Crude (WTI) touched below $70, what now?

(edited)

Well prices managed to touch low 69, and will now try to stay above $70 maybe $71 to try and resume the rally for the bulls. Like i said it won't be smooth sailing way down, and if you trade on margin, be ready to be stopped out, in both directions, although some cos require $3000 for a oil futures contract, and every 100 basis point move you either make $2000 or lose $2000 depending if you picked the right direction, so if you trade with tight margins you have no room for errors, but if you trade say with $25,000 per contract, you will have some leeway to not be too accurate, in your entries.

Disclaimer: Trading futures is risky and you could lose all you money, etc etc.

Here is another problem for oil prices, the $, . If you remember a prev article I mentioned that when the $ goes up  the oil prices generally go down, assuming nothing changed in the supply story, usually the big problem for supplies, war, hurricanes, sanctions, cold fronts etc. However, looking at a $ chart it would seem it will have some uphill battles, which should it drop hard, could cause Oil to go up again, assuming Oil prices are not way overpriced already, so as mentioned it is not a clear cut science. As you notice I am not focusing on what the next big news story will be that will shape future oil prices, as I mentioned many times I am no prophet, and for me to predict the exact story to move OIl, would be siily.

One thing is certain in Oil prices, powers that be, Producers, Governments (excluding Pres. Trump), Hedge funds, Banks, speculators, would like to keep prices here, and make them hit their targets of $85, $150, and even higher targets. 

We now know that the Iran Sanctions, won't be followed by certain countries, and certain countries will be given a reprieve if they buy Iran Oil.

Also the Libya port will try and produce oil at higher capacities. 

Norway oil strike won't last long, (just my 2 cents), settlement will come  very soon.

Russia is over pumping, OPEC allowed them.

Saudi is over pumping, OPEC allowed them.

Trade war tariffs on US oil, will cause some refiners not to buy Oil from US.

and other may soon follow, all that will flood oil supply.

So as hard as entities try to keep the oil prices up artificially, they are fighting a loosing uphill battle for now, but in the future, they could succeed to eventually put the prices in the eighties, but before this happens I will see this play out in the charts, and take the necessary steps, which is why to me charts are super important, I can discern major price movements before most, even minor moves of 100 to 200 basis points.

Also many countries want to keep prices up, since their cost of production in many cases is almost $50 per barrel, and their cost to balance their budgets is much higher, so certain countries will go out of whack, when prices of oil drop. Some of the biggest losers are Russia, Saudi Arabia, Iraq, Venezuela, especially since Venezuela and Saudi Arabia don't produce other products such as Mercedes. Couple of years ago Saudi Arabia had a $100 bill deficit due to lower oil prices.

So in short, I do see Oil in an uptrend from $26, and recently from $50, the uptrend has not been broken, but what it means is that even if prices fall back to the low 50s, the uptrend could still be in play. Remember institutions define trends as broken when 200 ma is broken. In other words if prices fall another $20 trend could still be in play.

So in short, I see oil prices going down, but with  many fights on the way down, and at some point before the 50s, it could even make an extended reversal.

What I am showing here, is that Oil is one of the most volatile instruments to trade, if you are a newbie, you will lose your shirt(s), no matter what you do, and especially if you rely on some guru. And even lots of experienced traders lose plenty of times, misjudging the market, as they misjudge future current events.

In short Oil is a zero sum game, judge it correctly, there is lots of money to be made quick, misjudge and you'll be out of the game before you can say "head or tails".

From reading the posts here, I see almost no traders, most are just trying to figure out the Geo politics in the oil world. At least that way they will be safe.

Side Point.

Some people ask me how I know that charts do this or that, well I can say that I bought just one study a while ago, and paid $4000 for it, many of these studies are not known at all to people, as many would never plunge 4k for one study and which anyways is no longer for sale, the people who made them are either no longer in the business due to lack of customers, are from different countries, they moved on or retired. But besides I will study what people have said about charts that no one heard about, or have completely discounted since their discoveries proved too subjective, and in fact are subject to a vast amount of interpretations. Many studies I look at the developers are gone, and studies are no longer available, anywhere, author disappeared. For example founders of  certain trading disciplines, are 90% wrong in their predictions, using their own disciplines. And people who wrote books on trading, so complete encyclopedias of trading, when they try to manage money, they completely mess it up. So how much more difficult will it be for a student of those disciplines, even a student with eons of experience.

Edited by Top Oil Trader
spelling errors, though there still may be grammar spots

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(edited)

Link showing biggest experts loosing big time.

https://www.wsj.com/articles/how-the-last-commodity-funds-will-survive-the-algo-age-adapt-or-die-1529919003

One Energy hedge fund that guessed right after serious setbacks

https://www.wsj.com/articles/as-oil-soars-few-hedge-funds-are-left-to-profit-1528277401

Edited by Top Oil Trader
added links

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