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Short interest figures for the end of November were released after the close on Friday.  As one might expect given the market’s rally during the month, negative bets declined pretty much across the board.  One notable aspect of the month end data, though, concerns the Energy sector.  At a level of 9.88%, the average level of short interest as a percentage of float (SIPF) for energy stocks is the highest of any sector, but it marks the first time in more than a year that the sector’s average SIPF level has been under 10%.  The chart below compares the Energy sector’s average SIPF level to its price going back to 2007.  While the sector has always had one of the highest average short interest levels, heading into 2015, its average SIPF level was closer to 7%.  As oil prices plunged, average short interest levels surged and peaked at 12.55% just as oil prices were bottoming earlier this year.  Since then, shorts have been steadily covering as prices have risen.  Based on the sector’s historical levels of short interest, though, there is still plenty of room for these levels to decline as along as oil prices remain stable.

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Despite the sub-10% average level for the entire sector, a number of energy stocks still have extremely elevated levels of short interest.  The table below lists the eighteen stocks in the sector where short interest levels exceed 15% of the individual stock’s float.  Of these eighteen, seven have more than a quarter of their float sold short, including large cap Transocean (RIG) at 26.98%.  The stock has rallied 28% this year, but because crude oil prices remain below levels where offshore exploration is deemed profitable, the stock still has more than its fair share of skeptics.

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