Crude oil is pacing for its worst weekly performance in the last three months as concerns about slowing global growth and a strengthening dollar have commodity traders hitting the sell button. And that has one group of traders very happy: short sellers.
"Open interest increased by 33,000 contacts on [Wednesday], so that's a significant addition of shorts," BNP Paribas' head of U.S. cash equity trading, Darren Wolfberg, said Thursday on CNBC's "Futures Now." Government data released Thursday showed U.S. supplies rose for the seventh straight week.
Wolfberg explained that when open interest rises on a day that an asset is down — crude oil fell 3 percent Wednesday — it means that traders are making new bets that the price will go lower. Conversely, he added that in early October, the increase in open interest was tied to a move higher in crude oil, reflecting more long positions.
"This is actually a good barometer to know the underlying flows of the marketplace," he said. When investors go short, they are betting a security or commodity will fall in value.