Signs of Shift in Oil Balance Draw Investors Back In… WSJ

I would probably change the headline to “Expected Shift in Oil Balance..”, and suggest that the high level of long speculators are actually looking for higher prices first, which, of course, would need to see a drawdown in stocks in order to occur… Yes, backwardation helps bullish speculators roll into the next month, but I would think that speculators buy futures because they expect prices to rise… One could play a view of expected backwardation specifically by buying the futures spread (buy a front month, sell an outer month), buying calls on the spread or selling puts on the spread… These options are called cso’s or calendar spread options…

Here are some interesting charts From the article:

It looks like “investors” have already “jumped back into the market”… The question going forward is, have investors over anticipated OPEC success?  We are pretty much at the same price level we were when the OPEC meeting ended, and compliance has been impressive… Do we need to wash out some length before moving higher?  Could the spread actually weaken on higher prices as massive length begins to liquidate nearby futures?

https://www.wsj.com/articles/signs-of-shift-in-oil-balancedraw-investors-back-in-1486296002