Living On Borrowed Time
I'm going to make this article as short as possible. I think speculators who are currently short oil will get their faces ripped off.
Ok, pack it up, I'm done with the article.
But in all seriousness, I am seeing a lot more bullish fundamental signals today than a month ago.
US oil production weakness continues.
US commercial crude storage set to fall to ~410 million bbls.
Refining margins are bottoming.
OPEC+ cheaters are complying with crude exports expected to stay low this month.
China's apparent oil demand is picking up. Demand has likely bottomed.
Speculator short positioning at an all-time high.
The most important point is that I believe the bearishness is largely priced in. In our WCTW titled, "The Oil Market Is Too Bearish, Non-OPEC Supply Growth Will Disappoint In 2025." I wrote:
The oil market is reflexive by nature. It's a commodity and it's vulnerable to boom-bust cycles. By being so universally bearish in both sentiment and positioning, the oil market is going to force an extreme out of the supply & demand models. You can't have low prices and higher supplies just like you can't have high prices and high demand.
At some point, the consensus will have to realize that the non-OPEC supply growth estimates are unrealistic given the price forecasts. And when it does, the beachball that's being forced into the water will inevitably explode higher.
Living on borrowed time, that's the best way I would describe the CTAs who are currently short crude.