No respite for oil

WTI crude fell 17% in July. We warned about the potential opportunity to sell on seasonals at the start of the month and it turned out to be the best trade in any market.

We may see a late-month bounce on position squaring but that will just be another reason to sell because the August through December period is a dismal one for crude.

The traditional thinking is that August is the true start of the Atlantic hurricane season and trouble in the Gulf of Mexico often means oil price surges but that's no longer true. The main reason is that on-shore wells in the US and Canada are now responsible for much of the marginal supply. Even if they weren't the overflowing stockpiles in the US could easily be tapped.

Bottom line: Whether it's due to storms or position squaring, any bounce in oil prices is a 'must sell'.