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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: The Ox who wrote (18752)	2/15/2017 6:07:36 PM
From: John Pitera	1 Recommendation Recommended By sixty2nds Read Replies (1) \| Respond to of 33421

Hi OX, the crude futures open interest has expanded to be as large as it was when Crude prices topped out at around $107 back in the fall of 2014, and the hedge funds have an exceptionally large long position. I don't believe it's all calendar spreads either. Considering that the commercials, the crude producers are hedging like there is no tomorrow... It will be very difficult for Crude to make any meaningful upside progress, unless we get some major price disruptions or some exogenous shock that we do not know about. The prospects of that are not that good. I don't like the look of the price action in crude or Gasoline the RBOB April, May and June contracts look like they could come down 10 to 15% without any difficulty. I I've been watching the intraday price action in crude the past 2 weeks and it does not look bullish to me... It reminds me of the way the EUR was trading when it was in the 1.07 - 1.08 range 2 weeks ago. 2 Fridays ago I wrote a very long post working out the precise contract size and the mechanics of implementing a short strategy for the EUR if one were inclined to feel it could fall to the .9600 level or even a touch lower and then my computer ate my answer..... back to crude..... if the market moves to backwadation on the longer dated futures... that would be lower prices..... The Rig count is undeniably rising the $50 to $55 level is the area where so many of the US frackers are nicely profitable on more of their wells already dug.... and ready to power back up. News that hedge funds are *net long 160 million barrels in calendar spread options* on the New York Mercantile Exchange (Nymex) shows how the fund managers are expecting the price curve to switch to backwardation as the physical market rebalances itself from the excessive supply,” Ive noted. John