Big Money is Super Bullish on Crude

As of Tuesday 11/4/2015 hedge funds, swap dealers and the biggest 4 traders were super bullish on oil.  As of today, 11/12/2015, crude is about 10% lower.  Since late August the big money has been buying crude heavily in the low $40s.  What do you think will happen after today?

Sure there is still a glut remaining, but the main driving force behind price is US production.  If it comes down price spikes.  Currently US production+Unaccounted--I feel this provides a truer picture of production than production alone-- has been maintaining around 9.6MM bbl/day.  That is after a fall to below 9.5MM bbl/day in July and September.  The late summer fall in production as WTI cratered indicates to me that producers got caught off guard by the early drop in price and didn't have much in place for hedges in August.  Indeed each time price reaches the $50 region you can see a spike in short positions by the physical and swap dealer groups.

If you look at the latest data you can see the swap dealers are far more bullish on crude than ever, as are the 4 biggest traders, and managed money is becoming more bullish as well.  I expect we will see a huge spike in long contracts from the physical group in the next two weeks as refiners and storage players binge on cheap oil.  Futures spreads are now over $1 so there is a lot of incentive to buy and store whatever is available.  But producers have little incentive to bring on new wells if they can't lock in a price near $50/bbl.