BNO — the United States Brent Oil Fund — enters September with a notable shift in tone: the fund has surged 10.5% in a week, yet short positioning remains near historic extremes, creating the week's sharpest tension.
Yesterday's prior note flagged that borrow was tightening hard. One day later, the data has pivoted. Short interest dipped slightly to 56.8% of float on September 1, down from 57.1% on August 31 — a marginal retreat, but still up nearly 5% on the week and 31% over the past month. The short base built through August remains enormous by any standard. What has changed is the lending environment. Availability jumped from 103.8% to 131.3% in a single session — a meaningful loosening from the squeeze-like conditions seen on August 26 and 27, when availability crashed to 20.4% and 36.9% respectively. Cost to borrow fell sharply too, dropping 21% over the week to 1.98% — well off the recent high of 3.23% hit on August 27. Shorts crowding into BNO are now paying less to hold the position than they were just days ago, and there are more shares available to borrow. That combination removes some of the near-term pressure on bearish traders that last week's note described.
Options positioning reinforces the cautious-but-not-panicked read. The put/call ratio held at 0.127 on September 1 — modestly above its 20-day mean of 0.106 and running roughly 1.4 standard deviations elevated. That is below the 1.58 z-score cited yesterday, suggesting the defensive hedging impulse has eased slightly alongside the availability relief. The PCR remains far below its 52-week high of 0.415, so options buyers are not crowding into downside protection in any dramatic way — they are merely a little more cautious than usual.
One new data point warrants attention. Carronade Capital Management disclosed an 8.6% stake in BNO via a Schedule 13G filed on August 14. The 13G classification designates a passive holding — this is not activist pressure — but a stake of that size in a commodity ETF is unusual. Carronade held approximately 1.35 million shares as of the filing date. Per standard disclosure rules, that stake is as-last-reported around the 5% threshold; the position could have changed since without requiring a further filing. Still, the presence of a named institutional holder at that scale adds a layer of complexity to the short story: with roughly 1.87 million shares short against a backdrop of large institutional ownership, the float available to borrow is structurally constrained even when availability appears adequate in percentage terms.
The ORTEX short score has crept up to 67.2 — its highest reading in the past two weeks and up from 63.8 on August 19. That score reflects the persistence of the elevated short base even as individual metrics like cost-to-borrow and availability have loosened. The fund's 10.3% one-month gain in price has not dislodged the bearish thesis that drove shorts to these levels; if anything, the week's 10.5% rally will be the key variable to watch — sustained price strength against a 57% short base is precisely the setup where availability can tighten again quickly if holders reduce lending into a rising market.
The next meaningful data points are crude oil fundamentals themselves — OPEC+ production decisions, weekly inventory data, and any macro developments affecting demand — which will determine whether the current short base looks prescient or overstretched.
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