SHORTING OIL IS A CROWDED TRADE Oil dropped 23% from 1Jan24 to 31Dec25. Oil ETF $USO stayed flat during that time. Oil shorts were so crowded that the backwardated term structure ate all their gains.

The latest price surge has not forced any capitulation. Backwardation has intensified. The Apr27 contract is currently 27% below spot. Meanwhile, speculative short interest in futures is as high as ever.