With Crude Oil in the news and prices surging after a quick dip under $40 per barrel, I thought it would be good to share some color from the must-read commentary of JonesTrading’s Dave Lutz and follow that up with some insights into key price levels for crude oil.
Here’s some news and market commentary on the Crude Oil rally from Dave Lutz:
“Pile of reasons last 24 hours for the Crude Ripper that peeps point to:
- US GDP a full face-ripper
- Massive US Drawdowns in Inventory
- Refineries coming on line helping alleviate Cushing
- Mexico Done Hedging
- Force Majure in Nigeria – Shell yesterday
- ISIS gains in Turkey
- “Mother of All” China Stimulus bets coming this weekend ahead of Parade
- Told PSX refinery downtime may be shorter than expected
- Erika – but not tracking toward GOM
Bottom line – I mentioned in the chatrooms it’s held extremely short – and all shorts are being called in viciously the last 24 hours it seems —> “Since mid-June, hedge funds have accumulated one of the biggest short positions in U.S. crude on record, equivalent to almost 160 million barrels of oil, up from less than 60 million, according to data from the U.S. Commodity Futures Trading Commission”
If you don’t read Dave, check him out. It’s good stuff.
Not coincidentally (in my opinion) the ramp in oil started right after the commodity printed Bar 8 of the umpteenth daily Sequential Countdown Buy. DeMark followers know the Bar 8 of a Countdown is a temporary exhaustion point prior to the completion of the countdown on Bar 13. That’s why a Countdown “13” can only print below Bar 8. The daily TDST Level Up on CL_F continuous contract is at $49.03. If we get close to there I’ll be looking to put on some cheap call ‘flies on DUG.
On the credit side of things, energy credit and credit derivatives are hardly budging on this ramp and indices of junk rated yields above 1100bps indicate significant distress.
Thanks for reading and have a great weekend.
Twitter: @FZucchi
No position in any mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
