While I considered covering my position on Friday I have decided to stay short oil. Oil traded very weakly on Friday, barely managing to cling to support at $78. I would not be surprised if it gaps down on the open tonight or in tomorrow's night session before the open on Tuesday.
With weather warming up, a resurgent dollar, high inventories in cushing, high overall inventories and lots of oil floating offshore there are not a lot of positive catalysts for oil right now. My suspicion is that we go lower probably fairly quickly. There is still a chance that crude trades in a choppy fashion at these levels until the spring shoulder season but I suspect that we'll go lower sooner than that.
Longer term I am still bullish it is just that short term oil looks overbought (due to beginning of the year index buying and weather) and due for a correction.
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