Energy futures are ticking modestly higher this morning, after trading lower overnight. The geopolitical tinderbox around the Middle East seems to be encouraging buyers, while global supply & demand fundamental are staying “strong enough” to keep the sellers at bay for now. If the complex can break above the multi-year highs set last week, the charts suggest we could see another 5-10% of upside near term.
OPEC’s monthly oil market report helped the complex recover modest losses overnight. The report kept global oil demand estimates unchanged despite the sharp increase in prices, but revised supply forecasts down slightly. The cartel’s total oil production increased slightly in April, with Saudi Arabia stepping up to fill another decline from crumbling Venezuela.
10 more oil rigs were put to work last week across the US, according to Baker Hughes weekly report, with Texas adding the bulk of those new rigs.
For a fourth straight week money managers cut back their net-long holdings in Brent crude oil contracts, but added to positions in RBOB and ULSD. WTI positions saw a 3rd consecutive reduction in speculative net-length, but all 4 contracts remain well above previous years.