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Sweet, sweet Oil

  • #201
  • Aug 1, 2008 4:43pm Aug 1, 2008 4:43pm
One word that should never be used in trading: Hope.

Although today was an up close and made a higher high for the 3rd day in a row, as I suggested in a PM to you there is overhead resistance - around $129-132 so I think the upside might be limited if and until this area is taken out strongly.
  • #202
  • Aug 1, 2008 5:03pm Aug 1, 2008 5:03pm
I caught the price spike this morning from the corner of my eye and went looking for a reason.

I put it down to the OIL markets being reminded of the proximity of geo-political tensions with the Deputy PM of Israel making a public statement over Iran about to make a breakthrough in it's nuclear program, which if one is reading between the lines can be interpreted as the implied threat of a military strike.

The very brief story of only 1 paragraph was posted on Bloomberg very soon after the OIL price started to move up.

I think the same thing happened the other day when the price suddenly spiked, but that time I believe it was over a statement made by Barrack Obama infering Iran's intentions to develop nuclear weapons.

There was a nice short opportunity around $128 on a quick pullback for more aggressive traders.

Anyway that's my take besides the support levels around $122 providing another reason.

NG has bounced off that long term support line around $9 and has also offered a few nice short term trades up and down from that level. It's a better bang for the margin dollar than the OIL futures.
  • #203
  • Aug 1, 2008 5:15pm Aug 1, 2008 5:15pm
roro,

You do realize the Bloomberg's website gets the news long after the Bloomberg trade terminals do?

Sun
  • #204
  • Aug 1, 2008 6:08pm Aug 1, 2008 6:08pm
Sun,

No, I can honestly say I didn't know that, but thanks for pointing it out.

I have heard about the terminals so I guess I need to look into it a bit.......it is a subscription service, right?.......and probably expensive too?

Any thoughts about the OIL spikes over the past few days........I trade the miNY OIL and NG futures.........trading off the recent support levels and shorting the OIL spikes.

Usually when I see a quick or sudden run-up in price as with OIL over the past few days I look for a catalyst........the run-up this morning seemed a bit of a surprise.........I had just finished reading some OIL outlooks and saw the price spiking on one of the screens so that's why I mentioned the Iran related comments........it seems it does not take much to spook the markets.

Your charts are very informative and thanks for that posting too.
  • #205
  • Aug 2, 2008 9:47am Aug 2, 2008 9:47am
A link to an FT article related to OIL price;

http://www.ft.com/cms/s/0/564cd82a-5...nclick_check=1

The author makes several points over Dip or Decline?

1 - No big rise in stockpiles of crude, gasoline or distillates and US inventories are low.

2 - The supply response to high oil price has been 'feeble' suggesting the oil industry finds it increasingly difficult to locate and produce more oil.

3 - Fall in demand likely caused by fears and potential changes to consumer behaviors over state of US economy may be the primary reason for recent price declines.

4 - Post 1970s OIL shocks reduction in demand was delayed but by 1985 US oil consumption had fallen 19% from its peak.

5 - Several differences and similarities to 1970s OIL shocks; in 1978 the US and Europe consumed about 75% of all world production while in 2007 that number has fallen to less than 50%, and China and India demand is probably not likely to slow significantly or at all.

One other point related to price pullbacks; in 2006/7 the price dropped from around $77 to $50 or 35%. So far the pullback has been in the order of around 15% and if the 35% were repeated that puts the price around $95, which is a number some argue is a necessity for the US economy.

My best guess is that $95 is a possibility if the current credit and banking related issues morph into further asset-price deflation/consumer recession which according to some smart people like Mohamed El Erian of PIMCO points out as being significant risk.

It also seems that another way to counter higher oil prices and support the USD is for central banks like the ECB, BOE and RBA to start backing off interest rates........and there may be enough reason for that to possibly start to happen.

The other elephant in the room for OIL price is the US/Israeli/Iran issue.

If an attack were undertaken against Iran then it's anyone's guess as to where OIL might trade, but there was a research piece put out by the Oxford Study Group several years ago over potential fallout (no pun intended) of an attack against Iran and it is curious how that seemingly critical element of the Iran issue is never mentioned let alone discussed by main stream media.

My logic may be flawed here but that's my thinking, at least so far. There's always room for improvement.
  • #206
  • Edited 6:27am Aug 5, 2008 6:24am | Edited 6:27am
Quoting roro53
A link to an FT article related to OIL price;

http://www.ft.com/cms/s/0/564cd82a-5...nclick_check=1

The author makes several points over Dip or Decline?

1 - No big rise in stockpiles of crude, gasoline or distillates and US inventories are low.

2 - The supply response to high oil price has been 'feeble' suggesting the oil industry finds it increasingly difficult to locate and produce more oil.

3 - Fall in demand likely caused by fears and potential changes to consumer behaviors over state of US economy may be the primary reason for recent price declines.

4 - Post 1970s OIL shocks reduction in demand was delayed but by 1985 US oil consumption had fallen 19% from its peak.

5 - Several differences and similarities to 1970s OIL shocks; in 1978 the US and Europe consumed about 75% of all world production while in 2007 that number has fallen to less than 50%, and China and India demand is probably not likely to slow significantly or at all.

One other point related to price pullbacks; in 2006/7 the price dropped from around $77 to $50 or 35%. So far the pullback has been in the order of around 15% and if the 35% were repeated that puts the price around $95, which is a number some argue is a necessity for the US economy.

My best guess is that $95 is a possibility if the current credit and banking related issues morph into further asset-price deflation/consumer recession which according to some smart people like Mohamed El Erian of PIMCO points out as being significant risk.

It also seems that another way to counter higher oil prices and support the USD is for central banks like the ECB, BOE and RBA to start backing off interest rates........and there may be enough reason for that to possibly start to happen.

The other elephant in the room for OIL price is the US/Israeli/Iran issue.

If an attack were undertaken against Iran then it's anyone's guess as to where OIL might trade, but there was a research piece put out by the Oxford Study Group several years ago over potential fallout (no pun intended) of an attack against Iran and it is curious how that seemingly critical element of the Iran issue is never mentioned let alone discussed by main stream media.

My logic may be flawed here but that's my thinking, at least so far. There's always room for improvement.
Thanks for the link. My opinion may not count but the fact is, oil price is determined not by the attach on Iran but the manipulation and irrelevant news about attack on Iran. We are not pumping any oil from Iran. This is just another opportunity for the price hike. The consumers can't do a thing about price since we depend on it so bad that $5/gal gasoline will not blow a hole in our pockets. The shareholders and oil companies are happy since they earn record profits.

The funny thing is, after I clicked on post reply, I found myself all alone in this forum. Why?
Because oil price is coming down. So no one gives a concern.
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  • #207
  • Aug 5, 2008 8:09am Aug 5, 2008 8:09am
I am of the mind that reading what the media says can be hazardous to your trading account.

But I would think that there would be a spike if an attack on Iran were to happen, after which if things didn't get totally out of control the price would return to earlier levels. Which these days means down.

Nearest support looks to be $111-$112.50
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  • #208
  • Aug 5, 2008 10:14am Aug 5, 2008 10:14am
Agreed, the media can be hazardous.

Like everything, the media is relative and subjective.......FT's Martin Wolf was writing about the risks of the derivatives in relation to real estate markets long before the word derivative was mentioned in the main stream press.

So I guess it's sort of a bit of "we are what we eat or in this case read".

And that's why I read your posts ST; because the information is presented in an intelligent, relative and informative context.

Thanks for putting up the OIL chart.
  • #209
  • Aug 8, 2008 4:47pm Aug 8, 2008 4:47pm
Yeah, thanks for the chart, dude!

I figured that media means market. Market is driven by media most of the time. Look at what is going on with the Beijing Olympics 2008. TV commercials, news of China's pollution, human rights, and demonstrations. Actually, in China, it's not that bad. Life goes on as usual.
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  • #210
  • Aug 8, 2008 4:58pm Aug 8, 2008 4:58pm
Anyone have any opinions of the theory that the markets are moving oil down in preperation for a war with Iran? Drive down the price so once the war starts the price will be elevated below the highs?
  • #211
  • Aug 8, 2008 5:31pm Aug 8, 2008 5:31pm
Quoting forexpert
Yeah, thanks for the chart, dude!

I figured that media means market. Market is driven by media most of the time. Look at what is going on with the Beijing Olympics 2008. TV commercials, news of China's pollution, human rights, and demonstrations. Actually, in China, it's not that bad. Life goes on as usual.
You can think that, but I sure don't. The market, for the most part, does not care one bit about the media. Supply and demand moves markets.

China has inflated their economy with the huge growth the last 5 years or more besides all the has gone into putting on the Olympics.
  • #212
  • Aug 8, 2008 6:01pm Aug 8, 2008 6:01pm
Quoting SunTrader
You can think that, but I sure don't. The market, for the most part, does not care one bit about the media. Supply and demand moves markets.

China has inflated their economy with the huge growth the last 5 years or more besides all the has gone into putting on the Olympics.
You're both right. Supply and demand is what creates the big moves, but the media and the news creates short term moves
It's NOT GAMBLING when the odds are in your favor
  • #213
  • Aug 8, 2008 6:26pm Aug 8, 2008 6:26pm
Quoting User Name
You're both right. Supply and demand is what creates the big moves, but the media and the news creates short term moves
Believe what you want.
  • #214
  • Aug 8, 2008 6:28pm Aug 8, 2008 6:28pm
Quoting Seaward22
Anyone have any opinions of the theory that the markets are moving oil down in preperation for a war with Iran? Drive down the price so once the war starts the price will be elevated below the highs?
Dude, forget about the war with Iran; The US will soon open an "interest office" in Tehran - that was a piece of news under the radar at the beginning of the week which i guess was factored in, rather that Israeli-fueled warmongering;;
"Everybody needs money. That's why they call it money" - Danny De Vito
  • #215
  • Aug 12, 2008 5:05am Aug 12, 2008 5:05am
Quoting slide
Dude, forget about the war with Iran; The US will soon open an "interest office" in Tehran - that was a piece of news under the radar at the beginning of the week which i guess was factored in, rather that Israeli-fueled warmongering;;
Where did you hear this news from? What are the potential benefits by opening an interest office in Tehran?
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  • #216
  • Aug 14, 2008 9:18am Aug 14, 2008 9:18am
Options for Sept crude expire Friday, Aug 15 and as a result there may be some volatile and whipsaw trade into the week's end.

Anyone care to offer an explanation as to why options expiration may affect price today and tomorrow?
  • #217
  • Aug 14, 2008 10:13am Aug 14, 2008 10:13am
Sorry not me. I watch CL / QM / $OIX / USO and GC / GLD as well as the IEA weekly figures but try not to figure what effect options have.

Too much already, options might be overload otherwise.

But always willing to listen to someone who does know, though.
  • #218
  • Aug 14, 2008 8:45pm Aug 14, 2008 8:45pm
ST,

Thanks for the reply.

I was reading some HighTower commentary this AM and picked up the "options expiration for Sept CL" so thought to post the question........also posted it at PFX's post about the OVX........didn't get a reply yet but the PFX site is down for maintenance so maybe later.

Not sure about the so-called options effect since OIL may make it back to $112.50 before the Asian session is over.........it's only 9:35 PM ET and the price has already traded back to $113.75.

The markets are quirky.........yesterday when the OIL inventory numbers came out the price was slow to turn up.........almost as if the market was not sure about what to do..........in the past numbers like this mornings would have launched a rocket.......... and this AM when the EZ GDP #s and then US CPI #s were posted the Euro was also slow to sell at least initially.

If I find out about the options issue I'll let you know..........like to know myself just for the knowledge.
  • #219
  • Aug 14, 2008 9:12pm Aug 14, 2008 9:12pm
I know just enough to be dangerous, as the expression goes - not in a good way.

But in order to figure which way the market might react you need to have options data, volume and open interest especially the last days leading upto expiration.

My guess is $110 is the near term bottom and we move back in the direction of $120. Nice round numbers.

Read a story with T Boone Pickens thinking a low of $110 and probably not going below $100. I could see, in the coming months, price going below $100 if world economy really tanks.

But currently I think a short term bounce on Friday is likely.
  • #220
  • Aug 15, 2008 8:35am Aug 15, 2008 8:35am
So, OIL did hit close to the S level at $112.50/75 in the overnight market, but where price travels from here is a question mark for me.

OS reading for the Day charts but that doesn't mean there can't be a technical breakdown either and right now it is selling back to $113 on the 1H chart and looks to go lower.

Unless it makes a sharp break I'll probably sit tight to see where it plays out.
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