Our DTO short is up 98% and I still maintain we have more gains ahead
“Davidson” submits:
Is it meaningful that $WTI just popped above its 200 dy mov avg? The media may say so! Certainly, traders will say so! Truth is that past prices are no indication of future prices. Prices are set my market psychology and not some signal coming through based on fundamentals as many promote.
Tomorrow the API Oil report comes out with the EIA US Oil Situation report on Wed. We are just exiting the Spring catalyst change-over where refining inputs are low and US crude inventories build. As soon as refineries come back on line, US crude inventories drop. That we are just above the 5yr US Crude Inventory average will likely see current inventory levels plummet below this benchmark. Current inventories falling below or rising above the 5yr mov avg have always been met with rising/falling prices as traders misinterpret short-term data to have long-term meaning.
Long-term history of oil prices do not show higher or lower levels of production vs. inventories as drivers of price the way traders indicate every week. But, believing in these signals generate shifts in market psychology which shifts prices accordingly. Near term we are likely to see higher oil prices due to traders who believe past prices predict future prices.
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