How I trade crude oil

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Old Feb 22, 2017, 6:33pm   #9
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Oil is dead, the range has contracted. anything that trades @ 50 sucks
when i step up to a mountain, i'll chop it down with edge my hand
-jimi hendrix
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Old Mar 8, 2017, 10:56pm   #10
Joined Dec 2016 started this thread
Originally Posted by View Post
Why I think oil is going down (breaking the range) on the medium term

Oil market has been trading sideways since the OPEC cut agreement. I made several calls on the short side which turned profitable but the market quickly went up afterwards. Today I am not calling a short-term movement: I think we will be entering a new medium term trend to the downside

The recent price action was overwhelmingly a result from political manipulations from OPEC. I won’t get in too much details but the oil producing countries have a budget to manage and Saudi Arabia / Russia were strongly enticed to push oil price higher (both were in terrible situation with a price under $50 a barrel). So we did get an agreement.

Oil went up and is now sitting above $50 a barrel. This movement is natural and reflect new expectations concerning the fundamentals. Yet those are still expectations and despite the implementation of the cut, I think fundamentals remain so-so (at best) and are not fully priced in the market. I don’t know when, but if I am right in a near future production and inventories data should send price lower.
Patience pay off....

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Old Mar 13, 2017, 4:57pm   #11
Joined Dec 2016 started this thread
Originally Posted by jah_b View Post
Consolidation above 48$, but seems to go lower. I'm bearish. What do you think?
I am very bearish.

I am currently working on a new article where I explain why oil will keep falling.

Should be posted tomorrow

You will find it here:

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Old Mar 30, 2017, 10:50am   #12
Joined Dec 2016 started this thread After my call to the downside Oil Trading – Oil is going down on the medium term. (Q1 2017) – Fundamentals, Sentiment and Price Action Analysis

I am now shifting my position to be long on the medium-term: Beginning to Think about Going Long – (Q2 2017)

After the recent correction in oil prices I think it may be time to consider building a long position.
Will regularly update this article.
My reasoning is based on three things:
(1) Market is no longer overbought
(2) Fundamentals are beginning to improve
(3) OPEC should announce new cuts
(4) Conclusion

(1) Market is no longer overbought

One of my main arguments for my previous short was the historical high positioning in oil futures. Professional investors were super-long but the price was ranging while the fundamentals were saying “the glut is still here and growing”.
After the recent correction, markets participants are now more mitigated.

During the week ended March 14, hedge funds decreased their net-long position, or the difference between bets on a price increase and wagers on a decline, by 23 percent to 288,774, the largest decline on record and the lowest level since December. WTI tumbled 10 percent during the period. Longs fell 8.9 percent to the lowest level since early January, and shorts doubled from the prior week to the highest since November

One can think that the still net long position in the market is now more sound and reflect the view of long-term investors (speculators have moved out).
At the same time, the liquidation of the unsustainable build-up in net-long positions takes away some of the harshness of the downside risk. Sort of like a safety valve that has relieved some pressure, the reduction in bullish bets means that there will be less of a danger of another sharp correction in prices stemming from speculative moves.

2) Fundamentals are beginning to improve

As always, fundamentals are the one reason for my long thesis.
I think we are at an inflection point.
Lag between cut and inventories data.
As I already mentioned in different posts:
How to Trade Crude Oil or Observations about Saudi Arabia Production and Oil Prices: Lag between Production Cut/Increase and Effect on Prices
There is a lag between production-related decision (here OPEC-cuts) and their effect on supply/demand and inventories. A rule of thumb is that you can bet on a 3-month lag on average. OPEC cut were decide around the beginning of December – add three months and here we are in March/April.
Some recent data already show this change in trend: lower build than expected, lower inventories in floating storage…
There was bearish seasonal factors in the U.S: it is refinery maintenance season and crude oil stockpiles are increasing. Once maintenance ends, inventories should start going down
The summer season is typically good for oil prices.
Spring: usually lower demand. Indeed refineries schedule their repairs during this period, roughly 25% close
In May the maintenance season ends -> refinery oil process increases -> stock level decreases -> price increases

(3) OPEC is coming back in the game

OPEC members and especially Saudi Arabia are strongly enticed to push prices higher.

When major market participants want something, and this is especially true in the oil market, history shows us that they usually succeed (see slash in output during the 2008 financial crisis and the huge recovery following).
When OPEC does announce – and adhere – to production cuts, crude prices rise.

Saudi Arabia
As we saw with the OPEC deal and the record compliance (120% for Saudi Arabia) – they are willing to commit and make huge efforts (deal with Iran- the archival!) to succeed in their IPO.
What could happen
Keep in mind Saudi Arabia is a big regional power, an allied from the US, a states that has contracts with numerous companies (energy, banks, industrial, defense..) worth billions of dollars .
They have different tools at their disposal to increase oil prices:
–Saudi Sate: announcements, position, influence and action.
Ranging from simple declaration to aggressive cuts.
–OPEC: announcement, position, influence and action.
Ranging from simple declaration to aggressive cuts.
-Big banks and institutions participating in the IPO will certainly have a “nice” and biased vision of the oil market – driving sentiment higher at the right time.
Ranging from reports to direct intervention in the market.

(4) Conclusion

I think that the present situation is now better priced in the market. the market is no longer driven by the OPEC.
This could be an opportunity if expectation were to go up drastically again. I think OPEC may soon interfere and we may enter a new cycle of “OPEC-driven market”, with the OPEC-May meeting getting closer is offline   Reply With Quote
Old Apr 17, 2017, 8:28pm   #13
Joined Apr 2017
Whats the view on oil? Im thinking long at $51, should I play short until then?
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Old Apr 19, 2017, 10:12pm   #14
Joined Apr 2017
Today I didn't trade.

Looking at the chart today my analysis of going short was right for both light crude and brent.

On the 1hr chart for light crude can see maybe my support area could come in for long. What are peoples thoughts?

For Brent; daily I'd have my first support at 52.76 area but I would be more inclined for it to be support of around 49.94

also it had a short all day.

continue with short on brent to circa 50?

light crude will it go lower if so what is next support?
Attached Thumbnails
oil-light-19th-apr-long.png   brent-30min-chart-short.png   brent-daily-19-apr.png  

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Old Apr 23, 2017, 6:38pm   #15
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Joined Apr 2017
Which way is crude going to move this week?
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Old Apr 24, 2017, 3:32pm   #16
Joined Apr 2017
Originally Posted by jobin View Post
Which way is crude going to move this week?
today going short either brent or crude light at 12 noon GMT would have made nice profit. charts showed decent entry based on price action.

missed the train! im looking to short either if i see the entry on price action
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