BNO — the United States Brent Oil Fund — has had a week of sharply diverging signals: the fund climbed nearly 9% while short sellers unwound positions at pace, yet borrow costs crept higher and options traders remained skewed toward calls at near-record extremes.
The most striking development is the scale of short covering. Short interest dropped 22% over the week to roughly 683,600 shares, or 20.7% of the float. That is almost half the level seen in early April, when shorts peaked above 1.25 million shares in the days following the tariff-driven crude selloff. The retreat has been rapid and decisive — shorts have shed around 570,000 shares since the April 7-8 peak, a 45% reduction in less than a month. That move mirrors the price recovery: Brent proxies bounced hard once crude found a floor, and leveraged short positions became expensive to hold.
The borrow picture is somewhat contradictory. Despite the mass short covering, cost to borrow actually ticked up 16% on the week to around 5%. That compares with levels above 10% during the peak short-building phase in late March and early April, so overall borrowing remains far cheaper than it was six weeks ago. Availability is relatively loose right now — the lending pool is well below the tightest conditions seen over the past year, when the 52-week utilization peak reached 97%. That means new short sellers face no structural squeeze pressure, even as the existing cohort reduces its footprint.
Options traders are as bullish as they have been in a year. The put/call ratio dropped to 0.19, close to its 52-week low of 0.11, and roughly 0.5 standard deviations below the 20-day mean of 0.21. The contrast with late March and early April is stark — PCR was running above 0.29 during the peak fear period, reflecting heavy demand for downside protection on crude. That hedging premium has now almost fully unwound. Call volume is dominant, consistent with a market leaning into the Brent recovery rather than defending against further drawdowns.
Broader energy ETF flows add context. Energy sector funds absorbed $362 million in net inflows over the week — positive, but a distant fifth behind technology and industrials. The appetite for energy exposure is returning, though institutional enthusiasm remains measured relative to the equity recovery trade. Materials, by contrast, saw nearly $1 billion in net outflows, suggesting the commodity reflation trade is not uniform.
The ORTEX short score has eased to 44.6 from a peak of around 55 on April 24 — a moderate reading that captures the recent short-covering trend without signalling anything extreme in either direction. Positioning looks less bearish than at any point in the past month: shorts are retreating, calls are dominant, and borrow costs are normalising. The week ahead turns on whether crude holds its recovery gains or tests the lows again — if the latter, the shorts waiting on the sidelines have cheap, available borrow to re-enter.
See the live data behind this article on ORTEX.
Open BNO on ORTEX →ORTEX Market Intelligence content is generated by AI from a snapshot of ORTEX's proprietary data. Content is informational only and does not constitute investment advice.
