What Really Caused The Oil Price Rebound?

WTI moved higher on the week by about $1.50 through Thursday as aggressive short covering tied to a bullish IEA report and an informal gathering of OPEC members in September outweighed yet another extremely weak round of DOE stats and accelerating output gains from Iran, Iraq and Saudi Arabia. $43 oil looks to be fairly valued to us at the moment and we continue to wait for the market’s longer term bearish momentum to create buying opportunities below $40.

To that point we still believe that there is enough negative momentum and fundamental justification to move oil into the high $30s. The global overhang of crude remains massive, product hubs are drowning in gasoline and distillates and core OPEC + Russia continue to pump oil at ludicrous speed. Meanwhile the strength of the global economy remains a risk from the demand side as evidenced by this week’s IEA report which- des
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