Crude Oil Opens Above $38, Takes Out 1-Week Highs

With hedge fund short positions near record highs and speculators at their least bullish in almost five years, oil prices have spurted higher in the early trading as the diplomatic gloves come off in The Middle East. Despite record levels of crude inventory around the world, WTI Crude is trading above $38, up over 3% from its $37.07 close on New Year's Eve. Algos ran the stops above last week's highs ($38.32) but for now prices are not as excited as many would have expected. Brent, for now, is outperforming and trade 45c rich to WTI.

WTI tags last week's highs but is holding for now...

 

Some context - back to the early December inventory build levels...

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As expected, Brent is outperforming - now trading 45c above WTI...

 

Hedge fund shorts near record highs may get hurt...

 

But don't forget that while a "war premium" makes sense in the marginal production barrel sense, with inventories at their limits amid a record glut, unless this escalates even more, the physical demand/supply divergence remains vast...

And of course, if oil prices are higher then US equity prices are higher because "lower oil prices are unequivocally good for America"... oh wait.

 

Source: Bloomberg