Fewer traders betting against oil, but few betting on higher prices

(Houston Chronicle) By Chris Tomlinson – West Texas Intermediate is trading above $50 a barrel and Brent, the global benchmark, is above $60. The collapse in oil prices is over and oil exploration and development companies can breathe a sigh of relief. Houston’s economy is spared! Hooray! Well, not quite. Oil prices have been on the rise, but when Bloomberg took a look at the trading in futures, the rise doesn’t so much indicate that traders think oil prices are going up. More realistically, there are simply fewer traders betting the price will go down. That’s a distinction that should give Houstonians pause because it signals there is likely a nearby ceiling for the price of oil that will not bring back the fat days of the last few years. The good news for those in the industry is that we could be getting closer to knowing what the new normal will be. I’ve written in the past about how less drilling is not going to lead to less oil production anytime soon. That’s an important fact, since so much of the Houston economy is built around drilling new wells, not maintaining production from existing wells. There was also news … continue reading

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Source: CTRM Center

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