Haymaker Daily Why Oil May Soon Hit Bottom (along with storage tanks around the world) Haymaker — Jun 30, 2026 — Paid
Hello, Haymakers:
In the Haymaker view of the commodity markets, the ultimate test of a chart such as the one below, on open interest in the oil futures market, is what happens after extreme points are hit. Looking back, the huge spikes in this measure in late 2016 and 2019 did, indeed, prefigure sharp drops, especially in the latter instance. Of course, the pandemic played a massive role in the early-2020 price crash.
[Chart: 10-Year Chart of Open Interest on West Texas Intermediate (WTI) Oil Futures — Bloomberg] [Chart: 10-Year Price Chart of West Texas Intermediate (WTI) Futures Contract — Bloomberg]
More interesting (pun intended) might be the times when open interest fell to exceedingly low levels. Unsurprisingly, the first was during the pandemic lockdowns when the futures price for oil went deeply negative due to lack of storage for the unconsumed barrels. A more realistic bottom was the June 2020 contract which troughed around positive $18. Even using that as a base, crude more than quadrupled to $90 over the next 18 months. As you can see above, by the end of 2021, it had retreated back down around $60.
Remarkably, open interest declined almost as much as it had during the pandemic panic. Oil then exploded to $120 due to Russia's invasion of Ukraine. But once that effect wore off, it again plunged in price, hitting $70 later in 2022 with open interest crashing to even lower lows than during the pandemic. This precipitated another strong rally, with it hitting $90 less than a year later, in the fall of 2023.
More to the point of this Haymaker Daily, open interest is now back down around the Covid nadir which is astounding given this is the worst supply shortage ever seen. It's also mind-boggling that prices have plummeted to $70 despite the mammoth inventory drawdown that has occurred this year. This is yet another reason to expect an oil price spike to occur in the months ahead. (Other supporting technical factors are the high level of bearishness among futures speculators, as noted last week, and the largest short position ever on the main oil ETF, USO.)
As energy expert John Kemp observed yesterday, bullish vs bearish positions are among the lowest on record over the past 15 years.
He further made this important point:
"Most of these short positions will eventually have to be repurchased, creating a considerable reservoir of potential future buying and upward pressure on prices."
This will be colliding with the planet's largest nations — and many smaller ones, like Pakistan — needing to replenish, or establish, strategic petroleum reserves.
The Haymaker Team