Thursday, July 13, 2017

Oil Contango is getting narrower

Dennis Gartman notes the now might be an appropriate time to be cover any short oil positions due to the narrowing of the cantango between WTI and Brent.

"ENERGY PRICES HAVE FALLEN FROM THEIR BEST LEVELS and have done so despite the very bullish numbers on inventories of crude and products reported out yesterday by the EIA. 

However, firstly we have to report that crude oil production in Venezuela continues to dwindle as OPEC reported yesterday that production there has fallen to 1.93 million bpd. This has happened despite the fact that all of the other members of OPEC, in aggregate, produced more crude oil in June than they had in May."

"....at $2.33/barrel the contango has narrowed for the week, for it was $2.61/barrel one week ago this morning. For that reason, we are going to move to the sidelines in crude oil, covering our short position..."