Who Really Moves Oil Prices? The Speculators the CFTC Can’t See#

In early May 2026, the Commodity Futures Trading Commission dropped its weekly Commitments of Traders report, and the numbers were hard to ignore. Non-commercial traders — the CFTC’s label for speculators — had slashed their net long positions in crude oil futures by the widest margin in months. Reuters noted the retreat was systematic: speculative funds were unwinding bullish bets across the board, fuelling talk that crude could slip below $100. The takeaway seemed obvious: the smart money was heading for the exits. Oil prices, hovering near $90, slipped on cue.

But that takeaway missed something crucial. The CFTC’s definition of “speculator” isn’t what most people assume. And the traders it labels “non-speculative”? They aren’t necessarily what you’d expect, either. Before we can make sense of how much speculation is really happening in oil futures, we have to understand how the market’s referee draws the line — and why that line has a gap wide enough to sail a supertanker through.

The Two-Colour World#

The CFTC, America’s commodities regulator, sorts every futures market participant into one of two buckets. The system is elegant in its simplicity — and, as we’ll see, dangerous in what it hides.

Commercial traders use futures to hedge real business risk. An oil producer selling futures to lock in next quarter’s price is commercial. An airline buying futures to fix its fuel bill is commercial. A refinery trading crude futures to manage input costs is commercial. What ties them together is a direct, physical relationship with the commodity. They pump it, burn it, or transform it. They are in the oil business.

Non-commercial traders are everyone else. Hedge funds making directional bets on oil prices. Floor traders hunting short-term arbitrage. Commodity trading advisors riding momentum. None of them have any physical connection to oil. They don’t produce it, refine it, ship it, or burn it. They are in the money business.

On the surface, the distinction makes sense. Commercial traders are the “real” participants — adults in the room, people with skin in the game. Non-commercial traders are the speculators — useful as liquidity providers, maybe, but fundamentally on the sidelines of a market whose core job is setting a price for a physical commodity.

The NYMEX itself once put it with admirable bluntness: a speculator is “a market participant who does not produce or use the commodity, but risks his or her own capital trading futures in that commodity in hopes of making a profit on price changes.” Does not produce or use the commodity. That’s the line. Hedgers on one side, speculators on the other. Two colours. No grey.

The Grey Zone#

Except the real world is drowning in grey.

Take a big Wall Street bank — Goldman Sachs, say, or Morgan Stanley. These firms don’t pump oil out of the ground. They don’t run refineries. They don’t fly planes. By the NYMEX’s own yardstick, they’re speculators. But the CFTC doesn’t classify them as non-commercial. It puts them in the commercial column.

Why? Because these banks are swap dealers. They sit at the centre of the over-the-counter derivatives market, writing bespoke contracts for clients who want exposure to oil prices. A pension fund in California wants to pour $500 million into commodities. It doesn’t march onto the NYMEX floor and buy futures directly. Instead, it phones Goldman Sachs and enters into a swap — a private deal where Goldman agrees to pay the pension fund the return on a commodity index, and the pension fund pays Goldman a fee. Goldman, now carrying commodity-price risk on its books, heads to the NYMEX and buys futures to hedge.

Here’s the kicker: the CFTC classifies Goldman’s futures position as “commercial” because Goldman is hedging a real business exposure — its swap book. The fact that the demand behind it all comes from a pension fund with zero physical interest in oil? For classification purposes, that’s invisible. The pension fund’s speculative appetite gets laundered through Goldman’s balance sheet and comes out the other side wearing a commercial uniform.

This isn’t fraud. It isn’t even, strictly speaking, a loophole. It’s the logical consequence of a classification system asking the wrong question. The CFTC asks: “Does this entity have a business reason to trade?” Goldman does — it’s hedging swaps. But the system never asks the follow-up: “What’s the ultimate economic motivation here? Who’s the end client, and why do they want oil exposure?”

If it did, the answer would be awkward. A significant share of what the CFTC reports as “commercial” activity in oil futures is, in economic substance, speculative demand routed through the banking system. The commercial label isn’t technically wrong — Goldman really is hedging. But it’s analytically misleading, because it masks the true scale of financially motivated trading.

The Invisible Army#

The consequences are real. Every Friday, traders and analysts worldwide pore over the CFTC’s Commitments of Traders report, hunting for clues about market positioning. When non-commercial net longs climb, the conventional read is “speculators are getting bullish.” When they drop — as they did in early May 2026 — the read is “speculators are pulling back.”

But if a big chunk of speculative activity is buried inside the commercial category, the Commitments of Traders report isn’t measuring what people think it’s measuring. The “non-commercial” bucket captures only the visible speculators — the hedge funds, the CTAs, the floor traders who register as non-commercial. The invisible ones — the pension funds, the endowments, the sovereign wealth funds whose capital flows through swap dealers into the commercial column — never show up.

It’s like a hospital that sorts patients into “sick” and “healthy” based on whether they came by ambulance or walked through the front door. Ambulance arrivals get counted as sick. Walk-ins — even the ones clutching their chests mid-heart-attack — get counted as healthy. The hospital’s stats would undercount sick patients, and anyone making resource decisions off those stats would be flying blind.

The circularity runs deeper than most observers realise. In May 2026, Goldman Sachs revised its oil price forecast upward, and Bloomberg reported the move sparked a fresh round of the “self-fulfilling prophecy” debate: a major bank issues a bullish call, speculative money chases the signal, prices climb, and the forecast appears to vindicate itself. But notice which side of the CFTC’s ledger captures what. The hedge funds that pile in behind Goldman’s call are non-commercial — visible. Goldman’s own hedging activity, fuelled by the swap business its forecast stirs up, is commercial — invisible. The feedback loop is real, but the regulatory lens only catches half of it.

The Question That Wasn’t Asked#

We’re not yet ready to put a number on this blind spot. That comes in Module Three, where we’ll trace the specific pipelines through which speculative capital enters oil futures — hedge funds, swap dealers, commodity index funds — each with its own mechanics, its own scale, and its own degree of visibility to the CFTC.

But the conceptual ground is laid, and it should make anyone who leans on official data to gauge speculation in oil markets deeply uncomfortable. The CFTC’s classification system was built for an era when oil futures were the domain of oil companies and a manageable crowd of professional speculators. It was a sensible system for a simpler time. But the market has moved on. New players have arrived — players who are speculative in economic reality but commercial on paper. The two-colour lens can’t see them.

Next time you read a headline announcing that “speculators hold X per cent of the oil futures market,” stop and ask: which speculators? The ones the CFTC can see, or the ones it can’t? Because the number that actually matters — the total volume of financially motivated trading in oil futures — is almost certainly bigger than any official report suggests. How much bigger is a question we’ll spend the next several chapters answering.

But first, let’s look at the sheer scale of the machine we’re talking about. The number of paper barrels in circulation, as it turns out, has been growing at a pace that should worry anyone paying attention.