Oil Price: HFI Research turning bullish on oil price

[dan_s]

Note this morning from HFI Research, which I have a lot of respect for:

It wasn't long ago that everyone was bullish on oil. Bloomberg published an article noting the possibility of triple-digit oil prices this summer and we tweeted at that time that it was not a bullish indicator. Following today's "misleading" EIA oil storage report, we can see that the sentiment side has turned 180. Couple that with what we are seeing on the money manager oil futures positioning, we can safely say that the washout has occurred.

The funny thing about the oil market is that speculators tend to always swing so wildly from one side to the next that you wonder just what's going on in their brains. It wasn't long ago that the conflict between Israel and Iran would send oil prices into the $100s only to not hear a blip about it now when prices are falling.

There's nothing like price-changing sentiment, but I'm here to tell you that the oil data is finally starting to improve just as sentiment bottoms out.
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MY TAKE: EIA reported yesterday that all of the "Big 3" inventories (crude oil, gasoline and distillates) are currently below the 5-year average. June, July, August is the highest demand period for transportation fuel demand. I expect OPEC+ to announce next week that they will extend their production quotas through at least Q3. If so, I expect WTI to move over $80/bbl in June. I'm still using $82.50/bbl for WTI in my forecast/valuation models because WTI spiked up to $87/bbl in April and averaged approximately $83/bbl for the month of April. Significantly higher natural gas prices should more than offset a bit lower oil prices in my forecasts for most of the upstream companies in our three model portfolios.