Here is a plot of price as of Tuesday each week vs US Production+Unaccounted for Oil.  I add Unaccounted for Oil to US Production to get a little clearer picture, a little sooner of what US producers are doing since EIA estimates weekly production.

It gives me a little concern for the bullish case since production has risen slightly recently.  I was surprised that a move to $50 had such a dramatic and lasting affect on US production.  I was fully expecting a drop below 9MM bbl/day.  That said, given the strong floor that seems to be established in the $42.50-$44 range by large traders/professional money, it is my belief that producers likely hedged their September-November output knowing a seasonal downturn in price was likely triggered by the refinery switch over for winter.

So now the game is for US production to fall making room for Iranian oil which will hit early 2016.  It is also by belief that the Saudis would like to pick up another 500k-1MM bbl per day of exports to the US, so oil prices could be capped in the $50s for awhile until US producers make room for more OPEC oil.

A lot of hedges some placed last year in the $80s and $90s along with new ones this summer in the $60s will be rapidly expiring in coming weeks and months.  That is likely to have dramatic impact on US production.

The COT report from my previous report indicates managed money may be slightly ahead of the big move up in price, yet this divergence still indicates price is likely to make a significant upward surge.  If it becomes obvious US production is falling, that surge will materialize.

In other words this trader is very cautious about shorting.  Really I only like to short when price hits $50, but I have been known to take out shorts at lower prices.  But I am a big time buyer in the $43 area.  I've lowered by UWTI target from $10 to $9 and even was able to pick some up this week at $8.25.  I'm buying USO via put options around $14-$14.50.  But I sell on each surge.