Oil Prices are driven by the Paper Traders

[dan_s]

Are hedge funds ready to start buying oil again? Oil Price.com Opinion.
Investors sold petroleum for a fifth consecutive week but the pace of selling slowed as the balance of risks began to shift to the upside and beaten down prices provided a more attractive re-entry point. Hedge funds and other money managers sold the equivalent of 15 million barrels in the six most important petroleum-related futures and options contracts over the seven days ending on December 13. Fund managers sold a total of 236 million barrels over five weeks starting on November 8, according to position records published by ICE Futures Europe and the U.S. Commodity Futures Trading Commission. From a positioning perspective, however, the balance of risks has clearly tilted towards the upside, especially in crude oil. With positions already so bearish, there is considerable scope for investors to rebuild bullish long positions once the news flow becomes more positive or at least less negative, which would likely lift prices in the short term.

MY TAKE: If Biden is finally done draining our SPR to reduce gasoline prices (which it appears that he is), U.S. and OECD petroleum inventories are not likely to rise in the first quarter like they usually do. OECD petroleum inventories based on Days of Consumption remain below 30 days of demand. At 27 Days of Consumption the "Right Price" for oil is over $100/bbl. Without any increase in physical inventories, OECD Days of Consumption will drop below 25 days next summer, a level that has not been seen before.

https://oilprice.com/Energy/Crude-Oil/A ... Again.html