USL - A Short-Term High In Oil Prices

2024-03-13 09:15:00 ET

Summary

• Oil market fundamentals are holding up well, and elevated refining margins should help push inventories lower in the coming weeks.
• However, speculative positioning is beginning to reach levels of extreme bullishness, and history suggests futures returns are limited from such levels.
• In addition, futures front month spreads have also moved lower of late, indicating physical market tightness may be lessening for now.
• As such, although positioning can certainly move higher from here until we see a pick-up in demand from the summer driving season, crude oil prices are probably set to continue to consolidate around the $75-$85 range for the time being.

A short-term top in oil?

After rallying more than $10 since December, oil prices may be set for a period of consolidation as a number of the underlying drivers of the rally are no longer wholly supportive of higher prices....

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