A slick move in crude - black gold has the wind to its back

6月21日

The oil market has the wind to its back as we head into the Northern Hemisphere Summer, with WTI crude having rallied 13% since the 4 June lows. The rally from $72 has seen price retrace a decent portion of the falls seen between April and June - which resulted in the market running one of the most bearish positions we’ve seen in years. Clearly, the demand side of the equation has seen that positioning challenged, and along with a punchy 8.8m barrel draw in the weekly inventory report, has resulted in a strong push higher in price. Given we’re now seeing price trending, amid building momentum, there are signs that systematic players (CTAs) are chasing this move above $81 higher and therefore strength begets strength. Given the still low positioning, and deeply backwardated crude futures curve that really incentivizes oil traders to be long the front-month WTI crude futures for the carry (upon expiration), the near-term signs look positive for crude, where pullbacks should offer opportunity and we’d be looking for a push into $85, perhaps even to revisit the highs seen in April of $87.63.