Category Archives: Energy

Extension Brings Expansion

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Since no one wants natural market forces to work these days, OPEC announced the extension of their already-in-place production cut. The response of crude oil has been steady all night, with prices ascending strongly, up over 3.5% as of this moment. To give this move some context, here’s the daily futures chart. The market is up about 10% since we bottomed earlier this month, but the multi-month trend still remains down.

0515-cl

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Oil Rip

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Well, the weekly inventory report came out, and the substantial inventory draw sent prices ripping higher (as I’m typing this, the front month is up nearly 3%). This isn’t great for me, due to my focus in energy shorts, but I actually only have one position in my portfolio in the red, so it’s not too bad. I did trim my ERY long position by about 35%.

My view is that oil sort of flushed out the stops a few days ago (red circle) and it’s recovering from that. However, there is a massive wall of overhead supply (see red horizontal line) that I think will be a strong boundary to further upside.

0509-oil

In the short time I’ve been typing this, crude’s rise has faded to 2.75%, so I’m thinking maybe we’ve already see today’s high.