Oil Gets Green Light To Test $110....

With OPEC holding production levels steady and the EIA reporting a surprise 3.1M barrel drop in crude inventories this morning, we now have the green light to test and likely take out the $110 level in crude. Our Oil thesis outlined in our Feb. 10th blog appears precisely on point with Oil now a stones throw away from our $107-110 target. Continue to hold all long positions in Oil and Metals as the fundamental backdrop of the entire commodity sector remains firmly in tact. With regard to the equity markets, please note that structural weakness in financials and tech are now being masked by strength in energy and commodity related plays.  However, begin taking profits in large cap Oil and Agro stocks as I expect a decoupling of these stocks from their underlying commodities over time....we're seeing a bit of that today in the Oil sector with XOM and VLO in the red even with Oil up $5.  In general I continue to be much more comfortable being short equities rather than long.