2024-04-07 08:29:58 ET
Summary
- Speculators in the NYMEX West Texas Intermediate oil futures market are no longer positioned for further downside in oil.
- The bearish narrative of a US and global oil glut caused by excess US shale production growth has crumbled.
- The easy money has been made in USO and it's time to sell and take profits, with more upside leverage in energy stocks.
- In flat oil markets like 2010-14, shares in energy stocks can produce strong returns.
Back in January I wrote a bullish piece here on Seeking Alpha covering the US Oil Fund ( USO ) titled The US Oil Fund, 4 Reasons to Buy Crude .
In it I covered four key indicators I watch for assessing the health of the US, and global oil market. In short, I concluded there were clear signs of a tightening in the supply/demand balance in the crude oil market while the weekly Commitment of Traders Report from the Commodity Futures Trading Commission (CFTC) suggested speculators were not positioned for a rally in oil.
That left oil, and the USO, an exchange-traded fund (ETF) that tracks US oil futures, poised for a significant move to the upside.
Since publication shares of USO have surged over 14.4% to close at $82.40 last week, close to the mid-$80s target for USO outlined in my January article....
Read the full article on Seeking Alpha
For further details see:
U.S. Oil Fund: Time To Take Profits (Rating Downgrade)