WTI continued to find support from Libya and North Sea outages as well as Saudi Arabia’s reported willingness to extend quotas for another six months. WTI also found some support from Middle East geopolitics. Though not directly affecting output, these regional uncertainties lead to additional short covering by some participants. The CFTC report confirmed short covering by the managed money sector, which were forced to cover 38,647 contracts as prices rose. Markets rising on short covering are not destined for longer term gains. Sustainable gains for prices need to be met with open interest gains as the price rise.
The storage report last week came in a little above expectations with an injection of 10 Bcf. With the declines in Mexico exports, this week’s injection should be a healthy 50+Bcf.
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