At the end of January, when looking at the positioning in the oil futures market, we warned that there is a a "Constant Short Squeeze Threat" because "Oil Shorts Are At All-Time Highs."

Everyone knows what happened next; for those who missed it we explained precisely two months later, following an epic surge in the price of oil, in: "It's Official: The Oil Surge Was Driven By The Biggest Short-Squeeze Ever."

In other words, just as we had warned, the oil trade so far in 2016 has been all about positioning - very extreme positioning at that - and the sparking of a historic short squeeze in oil.

We bring this up because less than three months following our warning about a "constant oil short squeeze", it is time to unveil the next warning: one of a potentially big drop in the oil price as now record speculative oil longs proceed to cover on the other side, unleashing a selling scramble lower.

Is that possible?

Well, according to Deutsche Bank's latest investor positioning and flow report last night, "oil speculative net longs are at record highs as gross longs rose and shorts fell last week."

So just as the crowd has shifted quickly from one side of the boat to the other, the risk now is that all those who are long oil are forced to liquidate, and since there are virtally no shorts left to cover into any selling we fail to see what major catalysts will be able to prop up the price of oil if and when the sellin resumes, especially now that all OPEC "oil freeze" headlines are largely ignored, even the algos.