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Speculators Vulnerable To Short-Covering Rally

Friday June 30, 2017

In the latest edition of the Numbers Report, we’ll take a look at some of the most interesting figures put out this week in the energy sector. Each week we’ll dig into some data and provide a bit of explanation on what drives the numbers.

Let’s take a look.

1. Oil begins to rally on short covering


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- Bearish bets on crude prices hit a record high, according to the most recent data.

- That suggests traders are incredibly pessimistic, betting on falling oil prices.

- But the preponderance of bearish bets risks a sharp short-covering rally. “The market is vulnerable to a very violent short-covering move,” Thibaut Remoundos, founder of Commodities Trading Corporation Ltd., told Bloomberg. In fact, that could be underway.

- Crude prices have gained more than 5 percent since bottoming out last week.

- There could be further gains in prices. All the while the selloff (and subsequent rally) had little to do with changes in fundamentals, and much more to do with shifts in market sentiment.

2. Oil industry in danger of wasting $2.3 trillion

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- A report from Carbon Tracker Initiative estimates that the global oil industry is set to spend $2.3 trillion on oil projects that ultimately might not be needed if the world reaches peak oil demand by 2025.

- Demand scenarios vary depending on who you ask. Some…

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