Strong Gains in Energy Prices
Optimism surrounding a possible resolution to the US-China trade war is taking credit for the strong gains in energy prices this morning. There is still some doubt as to whether or not anything gets done by the December 15th deadline but traders seem to be walking on the sunny side of the street this morning, citing increased pressure on OPEC from Iran to make additional supply cuts as a reason to keep October’s rally still going.
Baker Hughes reported another decrease in active oil production platforms in the US last week. The number of total rigs still open is down by over 180 from a year ago. While the trend in the shuttering of rigs seems like a poor indicator of the future health of US energy supply, one should note we are seeing an inverse trend on the oil output chart as it stays around all-time highs.
Managed money added to their net long positions in all 4 major energy product futures contracts last week, pushing net length in RBOB to a fresh seasonal high. WTI futures look to be setting their sights on one of the last technical resistance levels left on its daily chart this morning. $57 looks to be the level to top after which the path would be open for the American benchmark to test the $60 level.