Are bottom-fishing oil investors complacent?

Investors betting on a reversal in oil's lengthy slump poured billions into energy-related financial products this month, fueling concerns of market overconfidence and increasing volatility.

"If you look at oil ETFs (exchange-traded funds), there is huge buying interest, despite oil prices falling. There are a lot of non-consumption players out there playing it for financial gain and that will create more volatility, with moves down and corrections up," Ashok Shah, director of asset management firm London & Capital, told CNBC on Wednesday.

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An exchange-traded fund is an investment fund that that tracks indexes or assets like stocks, commodities or bonds. They have become increasingly popular with retail investors—mainly because they offer exposure to assets classes like commodities that are otherwise difficult for non-institutional investors to tap.

Read MoreCNBC explains ETFs

U.S. listed energy-related commodities ETFs pulled in $1.2 billion of assets between March 1 and March 20, with inflows occurring on all but five trading days, according to TrimTabs Investment Research.

This was despite a 7.2 percent price plunge during that period.

"Investors keep piling into commodities ETFs even though their performance has been terrible. How steep will losses have to get before investors start selling?" said TrimTabs CEO David Santschi, Chief Executive Officer in a research note out Tuesday.

"From a contrarian perspective, persistent bottom fishing in an asset class, that is selling off hard, points to lower prices. We advise steering clear of commodities, particularly oil and natural gas," he later added.

The price of Brent crude oil has fallen by around 10 percent this month, while light crude is down by just under 3 percent. This continues a steep slump that started last June and has seen oil prices fall by around 50 percent.

Shah forecast oil prices could go back down to around $40 and stabilize there.

Other professionals think oil could already be passed its low point.

Read MoreOil to reach $100 a barrel by end of 2016: Pickens

"It does look like we have very likely, very possibly seen the bottom," Dennis Gartman of the renowned Gartman Letter, told CNBC on Monday.

"I've bearish for a long-time—it's time to stop being bearish."

Some pundits claimed in January this year that prices had reached a nadir—only for the downward spiral to resume again in March.

As in March, January saw hefty inflows into energy-related ETFs of $1.6 billion, along with a price plunge of 11 percent, according to TrimTabs.