color-coded visualization of position extremes across markets
    • Application: Quickly identify markets with extreme positioning
    • Example: Heat map showing all commodity markets with positioning in 90th+ percentile
  2. Positioning Clock
    • Description: Circular visualization showing position cycle status
    • Application: Track position cycles within commodities
    • Example: Natural gas positioning clock showing seasonal accumulation patterns
  3. 3D Surface Charts
    • Description: Three-dimensional view of positions, price, and time
    • Application: Identify complex patterns not visible in 2D
    • Example: Surface chart showing commercial crude oil hedger response to price changes over time

8. Limitations and Considerations

Reporting Limitations

  1. Timing Delays
    • Issue: Data reflects positions as of Tuesday, released Friday
    • Impact: Significant market moves can occur between reporting and release
    • Mitigation: Combine with real-time market indicators
  2. Classification Ambiguities
    • Issue: Some traders could fit in multiple categories
    • Impact: Classification may not perfectly reflect true market structure
    • Mitigation: Focus on trends rather than absolute values
  3. Threshold Limitations
    • Issue: Only positions above reporting thresholds are included
    • Impact: Incomplete picture of market, especially for smaller commodities
    • Mitigation: Consider non-reportable positions as context

Interpretational Challenges

  1. Correlation vs. Causation
    • Issue: Position changes may reflect rather than cause price moves
    • Impact: Following positioning blindly can lead to false signals
    • Mitigation: Use COT as confirmation rather than primary signal
  2. Structural Market Changes
    • Issue: Market participant behavior evolves over time
    • Impact: Historical relationships may break down
    • Mitigation: Use adaptive lookback periods and recalibrate regularly
  3. Options Positions Not Included
    • Issue: Standard COT reports exclude options positions
    • Impact: Incomplete view of market exposure, especially for hedgers
    • Mitigation: Consider using COT-CIT Supplemental reports for context
  4. Exchange-Specific Coverage
    • Issue: Reports cover only U.S. exchanges
    • Impact: Incomplete picture for globally traded commodities
    • Mitigation: Consider parallel data from other exchanges where available

Common Misinterpretations

  1. Assuming Commercials Are Always Right
    • Misconception: Commercial positions always lead price
    • Reality: Commercials can be wrong on timing and magnitude
    • Better approach: Look for confirmation across multiple signals
  2. Ignoring Position Size Context
    • Misconception: Absolute position changes are what matter
    • Reality: Position changes relative to open interest provide better context
    • Better approach: Normalize position changes by total open interest
  3. Over-Relying on Historical Patterns
    • Misconception: Historical extremes will always work the same way
    • Reality: Market regimes change, affecting positioning impact
    • Better approach: Adjust expectations based on current volatility regime
  4. Neglecting Fundamental Context
    • Misconception: COT data is sufficient standalone
    • Reality: Positioning often responds to fundamental catalysts
    • Better approach: Integrate COT analysis with supply/demand factors

Integration into Trading Workflow

  1. Weekly Analysis Routine
    • Friday: Review new COT data upon release
    • Weekend: Comprehensive analysis and strategy adjustments
    • Monday: Implement new positions based on findings
  2. Framework for Position Decisions
    • Primary signal: Identify extremes in relevant trader categories
    • Confirmation: Check for divergences with price action
    • Context: Consider fundamental backdrop
    • Execution: Define entry, target, and stop parameters
  3. Documentation Process
    • Track all COT-based signals in trading journal
    • Record hit/miss rate and profitability
    • Note market conditions where signals work best/worst
  4. Continuous Improvement
    • Regular backtest of signal performance
    • Adjustment of thresholds based on market conditions
    • Integration of new data sources as available

Case Studies: Practical Applications

  1. Natural Gas Winter Strategy
    • Setup: Monitor commercial positioning ahead of withdrawal season
    • Signal: Commercial net long position > 70th percentile
    • Implementation: Long exposure with technical price confirmation
    • Historical performance: Positive expectancy during 2015-2023 period
  2. Gold Price Reversal Strategy
    • Setup: Watch for extreme managed money positioning
    • Signal: Managed money net short position > 85th percentile historically
    • Implementation: Contrarian long position with tiered entry
    • Risk management: Stop loss at recent swing point
  3. Crude Oil Price Collapse Warning System
    • Setup: Monitor producer hedging acceleration
    • Signal: Producer short positions increasing by >10% over 4 weeks
    • Implementation: Reduce long exposure or implement hedging strategies
    • Application: Successfully flagged risk periods in 2014, 2018, and 2022

By utilizing these resources and implementing the strategies outlined in this guide, natural resource investors and traders can gain valuable insights from COT data to enhance their market analysis and decision-making processes.

Market Neutral
Based on the latest 13 weeks of non-commercial positioning data.
📊 COT Sentiment Analysis Guide

This guide helps traders understand how to interpret Commitments of Traders (COT) reports to generate potential Buy, Sell, or Neutral signals using market positioning data.

🧠 How It Works
  • Recent Trend Detection: Tracks net position and rate of change (ROC) over the last 13 weeks.
  • Overbought/Oversold Check: Compares current net positions to a 1-year range using percentiles.
  • Strength Confirmation: Validates if long or short positions are dominant enough for a signal.
✅ Signal Criteria
Condition Signal
Net ↑ for 13+ weeks AND ROC ↑ for 13+ weeks AND strong long dominance Buy
Net ↓ for 13+ weeks AND ROC ↓ for 13+ weeks AND strong short dominance Sell
Net in top 20% of 1-year range AND net uptrend ≥ 3 Neutral (Overbought)
Net in bottom 20% of 1-year range AND net downtrend ≥ 3 Neutral (Oversold)
None of the above conditions met Neutral
🧭 Trader Tips
  • Trend traders: Follow Buy/Sell signals when all trend and strength conditions align.
  • Contrarian traders: Use Neutral (Overbought/Oversold) flags to anticipate reversals.
  • Swing traders: Use sentiment as a filter to increase trade confidence.
Example:
Net positions rising, strong long dominance, in top 20% of historical range.
Result: Neutral (Overbought) — uptrend may be too crowded.
  • COT data is delayed (released on Friday, based on Tuesday's positions) - it's not real-time.
  • Combine with price action, FVG, liquidity, or technical indicators for best results.
  • Use percentile filters to avoid buying at extreme highs or selling at extreme lows.

Okay, let's break down a potential trading strategy for the MINI SING FOB MARINE FUEL 0.5% futures contract, focusing on the Commitments of Traders (COT) report, geared towards retail traders and market investors. I'll outline a strategy considering the contract specifics and the information available in the COT report.

I. Understanding the Context: MINI SING FOB MARINE FUEL 0.5% & the COT Report

  • What is MINI SING FOB MARINE FUEL 0.5%? This is a futures contract based on the price of marine fuel oil with a sulfur content of 0.5% as delivered Free On Board (FOB) in Singapore and traded on the New York Mercantile Exchange (NYME). This is particularly relevant to the shipping industry. Fuel oil is used to power cargo ships and other large vessels.
  • Contract Units: Each contract represents 100 metric tons of fuel oil.
  • CFTC Market Code: NYME indicates this contract is traded on the NYMEX division of the CME Group.
  • Significance for Traders: Marine fuel is influenced by various factors, including crude oil prices, refining margins, shipping activity, seasonal demand, geopolitical events, and environmental regulations.
  • The Commitments of Traders (COT) Report:
    • Published by: The Commodity Futures Trading Commission (CFTC).
    • Frequency: Typically released weekly (Tuesdays or Fridays, depending on the report type and reporting schedule).
    • What it Shows: Aggregated positions of different trader categories in futures markets. Crucially, it shows the holdings of:
      • Commercial Traders (Hedgers): Entities who use futures to hedge their underlying business risks (e.g., oil refiners, shipping companies needing to secure fuel prices). They are generally considered to be the most knowledgeable about the physical market.
      • Non-Commercial Traders (Large Speculators): Hedge funds, commodity trading advisors (CTAs), and other large investors who are trading for profit.
      • Small Speculators (Retail Traders): Often inferred from the difference between total open interest and the reported positions of Commercial and Non-Commercial traders.
    • Key Data Points to Watch:
      • Net Positions: The difference between long and short positions for each trader category. A positive net position indicates a bullish outlook, while a negative net position indicates a bearish outlook.
      • Changes in Positions: The week-over-week change in net positions. This can reveal shifts in sentiment.
      • Open Interest: The total number of outstanding contracts. Rising open interest generally validates a trend, while falling open interest may suggest a weakening trend.

II. Trading Strategy Based on the COT Report for MINI SING FOB MARINE FUEL 0.5%

A. Core Principles:

  1. Follow the Smart Money (Commercials): The general assumption is that commercials (hedgers) have superior knowledge of the underlying physical market. Their actions are often driven by fundamental supply and demand factors.
  2. Confirm with Technical Analysis: Use technical analysis to identify specific entry and exit points and to confirm the signals from the COT report.
  3. Manage Risk: Implement strict stop-loss orders and manage position size to limit potential losses.
  4. Consider Market Fundamentals: The COT report provides valuable sentiment information, but it's essential to be aware of the underlying market drivers (oil prices, refinery margins, shipping costs, geopolitical events, etc.).
  5. Understand Contract Specifications: Be aware of the contract size (100 metric tons), tick size, and delivery specifications.

B. Specific Trading Strategy Steps:

  1. COT Data Acquisition:

    • Download the relevant COT report from the CFTC website. Focus on the disaggregated report, which provides more detail. Make sure you are looking at the correct contract (MINI SING FOB MARINE FUEL 0.5% - NEW YORK MERCANTILE EXCHANGE). You can also access COT data through various financial data providers (Bloomberg, Reuters, etc.) or charting platforms (TradingView, etc.).
    • Create a spreadsheet to track the net positions of Commercials, Non-Commercials, and Open Interest over time.

  2. COT Signal Generation:

    • Commercial Net Position as the Primary Indicator:
      • Bullish Signal: A significant increase in the net long position of Commercials, especially after a period of net short positioning, might suggest that they anticipate rising fuel oil prices (or at least reduced downside risk) due to hedging needs.
      • Bearish Signal: A significant increase in the net short position of Commercials, especially after a period of net long positioning, might suggest they anticipate falling fuel oil prices (or at least reduced upside potential) due to hedging needs.
      • Extreme Positions: Consider "extreme" net positions (historically high or low levels) for Commercials as potential reversal signals.
    • Non-Commercial Confirmation (Secondary):
      • Confirmation: If Non-Commercials are moving in the same direction as Commercials (both increasing net long or net short), it strengthens the signal.
      • Contradiction: If Non-Commercials are moving in the opposite direction of Commercials, it creates a mixed signal and requires more caution. In some cases, this can be a contrarian indicator, where the Commercials are ultimately right and the Non-Commercials are wrong, but this is not always the case.
    • Open Interest:
      • Rising Open Interest: Confirms the strength of the prevailing trend. If Commercials are increasing net long positions, and Open Interest is also rising, it suggests strong buying pressure.
      • Falling Open Interest: May indicate a weakening trend or a potential reversal.

  3. Technical Analysis Confirmation:

    • Trend Identification: Use trendlines, moving averages (e.g., 50-day, 200-day), and other technical indicators to determine the overall trend of MINI SING FOB MARINE FUEL 0.5% prices.
    • Support and Resistance Levels: Identify key support and resistance levels on the price chart.
    • Chart Patterns: Look for chart patterns (e.g., head and shoulders, double tops/bottoms, triangles) that may confirm the COT signal.
    • Oscillators: Use oscillators like RSI (Relative Strength Index) and MACD (Moving Average Convergence Divergence) to identify overbought or oversold conditions and potential divergences.

  4. Entry and Exit Points:

    • Long Entry:
      • COT Signal: Commercials increasing net long positions + Non-Commercials confirming (ideally).
      • Technical Confirmation: Price breaking above a key resistance level, a bullish chart pattern, or a positive crossover on an oscillator.
      • Entry Point: Buy near the breakout level or after a pullback to support.
    • Short Entry:
      • COT Signal: Commercials increasing net short positions + Non-Commercials confirming (ideally).
      • Technical Confirmation: Price breaking below a key support level, a bearish chart pattern, or a negative crossover on an oscillator.
      • Entry Point: Sell near the breakdown level or after a rally to resistance.
    • Stop-Loss Orders: Place stop-loss orders below a recent swing low for long positions and above a recent swing high for short positions. The placement should be based on your risk tolerance and the volatility of the market.
    • Profit Targets: Set profit targets based on technical analysis (e.g., distance to the next resistance level for longs, distance to the next support level for shorts) or based on a multiple of your initial risk (e.g., a 2:1 or 3:1 risk-reward ratio).
    • Trailing Stops: Consider using trailing stops to lock in profits as the trade moves in your favor.

  5. Risk Management:

    • Position Sizing: Never risk more than 1-2% of your trading capital on any single trade. Calculate your position size based on the distance between your entry point and your stop-loss order.
    • Diversification: Don't put all your capital into a single commodity. Diversify your portfolio across different markets and asset classes.
    • Leverage: Use leverage cautiously. Futures contracts have inherent leverage. Be aware of the margin requirements and the potential for magnified losses.
    • Stay Informed: Keep abreast of news and events that could impact the marine fuel oil market, such as changes in oil prices, shipping rates, refinery outages, and geopolitical developments.

  6. Example Scenario:

    • Scenario: The COT report shows that Commercials have significantly increased their net long positions in MINI SING FOB MARINE FUEL 0.5% over the past few weeks. At the same time, the price chart shows that the price has broken above a key resistance level and is trending upward.
    • Action: Consider entering a long position, placing a stop-loss order below the recent swing low, and setting a profit target near the next resistance level.

III. Important Considerations for Retail Traders and Market Investors

  • Data Latency: The COT report is released with a delay. The data reflects positions as of the previous Tuesday. By the time you see the report, market conditions may have changed.
  • Interpretation is Key: The COT report is just one piece of the puzzle. It's important to use it in conjunction with other forms of analysis.
  • Commercials Can Be Wrong: While commercials are generally considered to be the "smart money," they are not always right. Their hedging decisions are based on their specific business needs, which may not always align with the overall market direction.
  • Market Volatility: The marine fuel oil market can be volatile, especially in times of geopolitical uncertainty or economic disruption.
  • Transaction Costs: Consider brokerage fees and commissions when evaluating the profitability of a trade.
  • Know Your Risk Tolerance: Understand your own risk tolerance and only trade with capital you can afford to lose.
  • Continuous Learning: The markets are constantly evolving. Stay up-to-date on the latest news, trends, and trading techniques.

IV. Disclaimer

  • This is a general trading strategy for informational purposes only. It is not financial advice. Trading futures involves substantial risk of loss, and you should consult with a qualified financial advisor before making any investment decisions. The past performance of any trading strategy is not indicative of future results. I cannot guarantee profits from this strategy.

In summary, a COT-based trading strategy for MINI SING FOB MARINE FUEL 0.5% focuses on tracking the net positions of Commercials, confirming with technical analysis, managing risk effectively, and staying informed about the underlying market fundamentals. Remember to approach the market with caution and to always use a well-defined trading plan.