CannonTrading_Ilan
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I asked my colleague Mark O'Brien to contribute his opinion:
To this analysis I would contend that a three-day increase in the price of [Dec.] crude oil is an insufficient sign of a price move that’s somehow counter to any longer-term seasonal pattern, nor a counter reaction to the handful of recent events you interpret as bearish: the last one or two weekly EIA reports on crude supplies, press releases related to recent OPEC meetings.
In fact, larger seasonal forces may be at work. To quote a respected source, “consumption of crude oil may be greatest in the fourth quarter, but the market comes to it well prepared. Inventories are already high. But refiners in several large-producing states are subject to tax on year-end stocks. Thus, refiners spend much of the fourth quarter actually working their stocks down by maintaining their runs with those supplies and trying to postpone new purchases as long as possible preferably into the new year.”
It may be worthy to put this in a larger perspective. Going back almost six months, Dec. crude oil has been trading in a ±$9.00 range between ±$51.00 and ±$60.00. Even the arguably biggest fundamental event of that time period – the September 14 attack on the state-owned Saudi Aramco oil processing facilities, which cut the country’s oil production by about half and represented about 5% of global oil production – pushed prices above that range for barely 48 hours, which was followed by ±2-week price decline of ±$10.00 all the way down to the lower levels of the price range.
