Two weeks ago, we published an OMF titled, "It's Almost Time To Go Long Oil." In the article, we wrote:
Signals
OPEC+ uncertainty goes away. We will get more clarity on OPEC+ policies in the coming weeks.
Trump sanction enforcement on Iran. I suspect the market is also waiting to see just how real enforcement will be.
Physical crude timespreads bottom. For now, the tightness continues to dwindle.
Higher refining margins. The 3-2-1 crack spread will need to move higher in order for crude to move higher.
Lower speculator long positioning. Ideally, we would want to see more speculators sell before we go directionally long crude.
These are the signals to watch for. Global oil balances should continue to trend bullish. Traders will be pulling their hair out wondering why oil prices aren't moving higher despite the bullish fundamentals. But as we explained already, the market is narrative driven and people don't care about fundamentals until they care. It sounds paradoxical but that's the lesson we learned the hard way when it comes to navigating the cruel oil market.
Fast forwarding to today, WTI hit the $70.55 target we wanted last week and shortly after, we issued a trade alert going long UCO at $27.73 on Feb 13.
Looking at the signals we published, many of the things are starting to happen. And as I will explain in this article, I think oil prices are set to move higher into the $75 to $80/bbl range.