Crude Spikes To 3-Week Highs After Biggest Surge In Open Interest In 10 Years

WTI is now up 14% from its lows last week, with Sept 2016 trading back above $44.50 at 3-week highs.

Oil's rapid OPEC-headline-driven recovery continues...

Despite rising inventories (and record production levels in OPEC), the Saudi statement hope remains and prompted the biggest spike in WTI Open Interest since August 2006 yesterday!

As Bloomberg notes this is the highest level of aggregate open interest since 2013 with volumes above 1mm for the 7th session in a row.

This was a signal of the addition of length and more than just short covering, according to Petromatrix analyst Olivier Jakob.

 

Increases driven by reported comments yday from Saudi Arabian oil minister Al Falih about balancing mkt, says Eugen Weinberg, head of commodities research at Commerzbank

 

This "is a big increase,” Petromatrix analyst Olivier Jakob says by phone. “Based on that, it’s difficult to say that the rally of yesterday was just short covering, it points to the opposite, fresh longs and shorts coming into the market”

Bloomberg also points out that WTI front month 25-delta skew jumped to iutsmost 'bullish' biased since November...

WTI Call vol is highest relative to put vol (demand) since Nov 2015...

 

Of course, that is "probably nothing" but we suspect the last few days sudden spike in prices and aggregate positioning are a little excessive relative to any fundamentals...

“The contracts have recovered well but be careful,” PVM Oil Associates director Robin Bieber writes in a note.

 

“The speed and size of the reaction up should make one very cautious at the 34-day MAs. They’ve spoilt plenty of bullish parties before”