We have spent 2 days now traversing the same narrowish range (at least for oil). It has been a good time for short term chart trades but no progress for longer term positions.
I haven’t seen any new concrete factors today. More talk and speculation about the OPEC meeting, blah blah…
But one argument did get my grey cells into a twist: Apparently, many hedge funds and money managers built long positions at the time of the OPEC agreement back in December - OK, I understand that. Then over the last couple of weeks, and especially last week Thursday, they modified their longer term view and began closing out a large part of these positions and took a considerable loss - OK, I understand that, too. But then I get a bit lost because the argument continues that now that these long positions no longer exist they are apparently no longer holding the market back and price is able to go higher…errr, hang on… so, because all these fund managers were buying the market and holding their positions, the price could not go up? but now that they are closing these positions the market can rally…errr what??? Well yes, that is what the man said:
"for the week ending on May 2, hedge funds slashed their bullish bets on oil futures yet again, taking their overall net-long positioning to its lowest level since the OPEC deal was announced in November 2016…If a lot of bullishness has already been squeezed out, there is less built up pressure to push prices down further. Put another way, there is a lot more room now on the upside since everyone got out of their bullish bets. We are moving toward a positioning where these money managers are no longer over-invested,… This opens up the potential for them to start buying again.”
Sigh, there was a time when life used to be so simple…
Hourly chart for last two days, going nowhere in particular (but the overall bias is still negative):