Title:   Positioning in Oil and Nasdaq Is All Wrong
Show:    PauloMacro's Substack (paulomacro.substack.com) — paid post
Guest:   Paulo (pseudonymous, aka Cloudbear) — author
Date:    2026-09-19
URL:     https://paulomacro.substack.com/p/positioning-in-oil-and-nasdaq-is
Length:  written post (~1,300 words, ~15 charts) — no timestamps
Note:    Paid post read via Stephen's logged-in Chrome; byline SEP 19, 2026 (API post_date 2026-09-20T03:54Z UTC). Text saved verbatim. The ~15 charts (Dubai-Brent 2nd-month swap, Dated Brent physical premium, Shanghai crude vs landed China barrels, Brent curve/timespreads, oil implied/realized vol, Brent ATM vol 1m-3m spread and 1m/3m skew, spec contracts x price notional, Brent managed money net long % of OI, WTI non-commercial net long, Brent+WTI managed money gross long/short, gross long % of total gross + regression vs price, the same widened to other reportables + non-reportables, and the closing QQQ options chart) are images; only the closing QQQ chart is transcribed below (in brackets). The post follows up his Sep-12 "The Second Mouse Is About to Get the Cheese" (../2026-sep-12/).

Last weekend in The Second Mouse Is About to Get the Cheese, I wrote about how investors were fading the recent oil rally into some short covering, and that the lift in oil from $85 to $105 so far this month felt different from the speculative jam higher back in March-April. With the correction of the past few days, I want to briefly elaborate on this in charts using an approach I have not shared before that confirms many investors have cut or lost their position (and faded the rally), and end with an interesting highlight on the Nasdaq.

First, on the physical side, we all know how tight the market is regardless of the occasional jail breaks out of Hormuz and the pretty consistent hum of leakage (~9mmbpd currently). Dubai swaps over Brent in the 2nd month (1st month is noisy) remains sticky bid:

And while physical players were scrambling for cargos recently, the recent back-off in price still has Dated Brent for immediate delivery trading at premiums above the worst of the Russia-Ukraine onset in 2022:

Oil futures in Shanghai went crazy earlier this week and have since corrected, but still trade at a premium. Perhaps the “home team” clamped down on speculation, but landed barrels in China are still notably bid (white line). The warning sign that China was out of the market was a flip to discount in May — that’s not happening (yet):

In the meantime, the oil curve remains intensely backwardated and timespreads (particularly in the belly past 3 months) are seeing roll returns that are fanning speculation of further SPR loan releases (but aren’t those loans expected to start paybacks in a few months? And how is that supposed to work when releases have slowed to 400kbpd due to physics?). In short, the market is screaming at the world to bring any and all crude out of storage:

Then on the financial side of the market, I flagged this chart of oil volatility last week. Realized and implied volatility remains unusually depressed… what happens to the flat price if oil vol picks up?

Even more unusual are some of the vol relationships. For instance, while ATM vol (orange) has drifted somewhat higher since early July, the spread between 1m and 3m ATM vol in Brent is pretty much back to the lows of June-July when the flat price was last in the $72-78 range. Meanwhile 1m and 3m options skew keeps resetting back down even as the oil price trends higher:

The lack of skew in 1mth options is particularly surprising to me given the importance of the midterms which are just over 6 weeks out. Almost like the market thinks “Iran is never gonna really send it, are they?”

Meanwhile, positioning in futures and options is astounding me. I like to look at contracts x flat price as a proxy for $ notional (it’s not perfect, as not every speculative contract is in the front month), and you can see that far too much of the notional $ increase in speculative hands is being handled by the price rally rather than the contract side of the ledger:

Brent managed money net long as a % of open interest has quite a bit to go before revisiting the March highs, and is very far form 2017-18 levels:

And in WTI for instance, I continue to flag the net long positioning of futures and options by non-commercials (speculators) sitting well below not just the March highs, but even all the major highs of the past decade including the 2023-25 bear market period:

In other words, if there is another “big high” at hand, it would be happening at the lowest net long (for a “high”) in over ten years. This is simply not what positioning looks like at a significant high.

There is another way to look at positioning. A good buddy — let’s call him “The Gnome in Zug” — likes to look at gross long and short positions of managed money in isolation, and then look at the gross long as a % of the gross long+short (total gross). The combined Brent and WTI futures + options managed money gross short position (red, inverted on Y axis) remains outsized — far too big — in relation to >$100 oil moments in the past, where the managed money short would normally be below 100k contracts at this point. Meanwhile the gross long managed money position (green) is off the highs of March and well off the highs of 2021 or 2018:

If you look at the same Brent+WTI combined futures and options managed money longs divided by longs+shorts (the oil managed money gross long divided by the total gross), you can see that the 77% ratio should normally be north of 85% if we were at a “big high” — we are still quite a ways from that level see in March or 2022:

A regression analysis gets noisy, but shows you that the long/(long+short) ratio charted above is “out of bounds” vs. similar points in the oil price. When the oil price was above $100 (right side of the X axis), the gross long as a % of total gross has only been this low once — last week:

If we then expand the speculative category to include managed money + other reportables (non-commercials that don’t run external money, ie prop traders, single family offices, size individuals etc) + non-reported (small # contract traders) across Brent and WTI, we see the gross long as a % of long+short total gross is even more depressed:

In other words, small fry traders and prop shops are even less committed to the long side of the market. Again, while a regression may look like a blob of noise, notice just how out of bounds the current long as a % of total gross is vs. what it normally is when oil is above $100. In other words, there is far too much short gross in relation to total gross in the overall oil book:

The difference between the two regressions tells you that in comparison to other periods when oil was above $100 in the past decade, institutional managed money is under-committed to the long side, and prop/retail/small money is even less committed.

Now ask around to your buddies who were really long several months ago…ask them if they are bigger, the same, or smaller today. It’s not a knock… it’s just what the data is saying what we all quietly know privately. Oil bulls got massacred by Trump (and The Force — let’s leave it at that), and the market is under-committed just at a time when physical buffers have thinned and the geopolitical environment has rarely been this unstable.

Look, I’m not saying oil has to roof. But I am saying that the current positioning is not what we see at tops… the physical market is incredibly tight, and speculators are not positioned to reflect this because they got destroyed and have not recommitted to the market — yet. The gross short is too big given where oil prices are, and this is a dangerous setup in the context of the obvious geopolitical risks directly in front of us (not just Iran, but also Russia) along with the midterm calendar timing. If the market were to be given another reason to tighten further on some sort of escalation, the decline in futures liquidity could create a real move.

The most motivated buyer is the covering short seller.

As an aside but not totally unrelated, I figured why not look at the options profile in the Nasdaq after all the chaos this week. This is incredible to me, so I will just leave this here without further comment.

[Chart image — QQQ, Nov-2024 to Sep-2026 (Bloomberg). Series: QQQ price (L1) 721.45; QQQ 1M ATM implied vol (R1) 16.5666; QQQ 1M ATM vol minus QQQ 3M ATM vol (R2) -3.1441. The 1M-3M term spread sits at the lowest level on the whole chart (below the Dec-2024 and Dec-2025 troughs near -3), while 1M ATM vol has slid from ~28 in late July to ~16.6 with QQQ near its highs (~720; peak ~745 in late May). For contrast, the spread spiked to ~+9 and 1M vol to ~46 in the April 2025 selloff.]

Stay. Frosty.

As always, kindly yours,

Paulo aka Cloudbear