Four days ago, I recommended that we short oil and commodities post the OBL event. Today is pay day. WTI broke into double digits after trading above 110 while Brent headed lower to the 111 range all the way down from 120. While the list of culprits is long, ECB decision to hold rates, the rise in inventories, the spike in USD, the depressing ISM report from yesterday and the ADP employment figures are the most likely suspects feeding the “Has oil gone too high?” question. Another big driver would be the ETF rollover for the next month which tends to get executed round about this time. So we should see hopefully further downward action tomorrow.
In the interest of full disclosure I am short USO.