WTI @ 67.50, charts show $62.50 next

Been trying to investigate all the time frames to see if I could find any support for oil going above 70 to 80. Based on charts it doesn't look like it. The bounce we had at $66, once oil peaked at 75. That bounce did get us above 70, but was quickly stopped. The 2nd attempt was even weaker. Therefore, based on the charts over the weekend, it now looks 62.50 the original target is back in play. Not sure  fundamentally why oil would sell off, It could come as a result of some correction in the stock market of 1500 points plus. Which really started last week at 25636 area. It still looks like oil supply is limited from the middle east, though in US they are really starting to pump a lot of oil. However, the slump in prices could come from a lower demand of oil,  this time.

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(edited)

What a day we had today in the asian trading session! Started very much as risk off trading with all risk currencies lower, all equity indexes lower and the only assets moving higher were francs, yen, and the USD. Thats now halted now were into the wall street session, volatility is extreme tho.

 

On the other hand, Oil had a very uneventful day, rather boring in fact! Since when is oil less volatile than the forex currency markets?! It is finally Starting a move lower now it seems tho. The fact oil wasnt dumped earlier with all the other risky assets is a bit of a mystery, even with the sudden high break of the petrodollar. im sure we will see some action if and when the USD looses or gains some more direction. ALL the news on turkey etc seems to have perhaps shifted the focus away from oil markets and doubts over iran and Russia and the caspian sea? But for how long?

 

There was some previous support around 66.5 level from the previous range trading. If it can break below that it may gather downward momentum...

Edited by catch22
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5 hours ago, Top Oil Trader said:

Been trying to investigate all the time frames to see if I could find any support for oil going above 70 to 80. Based on charts it doesn't look like it. The bounce we had at $66, once oil peaked at 75. That bounce did get us above 70, but was quickly stopped. The 2nd attempt was even weaker. Therefore, based on the charts over the weekend, it now looks 62.50 the original target is back in play. Not sure  fundamentally why oil would sell off, It could come as a result of some correction in the stock market of 1500 points plus. Which really started last week at 25636 area. It still looks like oil supply is limited from the middle east, though in US they are really starting to pump a lot of oil. However, the slump in prices could come from a lower demand of oil,  this time.

According to CNBC's reading of the OPEC Monthly Repor]rt, "This year, oil buyers will need about 600,000 fewer bpd from OPEC than it consumed in 2017. Demand for OPEC's oil is set to drop by another 800,000 bpd in 2019, according to the group." If OPEC has it right, supply will exceed demand for both 2018 and 2019. The fundamental supply/demand factors say "Plenty of oil". What do the speculators say?

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Very good Williams. I am sorry for you that oil is going down, I was trying to hype it as much as I could to look for the positives, but the charts took a left turn, the upswing was really weak and I saw it failing last couple of days. I mention this in another post. And yes what I did show was that the demand is down. I don't know how to get to this post but it posted hours before market opened.

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2 minutes ago, William Edwards said:

According to CNBC's reading of the OPEC Monthly Repor]rt, "This year, oil buyers will need about 600,000 fewer bpd from OPEC than it consumed in 2017. Demand for OPEC's oil is set to drop by another 800,000 bpd in 2019, according to the group." If OPEC has it right, supply will exceed demand for both 2018 and 2019. The fundamental supply/demand factors say "Plenty of oil". What do the speculators say?

William, demand for oil generally and OPEC oil specifically will continue to drop for as yet unexplored reasons, and I offer two reasons for everyone's consideration.  (1)  There will be a veritable flood of "hybrid" autos into the market, not pure electrics, as hybrids offer the comfort of unlimited range and rapid re-filling at the pump, but the hybrid is less wasteful of intermittent energy and uses the oil energy much more efficiently; that extra mileage of the hybrid will rapidly translate into lower gasoline demand and consumption.

(2)   The impact of new DOT-112 strengthened and reinforced tanker railcars for Oil-by-Rail movements will be hitting the railroads, as the new production lines get ramped up.  Oil by rail will unlock  supply shipment bottlenecks inside the USA and Canada.  Those shipments will inevitably displace imported oil, again depressing OPEC oil demand.  And coupled with the new railcars will be the completion of doubling trackage and passing sidings, leading to greater rail capacity. 

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(edited)

On 8/13/2018 at 9:49 AM, Jan van Eck said:

William, demand for oil generally and OPEC oil specifically will continue to drop for as yet unexplored reasons, and I offer two reasons for everyone's consideration.  (1)  There will be a veritable flood of "hybrid" autos into the market, not pure electrics, as hybrids offer the comfort of unlimited range and rapid re-filling at the pump, but the hybrid is less wasteful of intermittent energy and uses the oil energy much more efficiently; that extra mileage of the hybrid will rapidly translate into lower gasoline demand and consumption.

(2)   The impact of new DOT-112 strengthened and reinforced tanker railcars for Oil-by-Rail movements will be hitting the railroads, as the new production lines get ramped up.  Oil by rail will unlock  supply shipment bottlenecks inside the USA and Canada.  Those shipments will inevitably displace imported oil, again depressing OPEC oil demand.  And coupled with the new railcars will be the completion of doubling trackage and passing sidings, leading to greater rail capacity. 

Thanks, Jan, for your input. I might mention something of an offset to your expectation that railed US/Canadian production will displace foreign oil, however. It gets back to my assumption that the world cannot afford to produce and refine heavy Canadian oil. So I think it unlikely that Canada will push out other sources of imported oil.

Edited by William Edwards

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7 minutes ago, William Edwards said:

Thanks, Jan, for your input. I might mention something of an offset to your expectation that railed US/Canadian production will displace foreign oil, however. It gets back to my assumption that the world cannot effort[d afford to produce and refine heavy Canadian oil. So I think it unlikely that Canada will push out other sources of imported oil.

Yes, I know your position on that point, yet I would respectfully disagree as it does not take into consideration the political realities inside Canada, which will oblige the use of its oil (and displace Middle East oil now flowing into the Irving Refinery in St. John, N.B., among others).  Also, at least some of the Permian and Bakken oils are being held off-production as there is no rail capacity for them.  I anticipate that that bottleneck will clear up.  Cheers.

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1 minute ago, Jan van Eck said:

Yes, I know your position on that point, yet I would respectfully disagree as it does not take into consideration the political realities inside Canada, which will oblige the use of its oil (and displace Middle East oil now flowing into the Irving Refinery in St. John, N.B., among others).  Also, at least some of the Permian and Bakken oils are being held off-production as there is no rail capacity for them.  I anticipate that that bottleneck will clear up.  Cheers.

I understand your point, Jan, and I accept your insight on things political. However, you have not yet revealed to me how Canada is able to put ten gallons of oil in a five gallon bucket. Thanks for your patience.

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Are one of you going to put tariffs on the other, or can we expect to see the art of the deal sometime soon? :)

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2 minutes ago, Dan Warnick said:

Are one of you going to put tariffs on the other, or can we expect to see the art of the deal sometime soon? :)

Jan can outlast me!

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37 minutes ago, William Edwards said:

I understand your point, Jan, and I accept your insight on things political. However, you have not yet revealed to me how Canada is able to put ten gallons of oil in a five gallon bucket. Thanks for your patience.

William, I suspect the answer to that is that Canada will simply get creative in ways to use that oil.  For example (and this is just one example) there are a number of old coal-fired thermal generating plants now dormant.  They can be converted to oil of various grades easily enough and simply fired up.  [They would in turn be displacing ruinously expensive wind power, which contracts I expect the Ford Administration to repudiate shortly]. The massive coal plant sitting down in Southern Ontario I think in or near Port Burwell (south of Tilsonburg) comes to mind, it is just sitting there mothballed.  They will convert the stuff into ethylene monomer and sell the monomer to the plastics industry.  They will force the oil now being imported from the US and from Kuwait out the door and shovel the domestic stuff in there, and part of the purchase price will be absorbed by a devalued Canadian dollar, which will probably sink further.  They will get creative, and I fully anticipate it will be done. I just don't see any other viable political way to handle the WCS.  They are politically locked in. Cheers.

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40 minutes ago, Dan Warnick said:

Are one of you going to put tariffs on the other, or can we expect to see the art of the deal sometime soon? :)

That is seriously funny! Definitely worth a Like!

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1 hour ago, Jan van Eck said:

William, I suspect the answer to that is that Canada will simply get creative in ways to use that oil.  For example (and this is just one example) there are a number of old coal-fired thermal generating plants now dormant.  They can be converted to oil of various grades easily enough and simply fired up.  [They would in turn be displacing ruinously expensive wind power, which contracts I expect the Ford Administration to repudiate shortly]. The massive coal plant sitting down in Southern Ontario I think in or near Port Burwell (south of Tilsonburg) comes to mind, it is just sitting there mothballed.  They will convert the stuff into ethylene monomer and sell the monomer to the plastics industry.  They will force the oil now being imported from the US and from Kuwait out the door and shovel the domestic stuff in there, and part of the purchase price will be absorbed by a devalued Canadian dollar, which will probably sink further.  They will get creative, and I fully anticipate it will be done. I just don't see any other viable political way to handle the WCS.  They are politically locked in. Cheers.

Maybe I am putting unreasonable restrictions on my thinking, Jan. Straighten me out. I am presuming that if oil sands has a cash cost of production of $20 and a selling price of less than $5, in any form, converted to whatever use or disposition you choose, Canada would not be willing to subsidize the producers to the tune of paying them $15/B to avoid shutting in that negatively-valued production. Am I wrong? Are you saying that Canada would spend hard currency to be able to say "We are producing oil"? I might remind you that, earlier in this year, Cenovus reported shutting in production because they could not sell the oil for what it cost. Why did Canada not step in then? Is it possible that they realized that it is impossible to put ten gallons of oil in a five gallon bucket, regardless of the price?

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(edited)

1 hour ago, William Edwards said:

Maybe I am putting unreasonable restrictions on my thinking, Jan. Straighten me out. I am presuming that if oil sands has a cash cost of production of $20 and a selling price of less than $5, in any form, converted to whatever use or disposition you choose, Canada would not be willing to subsidize the producers to the tune of paying them $15/B to avoid shutting in that negatively-valued production. Am I wrong? Are you saying that Canada would spend hard currency to be able to say "We are producing oil"? I might remind you that, earlier in this year, Cenovus reported shutting in production because they could not sell the oil for what it cost. Why did Canada not step in then? Is it possible that they realized that it is impossible to put ten gallons of oil in a five gallon bucket, regardless of the price?

William, look at the broader picture of what is unfolding inside Canada.  The (former) powerhouse of the country was Ontario.  That was run by the Liberal Party for the last 15 years.  The Premier was this wide-eyed leftist and she ran the Province into the ground, collapsed the industry, created havoc with electricity prices, and let a real-estate bubble, driven by offshore speculators, totally distort the housing market and create a permanent underclass of perpetual renters. So the powerhouse Province collapses and becomes a beggar Province, standing on the Ottawa street corner with a Little Tin Cup, begging for "equalization payments."

Now, where does the coin for that Little Tin Cup come from?  In a word, oil and minerals royalties, the "skim" that Ottawa puts on the resource-rich West.  But even the West is in trouble: aside from the Oilsands costing problems that loom so large, you have the Province of Manitoba collapsing into yet another Beggar Province.  So the whole place is floated by B.C. with its timber, and Alberta, with its grain and oil, and likewise Saskatchewan.  OK, so along comes Mr. Trump and whacks the timber industry of BC  (and New Brunswick) with tariffs, shutting them out, and with all that hurt the whole place is being floated by two Provinces, and Oil is the big gorilla in the room.  If you shut down WCS, then there is nothing to fund the equalization payments and you have big problems including big discord. 

Politically, the Liberals of Ontario just got shellacked by the Conservatives under Ford, the provincial (Ontario) Liberal Party is basically destroyed.  Now, Ottawa is still run by the Federal Liberals and Justin Trudeau.  If Trudeau loses that support (basically Eastern Canada and Quebec) then the Liberals are history on the Federal level as well.  So for political purposes the Liberals have to keep the Plan going, including easing the pain in Ontario, and for that they need to have Alberta continue to pump and mine oil. 

Now you say: "We don't have the customers for it, the offshore stuff is cheaper."  Guess what, the offshore cheap stuff gets locked out.  Either that occurs by devaluation of the Canadian currency, or it gets locked out by tariff walls.  But it ain't coming in, not at the expense of Alberta production.  It cannot; the Liberals either keep Alberta producing, or they are defeated as a national Party for a generation. For Trudeau, it is all or nothing. 

Now you further say: "There are not enough holes in the economic ground to pour all that oil in."  And I respond, if there is not enough demand for the stuff, then they make demand by firing up industrial boilers, this time using oil instead of coal.  They will find a place to burn the stuff. Either that, or the Liberals are out of business.  Makes no difference about the price.  Especially in Ontario electricity generation, whatever gets paid is still going to be cheaper than the ruinous wind electricity contracts, and those are headed for repudiation by the new Ford administration in Queen's Park  (Toronto), the Ontario Govt seat.  So if the windmills get canned, their power will now come from old coal plants changed to heavy oil.  I see no other solution. I predict that is how it will end up. 

Earlier this year, the Liberals were still in charge in Ontario. Cenovus will be back in production soon enough. 

Edited by Jan van Eck
scrivener error

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1 hour ago, Jan van Eck said:

William, look at the broader picture of what is unfolding inside Canada.  The (former) powerhouse of the country was Ontario.  That was run by the Liberal Party for the last 15 years.  The Premier was this wide-eyed leftist and she rant he Province into the ground, collapsed the industry, created havoc with electricity prices, and let a real-estate bubble, driven by offshore speculators, totally distort the housing market and create a permanent underclass of perpetual renters. So the powerhouse Province collapses and becomes a beggar PRovince, standing on the Ottawa street corner with a Little Tin Cup, begging for "equalization payments."

Now, where does the coin for that Little Tin Cup come from?  IN a word, oil and minerals royalties, the "sim" that Ottawa puts on the resource-rich West.  But even the West is in trouble: aside from the Oilsands costing problems that loom so large, you have the Province of Manitoba collapsing into yet another Beggar Province.  So the whole place is floated by BC< with its timber, and Alberta, with its grain and oil, and likewise Saskatchewan.  OK, so along comes Mr. Trump and whacks the timber industry of BC  (and New Brunswick) with tariffs, shutting them out, and with all that hurt the whole place is being floated by two Provinces, and Oil is the big gorilla in the room.  If you shut down WCS, then there is nothing to fund the equalization payments and you have big problems including big discord. 

Politically, the Liberals of Ontario just got shellacked by the Conservatives under Ford, the Liberal Party is basically destroyed.  Now, Ottawa is still run by the Liberals and Justin Trudeau.  If Trudeau loses that support (basically Eastern Canada and Quebec) then the Liberals are history on the Federal level as well.  So for political purposes the Liberals have to keep the Plan going, including easing the pain in Ontario, and for that they need to have Alberta continue to pump and mine oil. 

Now you say: "We don't have the customers for it, the offshore stuff is cheaper."  Guess what, the offshore cheap stuff gets locked out.  Either that occurs by devaluation of the Canadian currency, or it gets locked out by tariff walls.  But it ain't coming in, not at the expense of Alberta production.  It cannot; the Liberals either keep Alberta producing, or they are defeated as a national Party for a generation. For Trudeau, it is all or nothing. 

Now you further say: "There are not enough holes in the economic ground to pour all that oil in."  And I respond, if there is not enough demand for the stuff, then they make demand by firing up industrial boilers this time using oil instead of coal.  They will find a place to burn the stuff. Either that, or the Liberals are out of business.  Makes no difference about the price.  especially in Ontario electricity generation, whatever gets paid is still going to be cheaper than the ruinous wind electricity contracts, and those are headed for repudiation by the new Ford administration in Queen's Park  (Toronto), the Ontario Govt seat.  So if the windmills get canned, their power will now come from old coal plants changed to heavy oil.  I see no other solution. I predict that is how it will end up. 

Earlier this year, the Liberals were still in charge in Ontario. Cenovus will be back in production soon enough. 

Thanks, Jan.

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But isn't firing up old power plants with heavy oil going against the "green" policies of the canadian government also? That will also cost them votes... so theyre in a damned if you do, damned if you dont situation?

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In short since July when I tracked oil. Oil in short is a fun commodity to trade, but you need to be alert for any indication of a move, the moves are vicious and fast, but predictable, but only with very short term  charts. Now I understand why so many hedgefunds in oil have come and gone, and there will be many more. By looking at oil fundamentally, say based on a supply bottleneck, or say a supply dampness or increase, that is way too narrow to look at oil. Every day there will be indications of, if your long term view could be in jeopardy. As soon as you get a hint of that, you need to rethink your long term strategy. Alas must hedgefunds don't bother with charts, its a small part of their strategy, 80% of their strategy is fundamentals, and we all know where that leads. Also the producers who hedge their production, say they are doing 10 Mill barrels, and not seeing prices going from 45 to 70, then hedge at 46, and lose out billions in potential profits. This market is cruel, and the market seems to laugh at us months in advance, when we invest Billions in the market hoping it to go our way. But all in all, this oil price moves up and down, has been very enlightening, and I really have a lot more respect for oil, than I had when I first touched it as it reached a peak at 75. Back then it  was clear that was a top and we would go down to 62.50, but alas oil took a breather attempted to go up, but no many took the bait. And maybe it's is trying to please President. Trump in going down, after all he did say prices where too high when they reached 70, and asked the Opec to keep prices down. I kind of miss trading oil, but maybe sometime in the future when I have to some more time, will go at it again, this time with a lot more respect and knowledge of its voracious appetite for volatility.  I would say oil is the roller coaster of excitement in trading. And it would seem from this board no one even trades oil, so maybe I should not focus too much on it.

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3 hours ago, catch22 said:

But isn't firing up old power plants with heavy oil going against the "green" policies of the canadian government also? That will also cost them votes... so theyre in a damned if you do, damned if you dont situation?

Not really.  The Ontario "greens" just got a huge drubbing in the last election two months ago.  All that thinking has been thoroughly discredited.  I anticipate that the new provincial Conservative party leadership will dismantle all PURPA power contracts, specifically will cancel tie-in contracts with windmills (industrial wind) and industrial solar operations.  They will go under, the installations likely abandoned. Then the replacement will be some form of steady continuous power at a predictable cost, and that will push for the re-start of coal plants, except by oil conversion. 

The Ontario nuclear plants are partly being refurbished, but the costs involved make it impossible, and a number of the generators (nuke reactors) I predict will end up shut in. Ontario has been totally driven into the ground financially by the greenie crowd, you have no idea of just how awful it is.  The budget, even with tax increases, is predicted to run at least $11 billion deficit, and I personally think the true number will come in at $20-$25 billion.  The total provincial debt is now up to some $323 Billion. It is as a practical matter unpayable, now that the industrial base has been ruined. And this is what happens when you let the Greenie crowd loose; they have no idea what they are doing and have this hysteria about melting ice floes that has no foundation in fact. The result: financial disaster, and an unstable electric grid to boot. 

You have to keep the imbeciles out of the political parties, because invariably they will bring disaster.  It seems to be a daunting task.  

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After having looked watching oil daily since July, created I would say a very complex system, I call it complex because the signals it gives are in opposition to each other, so you may say its complete chaos, but i dwell in chaos and try to make sense of things, to me, this is the ultimate, in clarity. So looking at those charts 5 for each, for oil we see a drop below 66. And for the dow, a big drop below 25,000, and for the eur  a drop too, below 1.14,  i can go on and on, of course for others, lets say gold its going down, i dont see anything so far, that is going up, except for traders blood pressure. Of course there are some stocks going up,  and some currencies, but i don't watch those, like the usdchf which is the swiss franc.I play lots of games on xbox, and in many cases the timing there is almost as important as in the markets, to win. Trading the markets or playing a games comes down to 1 thing timing, and of course risk management, but that really all is part of timing too, you only risk a move or a trade when the timing is right. 

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(edited)

52 if stockmarket crash  ect.. expected affects demand? Vast Oil supplys cannot get to the market in US due to railroad incapacity once fixed market wil displace M.E.Oil and price inflection as will electric solar offsets anticipated

Edited by oilin
explained

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You would be correct. complete chaos in the oil trade. The only real bet is on the interests of foreign governments a la the middle east. They want higher oil prices and they will manipulate supply and the market itself to achieve higher pricing. This is a bet on corruption rather that a bet on oil.  

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are you asking if oil could go to 52? I for now can only see the first place where oil bounces off from if indeed im right, and it shoots down. After that if it goes further there is only 1 person, (being)  who knows for sure. And I am never disclosed that information.

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Just an update before I go to walmart. The eur which before was at 1.1425 is now trading at 1.1380s as i mentioned, it would trade under 1.14.  The Dow is almost collapsing but it holding onto a shoelace, its right now at 25234. And oil seems like its going the wrong way towards 68, its must be confused. But it should gather its bearings soon. 

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Eur has now dropped like a rock, unfortunately lots of traders got wiped out. The euro fell about 250 basis points last week, and this week started a retrace, traders thought eur would pull itself together and went long, it did a 360 and is now almost lower than last weeks low, and the week hasnt't even started.  And always remember that 95% of traders always never make it, or lose, now if i look at a current sample of eurusd day traders right now more than 85% are long, even though the eur just made new lows, not for the day, not or the week, or the month, but for the year, and still people are long. Here is a good explanation why 95% of traders get it wrong. It never ceases to amaze me, how confused traders and analysts get it wrong so many times in a row.

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5 hours ago, Top Oil Trader said:

After that if it goes further there is only 1 person, (being)  who knows for sure. And I am never disclosed that information.

Are you saying there is one person who knows exactly where oil prices are going to be?

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