VelocityShares Credit Suisse 3X Long Crude ETN (UWTIF)

[FreezeThese]

The quintessential question is whether the commodity will continue its upward trend. Despite a few positives, several issues remain.

Iran
Iran recently made an entry in the oil export market, after EU and US sanctions were lifted. Iran is in no mood to freeze production, and is in fact, looking to collaborate with a number of foreign energy producers, and increase production levels.

According to a recent report by Reuters, the director of the National Iranian Oil Co (NIOC) has said the country’s oil and gas condensate exports would augment to 2 million barrels of oil equivalent per day (boepd), by the end of this month. Iran’s willingness to increase production and exports is bound to be troubling for the Organization of Petroleum Exporting Countries (OPEC) and other oil investors.

US Oil Inventories
Despite declines in rig count, US inventories remain robust. US crude oil inventories now amount to 518 million barrels, which is an all-time high. US oil production could witness major declines in coming months, but a recovery in crude prices will in fact, move it to raise production again.

According to CNBC reports, several US oil and gas companies, including Continental Resources Inc. (NYSE:CLR) have hinted that the rise of crude to $40 per barrel, would be enough to trigger a production increase.

Conclusion
We believe the recent short squeezes in the energy sector are not sustainable for the long haul. The supply still outweighs the demand, and the weak Chinese market means an immediate rebound is not on the cards.

http://www.bidnessetc.com/64954-recent-energy-short-squeeze-sustainable-longrun/