Comments on: Wednesday Morning Pre-Market Comments

By: jegersmart

jegersmart — Wed, 19 Oct 2016 20:53:37 +0000

@rsotc – with regards to USL, I am advocating its usage for longer term positions – i.e. multi-month due to the somewhat lower short term volatility (in general) but as I say it gives access to the whole curve (if wanted) – so there is usually also less movement to make short term money of course. Personally, if I want to build a longer term trade I use USL – even with size management I find it hard to ride it out on USO (especially over the last 8-10 months) and of course on USL you should get lower roll costs which is beneficial when holding for a longer period. How it behaves from a tech analysis point of view I do not know, I am acting on fundamentals in terms of physical oil, that does not mean the paper market will necessarily reflect that at times. As someone pointed out above, oil seems to have ignored fundamentals for a period of time. Well, the problem with fundamentals (and which is why I do not trade using that method in equities and fx) is that no one really has all the information in order to make a fundamental call. Someone above didn’t know that Canadian pipelines were down for a short period in the last week – what else does he or we not know? I have access to a lot of proprietary info as I operate in this space, however I do not often trade flat price. Neither do most of my peers. If you have solid information on refinery and pipeline outages, inventory levels and rack activity you at least have a good chance on the various spreads in terms of product, time, location and even the more basic WTI/Brent spread. Naked flat price trading is a beast imho – and you may as well try tech analysis to take the emotions (and lack of fundamentals) out of the equation. I just don’t find it works as often as on equities, but that is anecdotal. USL sometimes fits the bill for me is all I am saying! Good luck long or short though obviously. J

By: rsotc

rsotc — Wed, 19 Oct 2016 18:40:33 +0000

In reply to jegersmart. jegersmart- Thx for the suggestion & reasoning behind going with USL. I'm going to add that one to my watchlist & will consider it as an alternative to CL (futures) or USO going forward.

By: GetItRiight

GetItRiight — Wed, 19 Oct 2016 15:20:15 +0000

In reply to jegersmart. Interesting. Haven't heard of that. Thanks for the info. It was baffling how on earth are they showing drawdown after drawdown in a season which should show builds. I have added to my DWTI position here, due to technicals (overbought RSI on the hourly) but also on expected profit taking at resistance.

By: jegersmart

jegersmart — Wed, 19 Oct 2016 15:16:18 +0000

p.s. as an afterthought and FYI, part of the draws seen are probably due to some Canadian pipelines being closed for a short period recently…..

By: jegersmart

jegersmart — Wed, 19 Oct 2016 15:03:21 +0000

Yes, at this point I would only add to my USL positions on reasonable sized dips – I am looking at a 2-5 month hold here. We are due a correction I agree – but I am not trading technicals here (for a change).

By: GetItRiight

GetItRiight — Wed, 19 Oct 2016 14:50:00 +0000

In reply to jegersmart.

What surprises me is how well crude is trading on fundamentals now, when it ignored them not too long ago. Crude had a huge run up based only on jawboning from OPEC. The drawdowns would support higher prices but not at this level.
Also, technicals in USO seem to take a backseat to sentiment.
What is holding me back from a long position is the COTs report, which shows the highest percentage of traders on the long side.

By: jegersmart

jegersmart — Wed, 19 Oct 2016 14:42:09 +0000

We are drawing inventory in the US at least at a time when we should be building, this is why I have been and have added to USL long position as already mentioned over the past few weeks. If you want to trade flat price which I wouldn’t recommend unless you really know what you are doing, USL offers a less volatile option for longer term swing positions and protects somewhat against contango….arguably… In any case, I would not be surprised to see WTI at 60 early next year…..imho

By: riverbirch

riverbirch — Wed, 19 Oct 2016 14:13:53 +0000

In reply to joefriday. Actually I see a weekly triangle pattern with a breakout above triangle and now at resistance of Sept 2015 high!

By: joefriday

joefriday — Wed, 19 Oct 2016 14:08:56 +0000

In reply to GetItRiight. Agree.... CL is likely going down imho.. IHS is just too obvious imho

By: GetItRiight

GetItRiight — Wed, 19 Oct 2016 14:03:12 +0000

In reply to riverbirch. All the more reason that it should fail.