Why you should be VERY cautious about the oil sector today

From Justin Brill, Editor, Stansberry Digest:

Oil prices have staged one of the biggest rallies in history…

As regular Digest readers know, crude oil soared more than 50% over the past seven weeks. But if you thought this rally was driven by bullish bets on higher prices, think again…

According to the latest data from the U.S. Commodities Futures Trading Commission (“CFTC”), it was actually short-sellers that were behind the big jump in prices.

How could that be?

Because short-sellers must buy back assets to close their short positions – in this case, oil futures or options – this buying can drive prices higher just as easily as when investors are buying long positions. In fact, because short-sellers are often motivated to close positions quickly – either to lock in profits or stop further losses – short-covering rallies are often some of the biggest, most violent rallies you’ll see.

CFTC data show short positions…

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