Oil went below $72 as predicted, now headed for $52.

(edited)

The question in most oil traders, analysts and buyers minds is, well Oil went down, OK, very good guess. But that is just a drop of $6 from the high of $76. So the question is will this selloff continue, and if it does where will it end? . Or will oil consolidate at the 70s and go up to the 80s or 150s as many analysts predicted. Now it won't go straight down. There will be lots of fights on the way down, particularly at $66, $65, $59 and $55. Please remember this is how I see it, I am no prophet, and am not always correct. Also remember it won't be fast going down, but there will be lots of surprises up, and new predictions from bulls on the way down. Sit back and enjoy the show.

Disclaimer, trading futures is risky, you can lose all your money, your wife and your ego.

Edited by Top Oil Trader
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Don't believe sanctions on oil begin until November.  Only the oil Gods know what the heck is going to happen.  Maybe.

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Well, i'm no prophet, but you'll see many countries won't honor the Iran sanctions, and all of a sudden, were faced with an even bigger supply. 

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And oil will sink, and continue to sink, especially when The Donald taps into that big Naval Reserve. (And lots of heavy naval ships are now run on nuclear reactors, so that makes the Oil Reserve a bit superfluous, but handy to keep around for political purposes.) 

Keep in mind that some 5% of total oil consumption is by ocean freighters.  So, if the bigger ends of that fleet start to shift over to nuclear power plants, you effectively dump even more oil into the market, shouldering other oil aside in an effort to find a home. Sure, it is bunker, not readily salable, but where there is an excess, you can bet some bright guy will find a good use for it.  Way of the world. 

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Good point. And President Trump is getting his wish, for lower oil prices. Like he requested of Saudi Arabia in last 2 weeks to pump more oil, and indeed Saudi's and Russia are now pumping oil like crazy just to please Trump,s wish.

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6 hours ago, Jo Mack said:

Don't believe sanctions on oil begin until November.

On Aug 6th, the first set of sanctions begin in Iran.  These prevent Iran from accessing US dollars and trading gold and other valuable metals.  On Nov 4th, the Iranian Central bank loses the ability to work with other world banks, its ports are closed to trading, and it loses the ability to sell oil to anyone who doesn't want to get on US's bad side.  

Does anyone think it a bit coincidental that these oil sanctions start only 2 days prior to the midterm elections in the US?

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Hi Friends, please understand I rarely watch the financial news, since to me by the time the news come out, the crash or the spike is over. So lets look at reasons for Oil going up, and why Oil can still go down. Now of course I'm in the camp that oil will go down, but can it hit 85, or 150 like many analysts are predicting etc. Well, it can if certain things happen. Those things could be a tightening supply, a major war, Or, anyone's guess, since I'm not in Vegas right now, I don't want to guess. However, all these or one of these events can be predicted from charts way before it happens. How can i say it so it makes sense to people, does a Hurricane (similar to a stock crash) just happen? No we have plenty or warning, by the time it hits, people have boarded up their houses, smart people have fled, and gamblers are waiting for it to hit in their row boats. So today, we have smart people  warning us way ahead of time, so people who may want to live until a healthy age can flee way before it hits. However, in the markets, it seems we don't have those systems set in place, why? Well first there is no government funding set up for this, and maybe not enough brain power to foresee the inevitable. And maybe, people who know, keep their mouths shut, and rake it in.

Disclaimer. Trading futures is very risky, you could lose all your money or more.

So since people right now are not sure why oil will go down or up, though more are bulls than bears. We need to look at  both scenarios. For reasons, to pick the right reason is impossible, who knew it would be that Libya would pump out oil again. What happens if Libya now says, all our drilling equipment broke so well have a 2 month delay.Will oil now hit $85? So to know the exact fundamental reason for a move, you need to be well informed, connected, or be a god, otherwise you just need to  wait for the hurricane to hit.

Ok, I can go on here in volumes, so since most don't have time, will stop here. What I'm saying the people saying Oil could hit in the hundreds have a point, small point but it's still a point. Remember, a pencil can also make a point. But they could be right, if the dynamics eventually one day change. And you can come up with lots of guesses what those events could be, It could be if all the oil pipes melt, it could be all the trucks drivers get sick, it could be a war, it could be because of a mosquito infection hitting the oil drill workers, pick one of a hundred reasons, and hope you are right, one day. Just remember one thing, oil is very volatile and if you happen to be on the wrong side, you could lose all your money, or even have to close down your operation, if you are a producer. This is why Producers hedge when prices are high, so even if prices go down $30 bucks, they may have hedged out for 2 years at prices of $80, and will be able to make it big, while producers who didn't hedge and where waiting for higher prices, now have to take the fall.

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Actually I do watch all the news, but I don' trade of it, since by the time its out the price have already moved in line to the new outlook, and very quickly.

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but at the same time, everyone else is largely watching and trading on the news ... so unless we unplug we can't get a good reading on the true fundamentals because it's all skewed by knee-jerk speculators reactions. 

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Well you are right, people trade of the news. What I am saying is, if you can predict bad or good news to hit an instrument, not the actual news, but whether it will have enough of an impact on the instrument, with charts, this gives you a head start.

Now especially if you are a hedge fund, a large hedge fund and I don't want to use specific examples, but if it is a hedge fund above 1 Billion, they need to get into a trade sometimes weeks before the news comes out, why they may  want to do 100s of contracts, and they don't want others to find out their standings, so that others should not drive the price down before they get filled. Why, since If they place a big short, they could bring down the prices and panic other traders, which will be detrimental to their entry prices, they would rather short while people are bullish, so they can enter at their  terms and when the news hit, they just sit back and relax. So if you wait for the news to trickle down to you, as a small trader you are also at a disadvantage. You see if the news is bad, the prices in many cases, automatically adjust down, before you can even enter.

Hope this helps.

 

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This discussion has a certain flavor of a comment on the probability of events made by Stephen Hawking.  He observed:  "The probability of a planetoid crashing into the earth and destroying the planet is very, very small.  But that infinitesimally small probability is still not zero."

And you see the truth of that when, every now and then, somebody picks of the Mega-Millions  (a U.S. lottery) for $350 million prize.  Yup,the odds are still not zero.

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