Futures, Seasonality Make Oil's Bullish Case

But the other chart that I bring in this time is that of crude oil seasonality. Seasonality tends to work a little better in commodity markets because it's basically the physical worldly seasons that are driving the activity and behavior that influence commodity supply and demand.

The historical tendency is that you see *on average* positive seasonality for crude oil prices from July through October (after that it switches over to negative seasonality). So all else equal, and assuming seasonality does hold (it doesn't always - averages can deceive!) it's a tick in favor of the oil price. When you get a positioning reset and positive seasonality, it's probably a good thing (at least a good thing for the bulls).

Crude oil speculative futures positioning has come down slightly in the latest reading - but bigger picture, it is down significantly since the peak in February.

Crude oil seasonality is about to go from neutral to positive. All else equal, and assuming seasonality actually works (caution: it doesn't always work), it's something to add to a bullish case.

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Trader Velizar Mitov

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