Not what he owns, but how he reads it: confirm physical tightness from delivery premiums rather than futures prices; test whether a rally is crowded with gross long / total gross instead of net length; compare today's positioning with what it looked like at past highs at the same price; and read vol term structure and skew for what the market is refusing to price.
How to read this page: each insight is a method — the data you pull, the diagnostic question, and the signal to watch when re-running it. The boxed line shows how it played out in this post. It extends the positioning framework of
Sep-12; the gross-long ratio is new. (Written post — no timestamps; the charts are not captured.)
1. Confirm physical tightness from the delivery market, not the futures price
The repeatable method
- Check the sour-vs-sweet spread (Dubai swaps over Brent, 2nd month — the 1st is noisy): a sticky bid = physical buyers still scrambling.
- Check Dated Brent (prompt physical) premiums against past crisis peaks.
- Check the marginal buyer: Shanghai futures vs landed China barrels. A flip to discount is the "China is out" warning.
- Check curve shape and belly timespreads: steep backwardation = the market paying to pull oil out of storage.
- If price dips but all four hold, treat the dip as positioning, not fundamentals.
Here:
Oil pulled back from ~$105, yet Dubai/Brent stayed bid, Dated Brent premiums sat above the 2022 peak, landed China barrels stayed bid (no May-style discount) and the curve stayed "intensely backwardated," with SPR releases capped near 400kbpd.
Watch for
- Landed China barrels flipping to discount; Dated Brent premiums collapsing; timespreads flattening.
2. Gauge crowding with gross long / (gross long + gross short)
The repeatable method
- Pull COT/ICE managed-money gross longs and gross shorts (futures + options) for both benchmarks and combine them.
- Compute gross long as a % of total gross. Net length hides how big both sides are; this ratio shows whether shorts are still leaning on a rally.
- Compare with the ratio at prior major highs (here >85% in March 2026 and 2022).
- Check the gross short in absolute terms against past $100+ episodes (normally <100k contracts).
- Repeat with other reportables + non-reportables to see whether prop and small traders are more or less committed than institutions.
Here:
Managed-money ratio 77% vs >85% at real highs; gross short "far too big" for $100+ oil; the broader speculator ratio "even more depressed" — "The most motivated buyer is the covering short seller."
Watch for
- The ratio climbing toward 85% (longs recommitting) or the gross short dropping below ~100k contracts (the covering fuel spent).
3. Condition positioning on price level, and ask what a top usually looks like
The repeatable method
- Regress the positioning ratio against price over a decade; locate today's point among past observations at the same price.
- If today is an outlier (much less long than usual at this price), the move is not crowded.
- Split notional exposure (contracts × price) into the contract change and the price change: rising notional driven by price alone = no new commitment.
- Compare net length at this "high" with every major high of the past decade.
Here:
Above $100 the ratio "has only been this low once — last week"; WTI spec net long below every major high including the 2023-25 bear market, so a top now would come at "the lowest net long (for a 'high') in over ten years."
Watch for
- The contract side of notional starting to rise (fresh money, not just price).
4. Read vol term structure and skew for the risk the market refuses to price
The repeatable method
- Track 1m ATM vol, the 1m-minus-3m ATM spread and 1m/3m skew.
- List dated catalysts inside the 1m window (elections, geopolitical deadlines).
- A spread at its lows and flat skew into a known catalyst = near-dated convexity is cheap; buy it rather than the underlying.
- Run the same check on other markets — the equity version uses QQQ 1m vs 3m ATM vol.
Here:
Brent 1m-3m spread back to June-July lows (oil then $72-78) and skew resetting lower six weeks before the midterms ("Iran is never gonna really send it, are they?"); QQQ 1M vol ~16.6 with the 1M-3M spread at −3.1, a two-year low.
Watch for
- Skew and the 1m-3m spread turning up; a vol pickup that forces the flat price to reprice.
5. Cross-check the data with the traders you know
The repeatable method
- Ask people who were very long a few months ago whether they are bigger, the same, or smaller now.
- If the answers match the positioning data (smaller), treat it as confirmation that the rally lacks committed longs.
Here:
"Oil bulls got massacred by Trump… and the market is under-committed just at a time when physical buffers have thinned."
Watch for
- Former bulls re-sizing; the anecdote flipping to "bigger" means the fuel is being used.
Methods distilled from the PauloMacro Substack paid post of 2026-SEP-19 for personal study. Not investment advice.