Energy Futures Surging Higher To Start Week
Energy futures are surging higher to start the week as the US announced it would let waivers for Iranian crude buyers expire. There are also reports that the US may have taken an unusual stance of signaling support for the Libyan commander trying to overthrow the UN-backed government. Add uncertainty from those 2 OPEC nations to the certainty of Venezuela’s sad situation, and it’s easy to see why oil prices are on the rise today.
If the early gains today can hold, this would mark a technical breakout for all contracts, leaving the door open for WTI to make a run at $70 and Brent to have a chance at $80, which would mean another 15-25 cents of upside for refined products. If for some reason prices can’t hang on however, this early spike will look like a bull trap at the end of a strong spring rally.
Money managers continue to jump on the energy bandwagon, with net-length held by speculators increasing in all of the big 4 petroleum contracts last week, while WTI saw an 8th consecutive week of gains. While the net length in oil has been steadily increasing of late, the total exposure is still close to the 5-year average range for this time of year, suggesting there’s more dry powder available should those funds choose to continue their buying spree. RBOB gasoline meanwhile is approaching a record-high net length, which can be a contrary indicator, since so many speculators have already bet on higher prices, the market can run out of new buyers.
Baker Hughes reported a decline of 8 oil rigs in the US last week, spread out across Texas, Oklahoma, Louisiana and Colorado.
The EIA this morning published a note on the changing dynamics of US energy trade with Mexico.