Brent crude traded at $104.70 on May 22, extending its slide after President Trump said on May 19 that a deal to end the war with Iran would come 'fast' and that oil prices would drop sharply. The decline comes as speculative net positions on the Commodity Futures Trading Commission fell 27% over seven weeks, from 233,600 contracts in late March to 169,900 contracts by May 16. At the same time, put hedging activity in the Brent Oil ETF (BNO) surged, with the put-call volume ratio doubling from 0.15 on May 15 to 0.30 on May 21.
Speculators pull back as oil bets shrink
The drop in CFTC net long positions marks the biggest weekly reduction in speculative crude oil wagers since early 2025. Traders have been unwinding bullish bets as diplomatic signals from Washington and Tehran raised expectations of an Iran deal that could add millions of barrels to global supply. The 27% contraction in net positions over seven weeks reflects growing caution among hedge funds and commodity trading advisers, who had built up large long positions earlier in the year.
Hedging activity surges in oil ETFs
The doubling of the BNO put-call volume ratio in just six days suggests investors are increasingly buying put options to protect against further downside. A put-call ratio of 0.30 is still below the 0.5 threshold often seen as a bearish extreme, but the rapid move signals a shift in sentiment. Traders typically increase put hedging when they expect prices to fall or want to lock in gains from existing long positions.
Technical levels in focus
Brent has already broken below the 20-day exponential moving average at $105.41 and is now testing the 50-day EMA at $100.27. That level overlaps with the 0.5 Fibonacci retracement at $100.83, creating a key support zone. A clean break below $100 would confirm a channel breakdown, with a measured move target at $86.37. Intermediate downside levels between the current price and that target include $97.42 and $92.56. The 200-day EMA at $82.43 marks the ultimate structural floor, with further downside to the 1.618 extension at $68.49 if the breakdown accelerates.
Bullish case hinges on quick recovery
For the bullish thesis to hold, Brent needs to reclaim $108.47 quickly. A daily close above $115.30 would invalidate the bearish setup entirely. The next catalyst could come from any breakdown in Iran negotiations or from supply disruptions elsewhere. As of May 22, the market is waiting to see whether the $100 level can hold or if the bears will push prices toward the measured move target of $86.37.
