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Trading Crude Oil with price action + indicator

  • #381
  • Jan 13, 2015 1:15am Jan 13, 2015 1:15am
Quoting spocktrader
{quote} One point you're missing is the high leverage of US shale oil extracting companies. Low oil prices put these companies under enormous pressure. And when they go bust, US banks will be left on a mountain of foul debt. Some say that writeoffs from bankrupt shale oil companies may reach a dimension similar to the housing crisis. You know what that means, right? Stock markets are already sliding on further oil price decline. Believe me, this thing can turn sooner than we think. South America producing cheap oil? Never heard of it. Who? Where?...
Yes I heard of the huge debts Shale companies are producing. At the moment it is somewhere between 400-500 mn USD.

I heard that Ecuador and Venezuala are producing cheap oil.
  • #382
  • Jan 13, 2015 3:55am Jan 13, 2015 3:55am
You're all correct...but looking at charts it's pretty clear traders don't really seem to care (yet).

Brent will reach 45 today...and if that breaks, it'll head to 40 rather sooner than later. Might stall a bit at 45 like it did at 50 late last week. For now, I don't even see a hint of a reversal in the charts.

Also not feeling sorry for those oil companies. They've enjoyed record profits for yeeeeears. If they are complaining about the low prices now because they overleveraged their businesses, they deserve what's coming for them...unsustainable business practices shouldn't be rewarded. To assume prices will always move up or stay at $100+ is ludacris, just as crazy as assuming house prices will always move up.
  • #383
  • Jan 13, 2015 4:45am Jan 13, 2015 4:45am
It seems that market share is much more important for oil suppliers than margin profit. Saudis and Russia will not cut their production probably, because they are afraid of Americans. We have to be also aware that such dramatic drops are caused also by margin calls for long positions. Bearers have to cut off their positions and it can accelerate further moves.
  • #384
  • Jan 13, 2015 8:17am Jan 13, 2015 8:17am
Hi everyone..

Long Light Brut Mars2015.... opened 4543....SL 4393.....TP 5243

Long term support oblique and volatility... It seem a good ratio long position
Attached Image (click to enlarge)
Click to Enlarge Name: Sans titre.jpg Size: 268 KB
  • #385
  • Jan 13, 2015 9:26am Jan 13, 2015 9:26am
Quoting 4exNinja
You're all correct...but looking at charts it's pretty clear traders don't really seem to care (yet). Brent will reach 45 today...and if that breaks, it'll head to 40 rather sooner than later. Might stall a bit at 45 like it did at 50 late last week. For now, I don't even see a hint of a reversal in the charts. Also not feeling sorry for those oil companies. They've enjoyed record profits for yeeeeears. If they are complaining about the low prices now because they overleveraged their businesses, they deserve what's coming for them...unsustainable...
Unfortunately it is not quite as simple as that. I will use the Resource boom here in Australia as a key example as it has been the same result with the lowering of Iron Ore prices putting pressure on higher cost resource companies. In order to get the most out of the rise in commodity prices, business need to establish and if they are already established then they need to expand to hold their market share. All companies are the same. During any boom, particularly in the construction phase which requires 3 x or greater the workforce needing during production, labour rates tend to rise at a much faster rate as companies essentially try to 'buy' the skilled labour.

In Australia that has seen the average wages of skilled (and unskilled) personnel in the construction industry increase dramatically. The supplies to the industry also increase as demand for products increase therefore well before production even occurs, the costs are ballooning. Labour, Parts, Plant and Machinery, it all adds up. Throw in a few unions, regulate, regulate and regulate further and before you know it, the costs have soared. How many times have you heard of projects having cost blow outs.

Now all the construction is funded through shares and loans, both of which need to be repaid and that is done through production. The cost on debt and the ongoing production costs set a benchmark cost and from their you get your margins.

Depending on the demand and the promixity of the wells to other companies, the competition for personnel and the managing of accommodation, flights, meals, recreation can increase as you fight to keep people employed. As a general rule of thumb here in Australia, the cost of getting a very good person and keeping them can exceed $200,000 per year. The cost of turnover are massive. Just the HR and compliance costs are enough to make most small companies shake with fear.

So unfortunately it is almost impossible to have new enterprise enter the productive market without incurring massive debt. My company directly services Mining and Construction here in Australia and we provide Earthmoving Plant and Labour so I am fortunate to have a pretty good idea of the troubles facing the oil industry in America as we are facing the same issues in Australia. Unfortunately only the fittest survive. The small start ups if they have good tenements and long life mines/wells will be bought out by the larger companies. The rest will fail without drastic change.

Unfortunately it doesn't need to be this way. If people worked for fair wages and looked at the bigger picture ie Job longevity instread of the immediate quick high, then alot of those miners/drillers would find huge reductions in costs, but while the larger players continue to offer high wages to secure the right people, the expectations for large salaries will continue.

RT
  • #386
  • Jan 13, 2015 9:33am Jan 13, 2015 9:33am
Quoting tomas.v
It seems that market share is much more important for oil suppliers than margin profit. Saudis and Russia will not cut their production probably, because they are afraid of Americans. We have to be also aware that such dramatic drops are caused also by margin calls for long positions. Bearers have to cut off their positions and it can accelerate further moves.
Market share at the expense of other producers it about the long term. As I mentioned in my last post, the cost of starting a project and getting it to production is both expensive and extremely time consuming. Even if one is to look at a commodity price today and deciding to get involved, it doesn't guarentee that the price will be the same when they finally reach production.

The winners are those who have been involved in business for long enough to be in a position where they are producing and enjoying the good times. The Saudi's have made Trillions on their oil over the last century so to them, this dip whilst painful, is under their control whilst they suffocate the competition. Once the comp is out of the way they will be able to restrict the oil, drive prices up and get the bang for their buck.

In the long term the consumers are the losers as they tend to always be in today society of price manipulation and corporate greed.
  • #387
  • Jan 13, 2015 9:49am Jan 13, 2015 9:49am
Quoting Razor_trader
...
I don't disagree with your fundamental analysis. All I'm saying is that until traders act on that info (which hasn't happened yet), it's kind of irrelevant for trading.

Sure, fundamentally you can start thinking about longs...but technical analysis shows pretty clearly that going long now isn't the right thing to do (yet).

I used to read sites like ZH a lot and tons of times their fundamental analysis makes sense. This leads to you asking a lot of "why on earth is price still moving up???" questions. Those questions are pointless though because all that matters is how price moves...aka how traders act on news.

I now stopped paying attention to news and simply focus on what price does...and it's paying off.
  • #388
  • Jan 13, 2015 10:33am Jan 13, 2015 10:33am
Quoting 4exNinja
{quote} I don't disagree with your fundamental analysis. All I'm saying is that until traders act on that info (which hasn't happened yet), it's kind of irrelevant for trading. Sure, fundamentally you can start thinking about longs...but technical analysis shows pretty clearly that going long now isn't the right thing to do (yet). I used to read sites like ZH a lot and tons of times their fundamental analysis makes sense. This leads to you asking a lot of "why on earth is price still moving up???" questions. Those questions are pointless though...
Without a doubt, no argument here. The old saying is that Markets can stay irrational for longer than you can remain solvent. I am still bearish Oil in my outlook because it has done nothing to show that there is a turn around coming. All the fundamental and technical signs are bearish. The open forums are generally bearish but still looking for longs and are getting murdered.

I am waiting for a larger spread news article around 35-40 a barrel that has plastered 'The time to sell oil is now, Oil is pushing all time lows'. When that comes out I will be immediately bullish because we all kn that main stream media is manipulated to spill the opposite agenda of those in power to blind side the masses.
  • #389
  • Jan 13, 2015 10:34am Jan 13, 2015 10:34am
Quoting Razor_trader
{quote} Without a doubt, no argument here. The old saying is that Markets can stay irrational for longer than you can remain solvent. I am still bearish Oil in my outlook because it has done nothing to show that there is a turn around coming. All the fundamental and technical signs are bearish. The open forums are generally bearish but still looking for longs and are getting murdered. I am waiting for a larger spread news article around 35-40 a barrel that has plastered 'The time to sell oil is now, Oil is pushing all time lows'. When that comes...
The time to buy is when your 80 year old gran tells you to sell because "she heard it on the news"
  • #390
  • Jan 13, 2015 1:31pm Jan 13, 2015 1:31pm
Iran started to threaten other OPEC countries, which means that some gentlemen started to getting nervous. A few dollars less is very possible.
  • #391
  • Jan 13, 2015 5:30pm Jan 13, 2015 5:30pm
Quoting 4exNinja
{quote} The time to buy is when your 80 year old gran tells you to sell because "she heard it on the news"
  • #392
  • Jan 14, 2015 9:40am Jan 14, 2015 9:40am
Quoting moto28
Hi everyone.. Long Light Brut Mars2015.... opened 4543....SL 4393.....TP 5243 Long term support oblique and volatility... It seem a good ratio long position {image}

Position protected now.....the downtrend is break, the triangle objectif is 4920....
Attached Image (click to enlarge)
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  • #393
  • Jan 14, 2015 10:25am Jan 14, 2015 10:25am
Quoting moto28
{quote} Position protected now.....the downtrend is break, the triangle objectif is 4920.... {image}
Cool! I'm targeting 48.00, I was actually looking for 49 - 50 but the bear trend seems to be pretty strong and i'm heavily long (25 lots) so want to close at a safer price!
  • #394
  • Jan 14, 2015 12:56pm Jan 14, 2015 12:56pm
if you doubt in fundamental reasons of oil decline take a look at below chart. US hit another record of Oil production in January, over 9M barrels per day
Attached Image (click to enlarge)
Click to Enlarge Name: 2015-01-14_164405.png Size: 67 KB
  • #395
  • Jan 14, 2015 1:35pm Jan 14, 2015 1:35pm
what was the cause of the 300 pip move
  • #396
  • Jan 14, 2015 1:39pm Jan 14, 2015 1:39pm
Quoting moen
what was the cause of the 300 pip move
Trying to figure that out too. Kinda funny given it took place shortly after another "omg record US oil exploration" article.
  • #397
  • Jan 14, 2015 1:44pm Jan 14, 2015 1:44pm
Oil gains nearly $3
http://1.gravatar.com/avatar/b38e4b7...4&d=retro&r=PGby Adam Button
Oil is finally showing signs of life, or at least signs of a short squeeze. It’s options expiration so that’s probably the catalyst because the main fundamental news today was bearish after a huge build in US inventories.
As floor trading closes, WTI is up nearly $3 to $48.76.
  • #398
  • Jan 14, 2015 8:52pm Jan 14, 2015 8:52pm
Quoting fxmasterdxb
{quote} Cool! I'm targeting 48.00, I was actually looking for 49 - 50 but the bear trend seems to be pretty strong and i'm heavily long (25 lots) so want to close at a safer price!

25 Lots buddy you have landed safely

still i think will kiss 49-50
  • #399
  • Jan 14, 2015 9:00pm Jan 14, 2015 9:00pm
Look this chart
Attached Image (click to enlarge)
Click to Enlarge Name: ScreenHunter_07 Jan. 14 21.59.jpg Size: 147 KB
  • #400
  • Jan 15, 2015 3:09am Jan 15, 2015 3:09am
Quoting moto28
{quote} Position protected now.....the downtrend is break, the triangle objectif is 4920.... {image}

Out 4955......great + 412 pts
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