Crude Crude Crude

[Greg8501]

I am, although, really just short-term momentum trading long positions, looking for quick hits, before it dips back down (basically exploiting the current vol). Having said this, I have an eye of the US data due later today (see below). I am no expert, however, for the sake of your account, be mindful that this is a tough trade, which has attracted a lot of new traders recently given the press. The market can swing big time, thus without a decent stop in place, you can empty your account in a heartbeat. Good luck.

Attention is likely to shift to new indicators of the economic health of the United States, which consumes nearly a quarter of the world's oil.

Consumer confidence for June and the Richmond Fed's manufacturing report are both due at 10 am New York time.

 

[ajtaylor]

Thanks for that, i am ready for the rough ride lol, good luck yourself

 

[cryten]

Hi, I have heard alot recently about Oil having high volume, how recent is this and what is Oil usually like to trade then? I have been trading forex and now the indices.

Just watching Oil for now..

 

[Greg8501]

Take a look at some of the graphs if you get a chance, this gives you a view of how oil has seen a dramatic increase in the past 3 months. I agree with Gooseman above that it is vital to understand the drivers of the oil market. Oil is subject to geo-political events such as the recent news that Israel is practicing war games in anticipation of a possible strike on Iran (2nd biggest producer on the planet). By chance if a strike occurred on Iran, the Gulf of Hormez would get plugged and you would see $150 before you could blink.

My last piece of advice on this would be to get as plugged into the data as possible, i.e. what the USD is doing (as oil tends to move in the opp direction, due to a lower dollar making oil cheaper etc), the weekly EIA drawdown report on Weds at 3.30gmt, US economic data, e.g. Non-farm payrolls, supply disruptions and so on...

BB and CNBC.com are worth keeping an eye on for info, but you really need real-time news to be on top of this. Also worth looking at NewsNow: Oil Prices to get a view of the trends in the market.

Hope this helps.

 

[cryten]

I was looking at TA only, It makes sense to get the full picture. I'll start my reading. Thank you

 

[gooseman]

primary drivers:
supply/demand
geo-politics
weather
trading volumes

the way i trade is independent of direction-all i need is the market to move. don't care which way. well, a little bit i would like to fill my car without having to apply for a mortgage.

 

[gooseman]

if hormuz closes expect to see $200.

 

[Crap Buddist]

Interesting bit on bloomberg saying 2008 71% of all oil transactions are by speculators. ie non supply or users of oil. With all these meetings going on , producers, governements, exchanges, I cant see them letting oil run up and up and all this talk of demand destruction that will whack in.. I think the bulls may get squeezed by the balls... Interesting to see what rules they may bring in to halt its ascent. If they do.

 

[ajtaylor]

as you have all suggested i have sold out, i made a quick £35.00 so beggers cant be choosers, gonna watch for a while now.

 

[Greg8501]

For the sake of petrol prices, I support the call to limit speculation on strategic commodities, i.e. oil, rice etc...

Obviously there needs to be a market for buyers and sellers to hedge phyisical delivery, but hedgies smashing the hell out of it cant be good for anyone. I also read with interest that Goldies latest 1/4 results mentioned thier recent wins in the commods market...the same Goldies who talked up 15-200 oil a few months back and then traded off the back of that...nice.

 

[gooseman]

wheee is that? i'd love to know how to distinguish between speculators and end users.....example BA calls it's bank (e.g. JP Morgan) and says I need to hedge my exposure out to Dec07. Please buy me x future contracts. Execution desk (who have just bought the futures) get a call from an investment fund.prop desk saying I've just bought a call-please sell me x futures to get me delta neutral. how do you distinguish between these?

i agree that there are speculators in the oil market, of course, but there is also a lot of hot air as governments search for excuses as to why petrol prices are going through the roof.

 

[Greg8501]

There has been some talk of this in financial news circles, however, this is all it may be due to the complexities of execution as you say...

I just don't buy this talk from some quarters that it's all about supply and demand. Sure guys like T.Boone Pickens from BP Cap are saying that it's 87m demand chasing 85m supply, but you have to ask, what has changed in the past 3-6 months for oil to spike to 140? No question that longer term oil will run out, coupled with the every increasing costs of extraction, but, we are a long way from this happening, hence my personal view that speculation has had a significant hand in the recent run up...I am in the Soros camp on this one...I see sub 120 oil before the end of summer, however wouldn't bet the farm on this due to the risk of a nasty old Hurricane, invasion etc...Regardless, it is an interesting topic to debate, but a relatively tough trade to pick.

 

[gooseman]

for me the main factors are the eur/usd fx cross. look at the correlation......
the lack of spare capacity if we need to. it is no longer a question of 'turning on the taps'
political instability across the middle east and in nigeria.
plus i imagine that the end users of oil have desperately been trying to buy futures to hedge their exposure. and it they haven't (like ryanair) then more fool them....
commodities are also an inflation hedge.

 

[Crap Buddist]

yeah i dunno how they work it out but bloomie said that info comes from the futures exchange bods. Speculation in 2007 was 33% 2008 71 % so far. see what happens

 

[futuresx]

Why do the grey suits in congress believe that all speculators are long oil? Most are short and are only buying to cover their short positions when bullish news hits the wires causing the jumps like we saw on the 5th and 6th June

 

[gooseman]

Why do the grey suits in congress believe that all speculators are long oil? Most are short and are only buying to cover their short positions when bullish news hits the wires causing the jumps like we saw on the 5th and 6th June

what's that observation based on?

 

[jamescummins]

Hello everyone,

Most market reports COT's, and these contain all the detail of which type of investor is long / short the market. Speculators are net short currently, so they are in fact driving the price down. It does not follow in my view that the high prices are a result of excessive speculation in the markets. Ultimately, the hedge funds and everyone else that is punting the market are finding it increasingly difficult to fund these positions, and are reducing leverage into a more risk adverse market. Another factor supporting the view that it is not funds, or prop money, forci8ng us higher is that there is an absence of any sort of growing surplus. To quote barcap "for the price of a commodity to double over the course of a year accompanied by lower inventories, even in the face of slowing economies, does seem to suggest there is a lot more going on than direct and indirect financial market affects". Having said all that, I would not be surprised to see a hike in the margin rates soonish if we keep charging up - it has happened in the metals market enough, not so sure about oil as I dont really trade it...

Just out of interest, and since this thread is all about oil, is anyone actually trading on exchange? If so, does anyone trade the minis? I would be put off by the margin on the full contracts, and I would also not be happy about having to go through a floor broker as I cant afford to run accounts with too many of them, and it is easy to get smashed by them! The main reason I would be put off them though, is that I simply would not be trading enough size to warrant it. Makes more sense to trade say 20 minis, than a few big boys - that much more flexibility.

Well, if anyone is trading the futures, please let me know your thoughts on whom to trade with, and which platform you prefer....

Cheers,
James

 

[ajtaylor]

So how did everyone fair today? nearly got caught out by the big dip earlier during the day but managed to sell out just before, bit annoyed as i left my desk and missed the fall but got some on the way back

 

[TWI]

I have actually backed off the crude trade for the time being, waiting for the next break beyond the 132-138 range CLQ8. Been making some good return in carbon emissions strangely enough.

 

[Greg8501]

Another interesting day in an incredibly volatile market. I think early 130's is resistance on this trade at the moment. Given we are at close to $137 at US mkt close, I am going short looking at $135, with a stop a 50 points north. There is some chance that I wil get stopped out, but I think we are in a range at the moment (notwithstanding a major event) and 137-138 looks like the top of that range. Just my view...