Energy Prices Hold Up to Headlines
While the bull camp has had the ability to absorb bearish supply and demand news consistently for the last 10 months, we get the sense that bearish fundamentals are stacking up and prices are expensive in the face of a 58-million-barrel year over year US surplus.
The charts remain bearish, the weather is also bearish and news on Chinese demand has been less frequent and therefore, the bear camp retains an edge. While we suspect that the most recent COT report overstates the magnitude of the net spec and fund long, we do not think the market is “mostly liquidated” yet but we do think the rate of declines will now slow and perhaps stop.
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