Oil Price Forecast: OPEC+ Softens Supply Hike, WTI Eyes Short Squeeze Setup

The Oil Report 8th September 2025.

In this report: Commitment Of Traders analysis and trade hypos, OPEC+ mulling another raise-word from OPEC insider, Russian refineries under attack.

Note on Commitment Of Traders data:

Please be mindful that there may be other armchair analysts on C.O.T analysis and their data is not correct. If you just go to the CFTC website today and download the .xls file, this data will only go back to 2022. It will not encompass data beyond that on any market. This is extremely dangerous, and most of these armchair analysts are not even aware of this.

We have invested over 100 hours in developing our tool, implemented machine learning, and have merged several databases to give us full historical data on our product views.

Articles

• OPEC+ Agrees in Principle to Increase Production in October
• Russia to ship oil to Brunei via Arctic route for the first time, sources say
• Trump’s Department of Energy Gets Scienced
• Putin’s petrostate faces a kamikaze petrol crisis
• Video: Ukraine Strikes Russia’s Oil Refineries – The effects, politics & what next?
• Russia’s Bashneft oil company installs anti-drone nets to protects refineries, says report
• The AI Trade’s Biggest Risk Still Needs to Be Addressed
• India to maintain Russian oil imports despite Trump threats, government sources say.
• Russia to ship oil to Brunei via Arctic route for the first time
• Global oil and gas company layoffs in 2024 and 2025

Views

Macro

OPEC+ Met Sunday by telephone and Sunday to decide on raising production and bringing back 1.66mln bpd of cuts that were to hold in place to end of 2026. Read more in ‘Trade’ section below. The expectation was a the full amount would be put back on supply, however the reality is only an introduction is 137k bpd. This would allow them to unwind the 1.66mln bpd over the next 12 months. So the selling may be overdone! Sell the rumour, buy the fact.

The 2nd and 3rd order consequences of this are interesting.

1: Cant keep up

The reality of this is actually mildly bullish. OPEC+ member countries are pinned to their collar to produce at these ‘paper production’ levels. The group’s exports are only at 2019 levels and member states are finding it difficult to meet already higher levels.

2: Spare capacity

The amount of spare capacity left in the OPEC+ system comes back into focus. The only real heavy hitting country that can ramp up or ramp down at will is Saudi Arabia. With 2.5mln bpd spare capacity. This is a tiny amount for the group to have at its disposal. Global oil consumption runs at 104mln bpd.

Russian squeeze.

Over the past 30 days, attacks on Russian oil facilities by Ukrainian forces have intensified. Utilising swarms of suicide drones, each carrying up to 120kg of explosives, they have forced petrol prices to increase 54% on the year in Russia.

Drill baby-negative ghost rider!

A mild slowdown in E of E&P (Exploration and production) activity. With job layoffs hitting the large oil companies, the industry is doing a lot more with a lot less people and expenditure. This new age of A.I. helping to accelerate this change. The charts as below illustrate this. All sourced from the OPEC August monthly report.

World oil inventory levels: well stocked!

Source: Kpler

Commitment Of Traders.

It has been known in the market for 2 weeks now that OPEC+ would start to bring back approx 1.66mln bpd at a next meeting. Traders this week would have positioned fully for this event. I expected this report to show continued Spec selling-confirmed. I also expect this to 180 turn around in the coming week, where specs may start to pair back net short levels.

Commercials– I expect now will be buying at a greater rate than selling, given they will want to start loading physical inventories to then process through Q4. This is what we are starting to see.

The ability to see this, at exactly what rate of change, is one of the key reasons why we developed this C.O.T tool. Anyone can look at the simple numbers on face nominal value by downloading a spreasheet- commercials buying more than selling, however it takes a lot more work to see the relative change, rate of buying and participation scores. Think Money Ball v baseball scouts.

Non-com/ Specs

Longs reduced -7,334

Shorts increased 6,636

Non-com/specs long/short. Source: Duggan Capital & C.F.T.C

Specs crowding

Short crowding 89.4% all time, almost unchanged from last week. Still short but not max short. Last time they were above this at 90% crowded was June and Dec 2023.

Non-com short interest.

On closer inspection of the distribution analysis of Specs selling, we can see it is high, but not stretched yet.

Distribution analysis-Spec shorts-All time. Source: Duggan Capital.

Commercials

Longs increased 42,546 contracts

Shorts increased 33,070

Commercials Long/Short interest.

The great thing about using machine learning is that we can start to really measure just how significant positioning is. Here, we can see Commercials are buying at quite a high level relative to all other observations. In the 96th percentile. This confirms to me they are now starting their buying programs to load inventory to process for Q4. This can act as an incredibly significant buying support. This has to be balanced with the macro picture AND technical price action. This is where compute meets craft.

Distribution of commercial longs- all time. Source: Duggan Capital.

In summary: Specs still short at high but not maxed out levels- I’m expecting a turnaround this week, where they reduce shorts with a blowout on the bottom on price. Commercials are buying up physical delivery, I suspect in prompt delivery months. I only expect this to last for another 3 weeks max. So expecting Commercials to continue to build net length faster than net shorts.

The soundbite-Specs still selling into growing commercial length. I expect the short squeeze may hit this week. With the OPEC+ activity this weekend, a setup of sell the rumour, buy the fact can easily play out.

Trade

Price action note: What we have had over the last week was the positioning lift against increased net short spec (non-commercial) traders. We indeed hit the QVWAP $65.67 upside target. With beautiful timing, newswires started to air what was a whisper a week ago – OPEC+ to potentially raise again at a meeting this weekend by 1.66mln bpd.

The market as expected started to price this in- printing back down for the whole day. This really was a fantastic get out of jail card for the shorts, who were getting mega squeezed: read ‘Bounce’.

Interesting order flow on Wednesday in the chart below. You can see that from 11am London time, relative volume jumped to approx 800% average volume for that time of day. Cumulative net delta went -2000 (i.e buyers being overwhelmed by 2000 more contracts sold than were buying) with the market printing down -2% / about $1. I took this as sellers initiating new contracts. However, once this large volume had been deployed, you can see that buyers stepped in for the rest of the day, with the market going positive net delta, actually ending the day +5000 contracts. The net result an aggressive absorption of sellers to little net price effect. Price closed +1.68% on the day. There are a few ways to interpret all this.

Hypo 1– Net shorts (the squeezed) covered, causing the large amount of net buying through the rest of the session.

Hypo 2. Shorts increased their position from QVWAP and pushed the market down at 11am. Then took profits through the rest of the session.

I prefer hypo 2 making the most sense from an order flow perspective of a spread trader. Either which way, the net result was academic. The flag is simple, OPEC+ are looking to increase production again, and you do not want to be net buyer in front of this-something I covered while talking to Jason Shapiro on Monday here

This week ahead

We are now at a point where the actual global economy bears the greatest risk to the downside on oil prices, rather than demand supply imbalances. All eyes are looking towards the September 17th FOMC rate decision. Markets expect a cut from Powell, which will in turn unleash a rare (short living) type of bull. Will it be enough to spur a new expansion in the economy, as is the intention? Or will it be the last sugar burn before a crash?

Point is- There is equity market correlation, not causation. If the equity markets come off more than .5% in a session, it weights on oil consumption expectations.

Let’s have a quick look at the trade guidance from last week. How’s my driving?

TRADE GUIDANCE FOR LAST WEEK.

WTI Futures. Daily bars. QVWAP.

WTI Futures. 30 min bars. MVWAP.