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Oil bounces from low 30s, could end at $10 in 2021

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Hi, First let me say this, when I said oil would go back up. And why my prediction was so off. I had looked at a simple chart someone posted at yahoo finance when i was researching financials of TLRY and based my call on a glance on someones oil chart setup. In the past when i was trading oil i had used my own charts with much better accuracy to the future.

Since I'm helping a fund since December cut their losses (very large) on weed stocks, telling them what to drop, basically told them to drop  everything an go into cash,  and at what point to get into what, which so far is none, I have looked at oil again based on my charts. I can see now where my prediction at 60 was really way off. And indeed it should have been a short, and had i looked at my charts back then, which i didn't since i had long ago stopped trading oil, basically when it hit 55 from 42. I would have easily seen it too. As a matter on the chart since DEC 19, there is SELL written on the chart an automatic signal. back then price was 62.

Now looking at the chart again, I see some kind of bounce coming up from low 30s,  this may  be due to pressure from the US, however it should stop somewhere before 40 is reached, and then head down possibly to 21 and then somewhere between 10 and 20. This may  happen in the 2020/21 time frame.

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5 minutes ago, Guillaume Albasini said:

Maybe this kind of bounce ?...

image.png.6ce7c139fb6e26bb84f816dbf7b96928.png

Only until this persistent ‘apparent’ over supply is addressed.

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Note that we have a strong contango and prices are $40 for Dec 2021 and $45 for Dec 2023

With announced cutbacks in drilling and completions, the result will be a supply gap starting late  this year. The lowest cost producers in the shale patch can already fund with 55% hedging now common in debt covenants at that price level. The farther out contracts didn't break $40 and those that did, only did so for a short blip.

https://www.barchart.com/futures/quotes/cl*0/futures-prices?viewName=main

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(edited)

In reference to oil price, What is your take/prediction for April through all the way after the US presidential elections? 

Edited by Shnabu

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IF

The SPR accumulation across the world continues apace, then oil is supported at ~$28 WTIC 

If we run out of storage, then the historical reference price is late 1960s at $21 adjusted for inflation. The prior inflation adjusted price of oil spike down was $18 during the Russian sovereign debt crisis. 

http://marine-transportation.capitallink.com/indices/baltic_exchange_chart.html?ticker=BDTI

https://www.macrotrends.net/1369/crude-oil-price-history-chart

 

 

 

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I'm curious as too the 'thinking' MBS & or Putin have brought to bear on this situation, Where is all this new oil gonna be stored???  

With the global end user network basically on lockdown vis a vi Coronavirus; not too mention the near saturation point we were at for being able to store the oil already in the pipeline.  If Aramco does fulfill the 'pledge' to increase daily output by an additional 3 Million barrels per day; where will it go? The system is already the equivalent of a full coffee cup ready to runneth over... 

Refiners in Europe were already putting suppliers on notice they were going to begin cutting back on accepted deliveries or in some cases out an out cancelling tankers already scheduled before they left ports in the Mideast or refusing them berthing rights upon arrival if already at sea.

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Like i said a bounce from 30 then down to the teens.

Now i have been out of trading for a long time, so i missed all the fun. But the last post, i got my charts up and running, and tracking lot of things such as the metals currencies and the markets, which is why i was able too look at oil again in much better detail. Basically without my charts and all the gimmicks, I can tell much about the future.

The big problem in the markets is that noone will know when to get back in, and each guess will be worse than the other, im talking about the stock market, for the oil market as some point it will be the low, but you need to see what happens as the prices base off, etc. So at this point it impossible to tell if the bounce will be a 10, 15, or 5. Since there is not enough trad-able data at those levels.

 

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As i said besides 2 weeks ago when i watched the prices in the 30s i have not looked at WTI since.

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14 hours ago, Top Oil Trader said:

As i said besides 2 weeks ago when i watched the prices in the 30s i have not looked at WTI since.

Trust me.  You don't want to look at it.  

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(edited)

 Of course, we can bid on how much a barrel of oil falls, but the truth is that at a price of $ 20 or below hardly anyone makes money in this business.

 Now even  in Saudi Arabia a total cost of oil production is approximately 17-18 dollars.

Two decades ago, the marginal oil barrel needed on the market costed around $ 30 now imho about  $ 60.

Of course, we will have the worst economic crisis since 1929, but these are the market fundamentals of potential oil supply.

Conventional deposits cheap to produce oil are depleting both in Russia and Saudi Arabia and breakeven price in this countries is growing.

Unconventional oil in US or Canada will never be as cheap as oil extracted by traditional methods.

From year to year, the cost of the marginal oil barrel  is rather rising in last 3 decades rather if you consider only the fundamental factors.

So at a price of $ 20 virtually nobody, despite high-profile declarations by both sides earns money in this business.

Edited by Tomasz
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