Is oil’s reckoning day finally coming?
The market has taken on a distinct chill…with funds looking to sell oil futures outnumbering those seeking to buy for the first time since early 2007, and most of the long-term money betting that oil prices will continue to sink.
Perhaps the best glimpse of the changed sentiment can be seen in traders' prices for oil far into the future. In late May, contracts reaching out to 2016 were all selling for more than the then-current price, which was around $130 a barrel. That trend held until the middle of this month.
The curve has since sharply reversed, so that contracts for oil four or five years from now are going for less than the current price. Trading on the Nymex has tilted toward short sellers, or those betting that prices will go down, according to the most recent report by the Commodity Futures Trading Commission.