The US oil market is witnessing a notable shift in investor and speculator sentiment, with recent indicators showing a widespread collective withdrawal from long positions due to rising concerns about oversupply and the diminishing effectiveness of geopolitical factors in supporting prices. Bloomberg notes that this withdrawal is not temporary but marks the lowest net long positions in sixteen years, reflecting growing pessimism about near-term price prospects. Data from the US Commodity Futures Trading Commission revealed that net long contracts for West Texas Intermediate crude fell by about 29,562 contracts in the week ending August 12, reaching a total of only 49,264 contracts, the lowest level since 2009 following the global financial crisis.

This significant decline in investment positions coincides with futures prices dropping to nearly two-month lows, reinforcing the hypothesis that the market is returning to the fundamentals of supply and demand, with reduced impact from external factors, especially sanctions on Russia, which had supported prices since the outbreak of the Ukraine war. Analysts at TD Securities noted that the market is now relatively indifferent to geopolitical risks related to the Russia-Ukraine conflict, pointing out that Russian oil flows have not yet faced significant disruption and Western sanctions have not substantially prevented Russian barrels from reaching the global market. The report adds that weak fundamentals in the coming months, combined with any signs of demand weakness, may mean that oil prices have not yet bottomed out.

Observers also note that the recent meeting between US President Donald Trump and Russian President Vladimir Putin did not send harsher signals regarding Russian energy exports but rather seemed like an attempt to ease tensions, which increased market comfort and reduced the likelihood of punitive measures that could reduce supply. This decline occurs amid global market uncertainty, with the Chinese economy — one of the largest oil consumers globally — slowing down, while demand levels in Europe remain volatile due to energy crises and industrial recession. In the US, despite continued economic growth, consumer indicators do not suggest a significant oil demand boom in the near term. Meanwhile, signals continue regarding a potential increase in supply, whether through rising production levels in the US or increased supplies from some OPEC and non-OPEC countries, heightening concerns about market imbalance if this increased supply is not met with substantial consumption growth.

Market sentiment in financial markets likely plays a significant role in this decline, as a wave of caution among investors due to uncertainty over monetary policies in the US and Europe adds pressure on commodity markets, including energy. With rising bond yields and increased attractiveness of safe assets, some capital is moving to reduce exposure to high-risk instruments such as oil contracts. Bloomberg sources view the US oil market as undergoing a sharp correction driven not by political crises or emergency decisions but by cold internal readings of market fundamentals and realistic supply and demand expectations. They added that this rapid shift in investor sentiment reflects not only a change in technical estimates but also a growing realization that geopolitical factors, despite their noise, are no longer sufficient alone to drive the market to sustainable highs without real indicators of structural supply imbalances.