The United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, if off 7.3% over the past month, indicating that it could take a while before crude and the related exchange traded products mount another credible comeback.
Some energy market observers are clear in their assessments and they see oil trading higher in the coming months. Some professional traders do not see the current oil bear market lasting very long. Still, some concerned oil market participants believe oil is rallying without strong fundamental cause. A case can be made that oil’s rally is defying still troubling supply dynamics and tepid demand.
Conversely, many traders remain bearish over the short-term, betting on weakening seasonal trends. Money managers increased wagers on declines in oil prices to a record on increasing U.S. inventories and ahead of a seasonal refinery maintenance that will curb crude demand – futures have dipped in each of the past five Septembers, reports Mark Shenk for Bloomberg.
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OPEC has kept up production to pressure high-cost rivals, such as the developing U.S. shale oil producers. The International Energy Agency expects it will take several years before OPEC can effectively price out high-cost producers.