WTI Heading for $60

There seems to be a cutoff point of $61.14 which represents the 20% yield required for Oil to enter into the Bear Market phase. If it drops below that, then it opens up the $55 price for the coming months. If it manages to stay north of that, then personally I’d be a light buyer up to $64, then crossing the $64 mark, it’s a much higher ceiling...

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On 11/6/2018 at 9:29 PM, ATK said:

WTI heading to $60, I have my reasons.

tvc_4d9a5373cb19aec21c0280294c8f63ce.png

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3 hours ago, Maged Fahmy said:

There seems to be a cutoff point of $61.14 which represents the 20% yield required for Oil to enter into the Bear Market phase. If it drops below that, then it opens up the $55 price for the coming months. If it manages to stay north of that, then personally I’d be a light buyer up to $64, then crossing the $64 mark, it’s a much higher ceiling...

I completely agree, I don't think we would spend much time in the 60s and out most would wick down before a retrace, but im going to reevaluate things next week after we get some insight on where OPEC is heading 

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5 hours ago, Jan van Eck said:

Or various refineries are built right next door to the oil-sands projects.  Then the finished product, which has less volume than the crude, can be moved effectively by unit trains. 

 

The Alberta election is coming up fast and the NDP have said they have a "made in Alberta" solution to the problem... I'm betting that it's going to be a provincially owned or (heavily subsidized) upgrader facility. 

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1 minute ago, Enthalpic said:

The Alberta election is coming up fast and the NDP have said they have a "made in Alberta" solution to the problem... I'm betting that it's going to be a provincially owned or (heavily subsidized) upgrader facility. 

It is an even bet that you are right in that estimation.  It might end up as a joint venture, with the NDP proposing that some percentage of the shares are owned by the Public Employees Retirement Fund, that sort of thing.  Quebec does that with its Caisse de Depot pool of capital.  It is actually a good concept, as long as you don't miss in selecting the target!

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(Waves at JJ :) )

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Suncor, Husky, Imperial Oil and Cenovus produce bitumen and have refining capacity.  As the CEO of Suncor said last week, if bitumen prices go down, we make more money refining this "low-cost" feedstock.  The extension of this corporate strategy is that the bitumen producers will produce more bitumen and push down Western Canadian Select (WCS).  Why does this matter?  Well most of the light crude produced in Alberta is priced against WCS.  A lower WCS price will squeeze the margins of these "entreprenurial" small producers pushing their share prices down and eventually bankrupting many.  The Husky bid for MEG is a real time example of this situation.  Basically the big producers are squeezing the mid and small producers in Alberta into submission.  The Alberta and federal governments should step and stop this cross-subsidization which is imperiling these hard-working, entrepreneurial oil companies but I suspect governments haven't realized what they are doing to this large group of light oil producers by allowing an expansion of bitumen production in Alberta without forcing the bitumen producers to refine in Alberta.  Very sad situation.

remember that bitumen production has increased from 2 million barrels per day to 4+million today.  Upgrading capacity in Alberta remains unchanged at 600,000 barrels per day. 

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CNQ is a low-cost bitumen producer without refining capacity.  Hence the underperformance in it's share price.  It too is being squeezed by the bitumen producers with refining capacity.

Alberta gives out the licenses and expects to get paid royalties for production.  But royalties have dried up because WCS prices are so low.  

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33 minutes ago, yeuxclairs said:

The Husky bid for MEG is a real time example of this situation. 

I sold all my MEG at a small loss only days before that takeover bid.  :(  ~8.00CND/share to 11CND/share overnight...

Oh, well can't win them all and I used the liquidity to buy GTT which turned out great.

Potentially great deals on Canadian energy companies right now (BTE).

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46 minutes ago, yeuxclairs said:

Suncor, Husky, Imperial Oil and Cenovus produce bitumen and have refining capacity.  As the CEO of Suncor said last week, if bitumen prices go down, we make more money refining this "low-cost" feedstock.  The extension of this corporate strategy is that the bitumen producers will produce more bitumen and push down Western Canadian Select (WCS). 

 

They also don't really sell it at WCS.  Pipeline contracts and other factors make it so they often get closer to WTI.  Q3 numbers show they are making decent cash...

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Tell the mid-caps who are producing light, sweet crude that they are okay.  Many have hedged themselves against WTI and watched the WTI-WCS spread blow-out.  They are getting paid WCS + $5 to $15'ish and having their heads handed to them.  Think WCP, MEG, CJ etc. etc.   The Suncor vulture is watching them I suspect.

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22 hours ago, catch22 said:

Indeed the inventory report was very bearish- however there must be considersble resistance now as it couldn't break below $61 when it normally would have produced a greater fall?  Im guessing you thought this would have been the trigger for $60? So we still have our bottom holding -albeit on shaky ground...  if the report surprised to the upside it would have sent it flying imho.. 

It's been a slow crawl down, bears potentially losing steam, sold about 40% of my puts just now and might sell some more before the market closes

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I wonder how low it goes & when oil companies here slow the drilling down in the USA?  Seems like in the $50s is when the Drilling started getting started heavy in my area. 

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19 minutes ago, Bradtech said:

I wonder how low it goes & when oil companies here slow the drilling down in the USA?  Seems like in the $50s is when the Drilling started getting started heavy in my area. 

The question is if OPEC decides to cut production why would the US also? If anything the US can take some of their marketcap by keeping their production where it is at. If the US does decide to go this route, OPECs only option would be to flood the market as a means to hurt the US shale industry

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1 hour ago, ATK said:

It's been a slow crawl down, bears potentially losing steam, sold about 40% of my puts just now and might sell some more before the market closes

Indeed... well the previous bottom didnt hold. Wonder if this one will? A slow crawl down to the high 50s is still possible with the harmonic extension of the ABCD @ 161% occurring down there. Thats always a problem with those harmoncs- you never know how far the extension will go before the possibility of retracement. There is just too much bearish fundamentals in play here to trade against them. 

I prefer it when the fundamentals are in line with technicals - thats when you get the higher probability setups. 

Im not going short from this low- and im not going long against the trend. Im on th3 sidelines until something breaks :)

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46 minutes ago, catch22 said:

Indeed... well the previous bottom didnt hold. Wonder if this one will? A slow crawl down to the high 50s is still possible with the harmonic extension of the ABCD @ 161% occurring down there. Thats always a problem with those harmoncs- you never know how far the extension will go before the possibility of retracement. There is just too much bearish fundamentals in play here to trade against them. 

I prefer it when the fundamentals are in line with technicals - thats when you get the higher probability setups. 

Im not going short from this low- and im not going long against the trend. Im on th3 sidelines until something breaks :)

Yeah I probably won't trade next week and see what the price action is like. I sold 70% of my puts, holding the rest until they expire. They will close in the money regardless unless we shoot back to $63 by the EOD tomorrow. 

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Glad I saved some of my puts! 

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11 minutes ago, ATK said:

Glad I saved some of my puts! 

your having a good run mate, steak dinners all week 👊

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YOU WERE RIGHT ATK. THANK YOU.

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(edited)

27 minutes ago, catch22 said:

your having a good run mate, steak dinners all week 👊

Thanks! I do have my bad weeks also (don't want to give anyone false impressions that I'm always right lol), but it's been pretty good since our fall from $76

Edited by ATK
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(edited)

Managed to sell the rest of my puts! Could of held a little longer, but didn't want to get greedy and lose out on money due to theta decay

Edit: extra glad I sold when I did!

Edited by ATK
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(edited)

A moment of silence for all the people (cough cough greedy hedgefunds) who opened longs the second week of October....

God have mercy on their souls 

Probably won't trade for the next two weeks and give the market a chance to decide what it wants to do. I'll be extra focused on what OPEC has to say this Sunday 

Edited by ATK
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On 11/7/2018 at 11:51 AM, ATK said:

Tell this to @Top Oil Trader, this post started as a joke but then turned into some meaningful discussion. I think we could see a move to $60.1x either tomorrow or Friday 

Something to know about me, I trade weekly options so when I discuss trade it's usually on a much shorter time frame (~5 - 7 days). 

Nice call - respect!

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On 11/9/2018 at 11:10 AM, ATK said:

A moment of silence for all the people (cough cough greedy hedgefunds) who opened longs the second week of October....

God have mercy on their souls 

Probably won't trade for the next two weeks and give the market a chance to decide what it wants to do. I'll be extra focused on what OPEC has to say this Sunday 

Good calls ATK, and smart to stall a bit until we see post election inventory and supply changes.

US Stocks are up by 5.8 million barrels of crude, but they are down by 25.3 million vs last year during the same week of November. 2016 Election oversupply finally cooled down and prices started going back up strong during the last week of November, two weeks is just about right with respect to sitting on the sidelines and waiting to spot the next trend.

Good chance that there will be supply relaxation, at least I'm hoping for that (to benefit my securities portfolio).

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14 hours ago, NatGasDude said:

Good chance that there will be supply relaxation

What does this mean?  Seriously.  Does it mean "perceived" supply relaxation?  Or does it mean that somebody is not going to have enough oil?  

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