WTI rallied back into $50 territory this week with help from positive OPEC speak regarding an output cut renewal, production outages in Libya, Iraq and Canada and compliance levels on output cuts near 95% (via Reuters) for March. We continue to be believers in flat price strength thinking that high levels of OPEC compliance and strong odds of a supply cut extension will make spec-short positions hard to hold once sharp draws to U.S. crude inventories begin in the coming weeks. While bearish inputs such as strong U.S. output and bloated U.S. inventories persist, this week was a good example of OPEC’s influence in talking the market higher and creating headline risk for short positions in similar fashion to what bond traders experienced when the U.S. Fed expanded its balance sheet via QE. – We still expect lagging U.S. crude demand (both for refiners and refined product consumers) […]