crude inventory
Trading Crude on Inventory numbers

How to trade Crude Oil on the inventory numbers?

Please share your experiences and methods

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1 hour ago, Rai Bose said:

How to trade Crude Oil on the inventory numbers?

Please share your experiences and methods

Hi @Rai Bose

I have not specifically traded the inventory releases but I guess there are two ways of approaching this - and a number of considerations to think about.

The first issue is whether you mean placing trade prior to the releases or entering after the releases based on what the numbers are.

In the forex market there are numerous data releases that are favourites for trading. These include US non-farm payrolls (NFP), Retail sales and inflation data (CPI). But I would be hesitant to apply the same approaches from forex trading to the Crude Oil inventories releases by placing orders/trades prior to their release. These releases contain a range of data covering other products than just Crude Oil reserves and I think there is a significant risk of whipsawing in the immediate aftermath.

But placing trades after the release is, in my opinion, more sensible, but should be considered in the light of the overall current situation. Today was a typical such situation. The EIA release stated crude oil inventories at 3.6mill barrels, which was more than anticipated. Considering that we have been in a strong down move, one could have expected a strong sell reaction. But it was not so. We have a G-20 meeting this weekend and it is more likely that traders will be looking to close out exposures ahead of it in order to avoid an open exposure to any surprise announcements from this meeting - and next week sees the OPEC meeting concerning possible production reductions.

The success or failure of such trading is probably more related to the choice of targets and stop levels than just direction. There are various trade approaches using options etc, but I cannot comment of those in the oil markets.

Maybe other, more experienced traders, can help you more! :)

 

 

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