A Hill-Billy Way To Predict The Weekly Petroleum Status Report

V

vanzandt

I don't trade energy futures. Maybe I should start. But I want to offer up something to you that do trade this stuff something that I have observed for the last month or so, and I really think I may be on to something here.

Its really easy. Go to any American city and look at the price of gas. You can even do this from your desktop. Pick boring cities like Cincinnati or Indy or anything in the upper Midwest. (OK... no offense to any residents, I mean boring in another way:cool:... these are all cool cities). Anyway, take a look at the price of unleaded on Monday and Tuesday. Then look at the RBOB wholesale cost (scrolls on Bloomberg TV) of unleaded. If you see a $0.50 to $0.70 spread between the two, you will get a gasoline buildup on Wed's EIA report. If the spread is markedly above $0.85/gal odds are, you will see a draw-down in gasoline inventories.

Now don't shoot the messenger here. I am sure this might evoke a passionate response. Just keep an eye on it and see what you think. Its been working. How to trade this effectively(?), I have no idea, but it's like you are getting tomorrows report today. But vet it first.... I may be crazy. Actually....:sneaky: .

"Trading Places": My God! The Dukes are going to corner the entire frozen orange juice market!
 
You wouldn't think so would ya. Maybe its just coincidence, but its been working. I started watching it because I was always bitching at my girlfriend showing her the wholesale cost and how we were getting ripped off. I couldn't figure why some days the pump price would be $1 above, and some days $0.70ish while the wholesale cost was stable. Its all in how these retailers order and hedge.

You gotta use the big interstate chains for the comparison. Like Pilot or Flying J. They do the most volume and order daily, sometimes twice a day, and they sell it right at the bare bones margin they need. They are the purest insight for this. You can't use local places, like sometimes in big cities there can be a $0.30 split on opposite ends of town and thats just a local thing. And use the Midwest, not the Northeast or California. Indiana and Ohio are perfect.

This weekend is a holiday weekend so all bets are off as they'll have it jacked up anyway but watch next week. We'll shall see. More to follow. If it works, I guess I gotta figure out how to trade this stuff.
 
Futures trading comes with unlimited risk. Futures aren't as popular with younger traders today as they were decades ago. You should look for an ETF and trade it vanilla equity (if you have the money) or options on the ETF.
Here are some ETFs I like :

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And speaking of hill billies, some of the finest traders I've met don't wear suits :)
 
fwiw, this worked again this week. Paying only $0.50 above wholesale yesterday. Thats cheap.

Draw-down came in less than expected.

expected: -.3M(Bbl) actual: -.122M(Bbl)

We'll see what happens next week.
 
Welp..... Lets see what happens.... but this theory would point to another buildup based on my data. We'll find out tomorrow.
 
It worked again. Substantial build. (the gap between wholesale and retail yesterday and Monday was only $0.50, which is really low) If this works next week, .... hmmmmm.
 
Dude, stop posting!
Find a way to trade it and don't ruin that edge for the rest of us by explaining it to the muppet - mob!
 
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