Eoin Treacy's view I decided discretion was the better part of valour and closed my short position in the January Brent crude oil contract this morning at $114.35 against my sale at $106.76 on November 1st.

My rationale for opening the position was that Brent crude has held a progression of lower rally highs since April and that it had probably just posted another in that succession. Prices have rallied for the last six consecutive days and today challenged the September 7th peak. While mildly overbought in the short-term, the backwardation is expanding once more suggesting continued short-term demand dominance.

West Texas Intermediate has now also moved into backwardation and rallied emphatically to break above its September high. I suspect the odds have turned in favour of an additional rally for oil prices. Heating oil found support in the region of the 200-day MA last week and has rallied to break the progression of lower rally highs. A sustained move below 300¢ would now be required to question current scope for additional upside.