From the FT:
Speculators have amassed near-record bets on further gains for oil prices even as crude has pushed past the $80-a-barrel mark.The latest data from the Commodity Futures Trading Commission showed the speculative net long position in Nymex WTI grew to 124,143 lots in the week ending March 16 when US crude oil closed at $81.70, compared with 109,314 lots in the previous week.Since last week’s Opec meeting, however, Olivier Jakob, of consultancy Petromatrix, pointed out that open interest (active positions) had jumped sharply. Petromatrix said this could be linked to more producer hedging (agreements to sell) as the increase in open interest was spread across the WTI contracts for May, June, July, August and December 2011, rather than being concentrated in the front-month contract.“That pattern would correspond more to hedging than to speculative flows,” said Mr Jakob. “For the large speculators [hedge funds], this surge in open interest [with crude prices trading near] $83 a barrel is bad news as it indicates there is significant layers of interest wanting to be short at these higher price levels.
If everyone is already long, there is nobody to push the price up. And if there are plenty of people looking to get short, there are plenty of people to push the price down.