Raymond James: Bear Market for Oil Caused by ‘Fake News’

Relentlessly bullish analysts at Raymond James are calling out the entire commodity market. From Bloomberg:

The recent collapse in oil prices was triggered by a breakdown in the technical charts but fueled by the ‘negative feedback loop’ of bearish headlines that usually follow price declines,” the analysts wrote in a July 3 note to investors. “Some oil price headlines have been misleading, or outright wrong, and they have distracted investors from what we believe is fundamentally a bullish overall picture.”

Those concerns have been overblown, the Raymond James analysts argued, saying trends pertaining to U.S. inventories, production and gasoline demand have been misinterpreted. They put out a list of “myths” that explain the downturn and set out to debunk them in arguing that crude can rise about 45 percent from current levels.

Raymond James focuses on U.S. inventory data since early March to capture the impact of OPEC’s production curbs given the time it takes to ship oil from the Middle East to U.S. refineries. They find U.S. crude inventories have averaged “massive” declines of roughly 280,000 barrels per day over this span, compared to a mean build of 180,000 barrels per day during this seasonal period over the past decade.

Moreover, factoring in stockpiles of refined products “would actually be more bullish than looking at the crude only trend,” the analysts contend. Extrapolating this to the global level implies that crude “inventories have been falling by about 1.2 million barrels per day over the past four months,” according to Raymond James.

EIA confirmed this week’s API news of massive drawdowns. Crude futures dropped as a result. Draw your own CONclusions. The end game will be a bloodbath.