Rally on Hold, if 69.5 don't break, 62.5 could be next.

[Top Oil Trader + 469]

 

I may have one viewpoint, but the market action must support my view, if it does, but not enough, my view changes, if it doesn't support my view, I close and rethink what could happen next.

But the news are of no consequence, if the charts have a different viewpoint.

Well the charts speaks volumes, let not go down that rabbit hole, even though I pick my fundamentals based on the chart action only. But lets look at fundamentals. what caused the spike from 63 - 76 on WTI? Today when I was long, someone sent me some news that should have caused oil to tank, but since chart did not show prices falling at 67.5 I had to stay long, bad or good news don't change my opinion.

Why do I think rally is on hold?

Iran Sanctions.

Libiya Oil closures.

Prices shoot up $10.

What happened since.

Libiya starting pumping at full production almost.

Norway strike may soon be over.

Many countries will still buy oil from Iran, not matter what the sanctions are.

US may reduce the Iran sanctions.

Permian basin, producing more oil.

Saudi ramping up productions.

Russia ramping up productions.

Well eventually people will wake up and head for the Exit sign.

Why should oil go to 85, I don't see any reasons, except for speculators trying to manipulate the price.

Also todays, reversal of 150 basis points, to me lacked conviction, although I expected it, i did expect a more vicious move,  its out of steam, or more appropriately its out of gas.

So there was a reason why it had to bounce from the 67 range, but if this does not turn out to be a reversal of the recent selloff, look out below.

I look at every move of 100 basis as a significant move that could lead to breaking the jar wide open, or just bounce of it, as if nothing happened.

WTI prices just went below 69, hovering at 69. 

So 69.5 Rally could continue.

In between I think selloff continues, unless 69.5 crosses, that is only 50 basis points from here, a nothing move.

If 67.5 hits again selloff continues.

Edited July 19, 2018 by Top Oil Trader
spelling bee

[tsxman + 2]

- Norway's strike can be over but Norwegian production is down yoy and even more if you go back to 2014
http://www.npd.no/en/news/Production-figures/

- Iran sanctions remain a wildcard but countries like Korea already have halted Iranian oil shipments.  Saudi Arabia is not going to do Trump any solids if those sanctions are not put back on Iran;  plus, Trump needs to do Texas a favor and sanctioning Iranian oil would be helpful.  If Trump can pressure China to equalize trade by importing more U.S. oil (my hope) it could be a leveraged play.  Certain Indian refiners and banks have already announced they will not deal with Iran.  India's largest refiner already cut shipments.

- Permian is very light oil and selling at a massive discount already.  U.S. pipeline takeaway is booked.  Do not expect the Permian to continue growing for a couple years at least.  

- Libya is on and off, but I wouldn't ever rule them all the way in or out;  same goes for Angola and Nigeria.  

- Saudi Arabia and Russia are tentatively "ramping up" production but numbers show they are still complying 120% with OPEC deal.

Don't forget Mexican and Venezuelan production, both of whose exports primarily go to U.S. are significantly down (not just a little bit.)  Canadian pipeline space is out of room so we are relying on rail.  Saudi domestic consumption rises in the summer.  

Ultimately the narrative will change for the better and worse, but the situation for oil markets is very bullish.

Trump is my biggest wildcard.

 

[Top Oil Trader + 469]

Good articles of why Oil prices eventually could drop much lower.

https://money.cnn.com/2018/07/16/investing/oil-prices-plunge/index.html

https://oilprice.com/Energy/Oil-Prices/Oil-Prices-Tank-As-US-Drillers-Add-Massive-Number-Of-Rigs.html

and many more fundamental links. If it turns out that there is in fact a big oversupply, and this recent supply fear turns out to be a mirage, and Trump forces other countries to release their SPRs, it could be all over for the rally.

[Top Oil Trader + 469]

So far WTI has dropped 25 basis pt, not a big deal. However, another 50  basis point drop, and if stays there, could be a sign that the continuation of the selloff from 75. Some analyst from Chicago said today, that prices would need to stay above the 67.xx area for rally to not to break, and they should go above 69.70, for the uptrend to continue. These are the people who are experts in oil options. So they know all the levels. But this analyst in summary was bullish on Oil, saying 70s should be broken, and oil should move past 75 eventually. For now, he still could be right. But I would say, he will be surprised, as soon as WTI nears the low 68.xx. 

[Top Oil Trader + 469]

I notice that almost all people here are pretty bullish. I am not biased one way or another, I just listen to the market. What it really boils down to is this. The market I think is overpriced based on speculators who are long, who are trying to force the price up. However, if you look at the news honestly, without any bias, there really right now is 0 reason for oil to go up. And of course looking at chart, the last move up, though it went up, and I said it would, I had hoped for a stronger move, the up move none the less, was very weak, which should be a course for concern if you are bullish. This is why at 69 I closed the longs, and reversed short. As long as we don't hit 69.70 my stop, I should be ok.

[Top Oil Trader + 469]

So far WTI has dropped 25 basis pt, not a big deal. However, another 50  basis point drop, and if stays there, could be a sign that the continuation of the selloff from 75. Some analyst from Chicago said today, that prices would need to stay above the 67.xx area for rally to not to break, and they should go above 69.70, for the uptrend to continue. These are the people who are experts in oil options. So they know all the levels. But this analyst in summary was bullish on Oil, saying 70s should be broken, and oil should move past 75 eventually. For now, he still could be right. But I would say, he will be surprised, as soon as WTI nears the low 68.xx. 

[Top Oil Trader + 469]

Well as expected oiil which closed at 69, now dropped 80 basis points, and this was just in the UK session. Can only imagine would may happens once US session opens.  For now, imho, I would say the  uptrend is over, and headed for 62.5. Before, maybe some more bad news that could reverse the selloff. Again I don't know what that news could be. Don't even want to guess.

[Dan Warnick + 6,100]

Hi JJ.  Keep writing.  Very interesting thought process, and helpful.  Options contracts for July are coming due tomorrow.  I know you are trading futures, not options, but I wonder what your experience, or the experience of other members, is with regards to prices moving due to options expiries?

[Top Oil Trader + 469]

Well what a reversal 69.5 broke, so looks like the rally is back on.

[Top Oil Trader + 469]

What I see is, Crude was just about to break 67.5 which would have collapsed the prices, and some entity came in and saved the day, with a massive in flux of buy orders. Whatever the news was to bring it up 180 basis points from the low. Even though it is going up, it looks like it can't go up much higher. than 69.8 - 70. 

[Top Oil Trader + 469]

Notice no analysts, or news writer, has come out with a reason for the spike. Neither has anyone else. Although I'm sure well soon hear of the reason for the spike soon. They could simply bring back any of the old new stories, they published in the last 3 weeks.

[Top Oil Trader + 469]

Someone with Zillions of dollars moved up the prices, just before the collapse. That is all I can see. And what they did, anyone who was short, futures, options, not anyone, but weak hands, just got wiped out.

[Top Oil Trader + 469]

Here is the news why Oil dropped earlier from 69 to 67,xx.

https://www.bloomberg.com/view/articles/2018-04-20/surprise-russia-saudi-oil-alliance-could-push-prices-down

Still no credible news for spike, and its still going up, I guess it needs to take out of the recent short positions initiated, which it is now doing, with prices now above 70. But I still think the move up, could be temporary, and reverse later down. Certainly this move is what separates the weak from the strong, on CME most options and future traders would be long by now.

[Top Oil Trader + 469]

Well looks like the spike, is tapering off. When they take out short positions, there is only so far they can go, especially if they can't bring any valid reasons for why the prices went up. Without a valid reason, all they accomplished was to remove many short positions, and temporarily bring less pressure from speculators / hedge funds on short positions. Since most traders, are in essence day traders, most would have closed their shorts and reversed long, hoping this is the beginning of an uptrend. But if they begin to realize they got duped, they may reverse and go short again. Next time it will be harder to take them out, of their short positions. Since next time, they would need to bring the prices to 71. But this shows, why if you are new, or even have experience, you should not attempt trading Oil futures, since you could lose more than you invested. In options though, the max you could lose is what you invested. But in Futures if you had a stop, and it wasn't honored and the MC happened after your account went to 0, you would owe the broker money.

[Dan Warnick + 6,100]

8 minutes ago, Top Oil Trader said:

Well looks like the spike, is tapering off. When they take out short positions, there is only so far they can go, especially if they can't bring any valid reasons for why the prices went up. Without a valid reason, all they accomplished was to remove many short positions, and temporarily bring less pressure from speculators / hedge funds on short positions. Since most traders, are in essence day traders, most would have closed their shorts and reversed long, hoping this is the beginning of an uptrend. But if they begin to realize they got duped, they may reverse and go short again. Next time it will be harder to take them out, of their short positions. Since next time, they would need to bring the prices to 71. But this shows, why if you are new, or even have experience, you should not attempt trading Oil futures, since you could lose more than you invested. In options though, the max you could lose is what you invested. But in Futures if you had a stop, and it wasn't honored and the MC happened after your account went to 0, you would owe the broker money.

So does it look like prices will drop a little bit, a lot, or stagnate where they are at?  I mean, your narrative seems to indicate that a lot of effort is being made by someone to keep the price from dropping too much too fast.  Would this be an accurate read on the scenario, or do you see something else?

Edited July 19, 2018 by Dan Warnick

[oilfutures + 39]

 I noticed you have brought up EW - how much does that factor into your trading? 

[Top Oil Trader + 469]

Well here is the thing. If you are a fundamentalist, you need to find the news story that made oil spike. So far only news story I see is a reason for the drop. So this must have been some efforts to halt the decline. Now I don't work for those people, so there is no saying how far they need to go to protect the fall. This could just be phase one. Or it could have been Algos, blackbox that set up a slew of millions of orders to buy. This is again the dangers or playing futures, these are the reasons hedgefunds give up, just a couple of months after they start. This is what makes someone like Tudor stay in the game, and make almost 20% yearly. You might say, he has an edge. He is someone, these Algos, or black boxes can't touch, well rarely. He is always 1 step ahead. If you could emulate his system, (of course its a secret), you would make it in the hedgefund space. But if you are just using your brain, ok this news is bad, this is good, my brain says go long, or whatever, then no chance. So here for any hedge funds out there, trying to be the next big thing, I just gave you a hint of how to make it. All you need to do now, is figure out what that secret is, and stick to the game plan. Of course even if someone figured it out, well they might take a guess, they would not stick to the plan (since they would not be certain if that is the system), and still lose their money, since they lack discipline, and usually have very high egos. As i am writing this Oil retraced 60 points.

[Top Oil Trader + 469]

sorry im a little tired. EW? but yes it looks like the fake spike is tapering off

[Top Oil Trader + 469]

By average a fake spike in oil is 250 Basis points in a downtrend. And the same in an uptrend. This is not Black Gold science, but those spikes are enough to scare most traders into submission. Especially since most day traders would have shorted at the break of 68. Remember most traders will short at the bottom, 68, and go long at the top, 70. In the futures markets, history repeats itself daily. Fortunes are lost and smaller fortunes are made daily. I always tell anyone who wants to trade, don't even think about it, you'll lose it all. In all cases if they don't listen I end up being right. Then they ask me, well you do it for me, I say no, I don't have a license, not a broker,  and unless we sign some contract with a lawyer, to do a partnership, or legal entity I can't do it. Most of these guys / ladies,  are small potatoes anyways.

[Dan Warnick + 6,100]

2 minutes ago, Top Oil Trader said:

By average a fake spike in oil is 250 Basis points in a downtrend. And the same in an uptrend. This is not Black Gold science, but those spikes are enough to scare most traders into submission. Especially since most day traders would have shorted at the break of 68. Remember most traders will short at the bottom, 68, and go long at the top, 70. In the futures markets, history repeats itself daily. Fortunes are lost and smaller fortunes are made daily. I always tell anyone who wants to trade, don't even think about it, you'll lose it all. In all cases if they don't listen I end up being right. Then they ask me, well you do it for me, I say no, I don't have a license, not a broker,  and unless we sign some contract with a lawyer, to do a partnership, or legal entity I can't do it. Most of these guys / ladies,  are small potatoes anyways.

Just call me Spud.  Ha-ha!

[Top Oil Trader + 469]

So far WTI has dropped 25 basis pt, not a big deal. However, another 50  basis point drop, and if stays there, could be a sign that the continuation of the selloff from 75. Some analyst from Chicago said today, that prices would need to stay above the 67.xx area for rally to not to break, and they should go above 69.70, for the uptrend to continue. These are the people who are experts in oil options. So they know all the levels. But this analyst in summary was bullish on Oil, saying 70s should be broken, and oil should move past 75 eventually. For now, he still could be right. But I would say, he will be surprised, as soon as WTI nears the low 68.xx. 

[oilfutures + 39]

EW = Elliott Wave 

[Top Oil Trader + 469]

Dan you are not stupid, just willing to take risk.

[Top Oil Trader + 469]

So far WTI has dropped 25 basis pt, not a big deal. However, another 50  basis point drop, and if stays there, could be a sign that the continuation of the selloff from 75. Some analyst from Chicago said today, that prices would need to stay above the 67.xx area for rally to not to break, and they should go above 69.70, for the uptrend to continue. These are the people who are experts in oil options. So they know all the levels. But this analyst in summary was bullish on Oil, saying 70s should be broken, and oil should move past 75 eventually. For now, he still could be right. But I would say, he will be surprised, as soon as WTI nears the low 68.xx. 

[Top Oil Trader + 469]

So far WTI has dropped 25 basis pt, not a big deal. However, another 50  basis point drop, and if stays there, could be a sign that the continuation of the selloff from 75. Some analyst from Chicago said today, that prices would need to stay above the 67.xx area for rally to not to break, and they should go above 69.70, for the uptrend to continue. These are the people who are experts in oil options. So they know all the levels. But this analyst in summary was bullish on Oil, saying 70s should be broken, and oil should move past 75 eventually. For now, he still could be right. But I would say, he will be surprised, as soon as WTI nears the low 68.xx.