Overall, the scheme worked, WTI advanced nearly +100% on an ex fundamental basis, but the type of distribution the market constructed is dangerous. P shape distributions are notorious for overhead supply, and if larger timeframes don’t believe in the move, the unlocking of overhead supply generates the waterfall effect. Supply starts in the 43-51 range in widening of the base that has rotated for 3.5 months. The oil market has to essentially cater to these folks, because if animal spirits wane, the unlocking starts.
That is exactly what we see today. The animal spirits wane as technical breakouts have been rejected. Along with fundamentals weighing on the physical market. Our major concern is when the unlocking starts the momentum and weight of overhead could send prices to the next migration of 41.60-36.