Shares Outstanding In Biggest Oil ETF Plunge To 13 Month Low

How many times have I said that betting on further increases in crude prices is probably a bad idea at this point?

Between the Saudi’s perceived reluctance to extend the output cut deal past six months (for what I contend are political reasons) and US shale’s refusal to just roll over and die so the market can rebalance once and for all, it seems exceptionally unlikely that crude is going to get a sustainable bounce.

Well, consider the following re: inventories (via Bloomberg)…

WTI little changed to trade near $53. EIA inventory report showed U.S. crude stockpile build in line with expectations. Market awaits data on production cuts from OPEC, non-OPEC producers.

  • Build in U.S. crude stockpiles was essentially in line with what consensus expectations were and smaller compared to normal seasonal levels, Mike Dragosits, senior commodity strategist at TD Securities in Toronto, says by phone
    • Market is waiting to see official production cut data from OPEC, non-OPEC, he says
  • U.S. crude inventories rose for 3rd week, +2.84m bbl to 488.3m bbl
  • Cushing crude stockpiles fell for 3rd week, -284k bbl to 65.4m
  • Gasoline stockpiles +6.8m bbl to 253.2m bbl, highest level since February
  • March WTI -10c to $53.08/bbl at 11:16am ET
  • March Brent -21c to $55.23
  • Brent at premium of $2.15 to WTI

… and then in light of that, have a look at this…

  • Shares outstanding of U.S. Oil Fund, biggest exchange-traded fund that tracks crude prices, fell to 253.9m on Tuesday, lowest since December 2015, data shows.
    • USO saw withdrawal of ~$131m on Tuesday, biggest daily outflow in 7 weeks
    • Market perceives risk/reward as not very appealing with oil in the mid-$50 range and with expectations of an adequate response from U.S. shale production, Bruno Stanziale, director of commodity strategy at Eurasia Group, says by phone
    • USO held 54,409 contracts of March WTI futures as of Jan. 24, according to data available on co. website
    • March WTI +43c to settle at $53.18/bbl Tuesday, highest since Jan. 6; WTI has traded in $51-$54 range since December

Any questions?

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One thought on “Shares Outstanding In Biggest Oil ETF Plunge To 13 Month Low

  1. Thanks for tracking this. Oil is the best trigger for the deflationary cascade predicted by Dent since a high oil price blocks the effectiveness of just printing more money for free and pulls the rug out from under the financialization gimics that are driving stock prices ever higher and paying for excessive government.
    Governments’ central bank puppets can print their way out of paper scams but they can’t print oil.

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