Mixed Fundamentals and Record Long Positions in Crude

December 19, 2016 6:48AM CST

Mixed fundamentals and record long positions could create an interesting last two weeks of the year for crude pricing.

Last week the crude oil market initially overcame press coverage of higher Iraqi oil sales to the big 3 demand markets (China, US and India) to show some respect at that $52.50 support level on the charts. Some might interpret a reversal from last week’s lows as a result of milder end of December weather forecasts and a “quasi-risk-off mentality” as a sign of more near term gains. However, there was a slight chart reversal from a new high for the move this morning and therefore one might conclude that the February crude oil market is vulnerable to some back and fill action. Also, news that China has been moving to end export quotas for its refineries and reports of increased Nigerian and US exports should leave last week’s bounce as suspect to continue. Another issue that might directly affect and limit this bullish market is the fact that the Non-Commercial Net Long position in crude oil hit a new record level at 480,689 contracts. Fortunately for the bull camp, the March crude oil contract fell back by roughly $2.10 a barrel into last week’s lows that might have balanced the market somewhat.

Crude Oil Feb'17 Chart

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