JOCKEYING FOR POSITION

Fear of falling further into recession and a slow-down in China in the second half is the argument for falling crude oil prices. Offsetting these factors will be steady global fuel demand growth and tightening non-OPEC supply.

Supporters of the later argument say that concerns over the sustainability of stimulus packages and the credibility of government debt reduction programs will not keep oil prices below the $80 barrier because demand growth in countries outside the OECD and a decline in supply from the US and Russia will help push the market up.

Speculative interests apparently hold this view, increasing length 67% in the week ended July 13, the most since February 2007, according to the weekly Commitments report from the CFTC. Still, these same interests have pared length by 56% since early May, when the highs for the year were posted. market expectations.The intellectual divide between buyers and sellers remains unchanged.

The former hold that a viable, sustainable recovery is underway, while the later remain skeptical. The burden of proof is with market bulls. The precarious equilibrium measured by last week’s $3 range should persist between 75 and 78 while crack values deteriorate marginally.

source: