Comment: Yesterday's "Golidlocks" API report - not too much larger than expectations, but still a sizable build (>+2mmbb), coupled with crude's overnight price action gives me comfort that short-sellers won't be coming out en mass similar to the prior two reports. We'll still need to wait to see what the EIA reports at 10:30am today, but the moves this morning in crude make me believe Janet's lack of über-dovishness is weighing more heavily on traders minds'. Last night, I saw a breakdown in an ascending triangle forming on the 30min chart and opened some weekly 25 puts. (http://www.basementmacro.com/uncategorized/bot-4-clh6-11000-mar-16-loh6-25-put-22-mark28-45/) I'm looking for new lows.
Saudi isn't getting involved in Syria because of oil issues, they're getting involved because it's a proxy war against Iranian interests. Nothing to do with the price of oil. Similarly, we've seen the historical "war premium" disappear from the price of oil. Ignore these concerns and continue to short.
This has been a key and very profitable pattern, as of late. I'm not seeing anything in the CFTC Commitment of Traders Report that suggests this should/shouldn't repeat. Last week, we did see a massive redemption (~$600m) in a triple levered short oil ETF. That could have reduced the number of less aggressive shorts that would be looking to cover on another massive build. All that said, I think you need to remain cognizant of the pattern and adjust based on what the price action reveals. So far, the PA is showing us there are quite a lot of buyers in the 29s. If we can't break below 29.00 on a larger than expected build, we'll probably see the pattern repeat.