Oil Market Analysis – EIA Weekly Summary Report

Dollar weakness pushed all commodities higher on Wednesday afternoon causing shorts to be squeezed in the oil market. I am sure Bears are surprised where Oil is now given the negative sentiment on Tuesday, we are trading in a range between $35.96 and $39.64 the last nine days. If there is any weakness if the oil complex the rest of the week, look for gasoline to lead the way, as it had a lesser inventory drawdown than expected by traders. 

Equities and oil are basically the same trade right now, pullbacks are bought up pushing both assets to new cycle highs in this bull run starting from mid February in both asset classes. The “God Father Algo” is orchestrating quite the profitable move for these positional traders. These type of long term highly correlated positional runs are not coincidental, always keep in mind the big picture of who is playing the Game, and how it is being played – these positional players dictate the rules for financial markets. 

Always know who your “Overlord” is and what they are doing if you want to make money in this game. The Overlord in financial markets are the big positional traders who were building sizable positions in multiple asset classes when oil was getting hammered everyday under $30 a barrel. 

The same patterns happen year after year for a reason, market tells give you insight into the thinking and methodology of the big game players. Look to currency markets for many of the clues as often carry trades in part accompany these long term structural trades as the funding source for providing extra juice in the trade.

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