The Decline in Short Interest and Strategic Bullish Implications for Western Midstream Partners LP (WES)

The stock market has long regarded short interest as a contrarian indicator, with sharp declines often signaling a shift in sentiment from bearish to bullish. For Western Midstream Partners LP (WES), the recent reduction in short interest raises intriguing questions about its strategic implications. As of November 14, 2025, WES's short interest stood at 4.80 million shares, representing 2.01% of the float, according to Finviz. This figure marks a 16.2% decline from June 2025 and a 49.89% drop since earlier in the year, as reported by Benzinga. Such a pronounced retreat in short selling activity, coupled with a short interest ratio of 3.02, suggests a moderation of pessimism among investors.

Short Interest as a Contrarian Signal

Short interest ratios between 1 and 4 are typically interpreted as reflecting positive sentiment, while ratios exceeding 10 indicate extreme bearishness. WES's current ratio of 3.02 falls comfortably within the former range, implying that short sellers are not overwhelmingly positioned against the stock. This aligns with broader market dynamics: WES's short interest percentage of float (2.01%) is notably lower than the average of 3.21% for its energy peers, according to Finviz. . Such a disparity underscores a relative stability in investor confidence, particularly in a sector historically prone to volatility.

The decline in short interest also warrants scrutiny as a potential precursor to a short squeeze-a scenario where rising stock prices force short sellers to cover their positions, amplifying upward momentum. While WES's short interest ratio of 3.02 is moderate, historical data reveals a pattern of resilience. From 2020 to 2025, WES's stock price surged from a low of $1.88 to a high of $40.33, despite intermittent short-term bearish pressures. For instance, in July 2025, the short interest ratio peaked at 6.89, yet the stock continued its upward trajectory. This historical performance suggests that WES's fundamentals may be robust enough to withstand short-term bearish bets, even as short sellers retreat.

Strategic Implications for Investors

The interplay between short interest and stock price movements is not deterministic, but the current data for WES presents a compelling case for cautious optimism. A 16.2% reduction in shorted shares in June 2025 alone indicates a tangible shift in sentiment. If this trend persists, it could signal that investors are increasingly valuing WES's operational strengths, such as its role in midstream energy infrastructure and its alignment with long-term energy transition strategies.

However, the likelihood of a short squeeze remains contingent on broader market conditions. As of November 2025, only 2.01% of WES's float is shorted, a relatively low threshold compared to the 8.51% reported in June. While this reduces the immediate risk of a short squeeze, it does not eliminate it entirely. A sharp price rally-driven by, say, improved earnings or favorable regulatory developments-could still trigger covering activity. Investors should monitor the short interest ratio closely; a rise above 5.0 might indicate renewed bearishness, whereas a sustained decline could reinforce the stock's bullish momentum.

Broader Industry Context

The energy sector's evolving landscape further complicates the analysis. As Deloitte notes, the oil and gas industry in 2026 faces shifting policies, rising costs, and digital transformation pressures. These factors could influence WES's performance independently of short interest dynamics. For example, regulatory tailwinds for midstream operators or a rebound in energy prices might bolster WES's fundamentals, rendering short-term bearish bets obsolete. Conversely, sector-wide headwinds could dampen investor enthusiasm, even if short interest remains low.

Conclusion

The decline in WES's short interest, while significant, must be interpreted within the context of its historical resilience and sector-specific challenges. The current data-low short interest percentage, moderate short interest ratio, and a peer-leading trend-suggests that bearish sentiment is waning. For investors, this represents a strategic inflection point: a potential opportunity to capitalize on a stock that has demonstrated both growth and adaptability. Yet, as always, prudence is warranted. Short interest is but one lens through which to view market sentiment; it must be paired with rigorous analysis of WES's operational performance and macroeconomic trends. In the end, the interplay between short sellers and bulls will continue to shape WES's trajectory, but the recent data tilts the scales in favor of the latter.