Quote:
Originally Posted by BrownDrake
Because those people covering see less downside than short term upside and they are locking in gains. We are probably in a bottoming process. This is not 2008/9 where you will see a V shaped oil recovery, this is a fundamental supply/demand imbalance oil price collapse. Before the all clear is sounded you will likely see a re-test of the lows or a higher low in the low 30's or high 20's. We probably eventually see oil recover to the mid forties by year end if US and other Non-OPEC production shows significant declines.
OPEC has not gone through this pain and the burning their cash reserves to see world rig counts recover - they are attempting to stabilize the price not make it go higher to save these producers.
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I don't really disagree with anything you said here, though I would think most long term shorts have already locked in gains and if your thesis of a short squeeze is correct, it's because they're getting margin called after getting their faces ripped off in the last 2 weeks like ^ just posted. Not because they're locking in gains.
I'd also mention that we have already re-tested the mid-20s lows and bounced hard from there to form a pretty textbook "W" double bottom. Previously every re-test of the lows failed so there is a real distinct change in behaviour here. But you're right we could test mid 20s again to form a triple bottom, I personally think that's pretty unlikely and the lows are in.