The Daily Shot does an excellent job of explaining how players are positioned in the oil market… I am reproducing the whole thing:
1. American oil companies continue to lock in pricing on a larger share of their crude output (in many cases locking in output prices allows them to obtain financing). These firms sell production forward in the swap market, and swap dealers, in turn, hedge their exposure by shorting crude oil futures. Swap dealers’ net futures position is now the largest on record.
2. Hedge funds are on the other side of the swap dealers’ trades, with net positions (both in Brent and WTI crude) also the highest on record.
Me: Of course, hedgers are out along the curve while specs (hedge funds) are mostly in the front… Dealers must manage spread risk…