A +12 rise in the total (oil+NatGas) Baker-Hughes AHEM “Baker-Hughes-General Electric” (hereinafter referred to as BHGE) weekly drilling rig count report once again reveals serious weakness in the current frenzy of short-selling. This has not dissuaded hedge funds as they continue to hold a record number of short positions in WTI futures.
For the umpteenth week in a row, oil in storage is down. This week’s numbers are scorching to any bearish thesis on a further drop in the futures price of crude. Storage at the Cushing, OK hub is of particular note. But we are talking about an enormous amount of money staked against crude oil at the moment.
A rational mind looks at the following and says “Buy”. But this is crude oil, and rational thought only bears fruit over a period of months, not days or weeks.
Of particular note is gasoline inventories. These numbers, at the beginning of fucking July, are poison. Refineries are pumping out gasoline in record numbers. They cannot keep up with demand.
“Ahhh, but hedge funds are holding record positions!”, you bleat. Yes, but if one looks at the actual performance of hedge fund managers over the past five years (dismal) perhaps it would give you pause. Perhaps.
Something is going to snap here. It will be brutal and it will be swift.
For the second week in a row, active drilling rigs are down in the Permian Basin. And flat in the Eagle Ford. The bulk of added drilling rigs in the entire 50-state region was in fucking Alaska, which increased it’s total rig count to 8 from 4. All horizontal. All meaningless.
Everything is meaningless outside the Great State of Texas, and specifically the Permian when it comes to crude oil in 2017. Everything.
The following comes from BHGE and it is not bearish at all:
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