Energy futures are trading lower again this morning, in spite of hints from OPEC over the weekend that it might put production caps on Libya and Nigeria, and the Saudi Aramco boss predicting a global oil shortage to come.
The complex has now given back most of the gains it made during the 8-day rally to end June and start July, and technical studies are rolling over and favoring lower prices near term. That said, the bears still have a fair amount of work to do before a new bear-trend can be declared, as WTI is still $2 above its June lows (which also marked the low for the year so far) and refined products are about 8 cents higher than where they bottomed out 3 weeks ago.
Money managers added to their net long positions last week, largely by covering some of the large outstanding short positions in Brent and WTI. Once again, the large speculative class of trader (largely hedge funds) proved how challenging timing the oil markets can be as those shorts were covered as of Tuesday, meaning those funds missed out on the selling in the back half of the week.
As if the weekly CFTC reports on trading positions hasn’t provided enough evidence this year, a pair of articles this morning note the difficulty many large market players have been having of late, which many are blaming on the continued growth in trading among CTA’s and automated traders.
After a 1 week dip, the oil rig count resumed its march higher last week, with 7 new rigs brought online according to Baker Hughes’ weekly count. Oklahoma and Texas both saw an increased count last week, while Colorado and North Dakota were flat.