The price of oil has been rising for more than a week. What gives?
The price of oil has been heading up for eight trading sessions, raising the hopes of energy companies, investors and the whole province of Alberta. But is this rally the real thing, or is the market misreading the signs? Here are two takes on the oil price rally.
The Bear
Stephen Schork is the editor of the Schork Report (Schork Report)
Stephen Schork is the editor of the Schork Report, an investment newsletter that is dedicated to the energy market. Schork describes the current rally as a classic short squeeze rally. Which can be a bit tricky to explain.
‘All of the fundamental drivers in this market point to even lower oil prices.’
– Stephen Schork, The Schork Report
As the price of oil dropped through the fall and winter, many traders started to short futures contracts, essentially betting that the price will continue to go down. In the past two months, the price of oil has started to rise and some of the traders who were shorting futures contracts had to cover their short positions, by buying futures contracts, which pushes the price up higher. Clear?
- Canadian dollar gains almost 2 cents as oil rises and interest rates stay
- Canadian dollar at 82 cents US as oil surges for a 2nd day
“All of the fundamental drivers in this market point to even lower oil prices,” said Schork in an interview.
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