CL Redux
- Thread starter schizo
- Start date
I would be perfectly fine if 82 was the bottom for a while. And the way things have been going I wouldn't be surprised if it happens in the next hour.
Ahh crap Israel just invaded Iran, they said they can't wait 4 more years.
I think the key level is approaching and if we surpass 400 mm barrels in storage in the US for pyschological importance this will really get people`s attention and then we are likely to see the 68-72 area being tested, which hasn`t happened in a couple of years 75 was last year and that happened in the middle of the night, doesn`t really count, what counts is a sustained pit test of the 72 level.
But the US production numbers just keep climbing, and is part why the spread narrowing debate regarding keystone isn`t as simple as Goldman`s star analyst believes, plenty in the refining business who don`t see it going to 4 dollars early next year.
I think ultimately (this is a big if b/c we don`t have enough solid continuation to have an established trend in these fundamentals) but if the fundamentals keep playing out like this, the numbers just don`t add up, either the saudi`s and the cartel are going to have to cut back production, and stick to them or things are going to get quite interesting in the oil market and $69 could actually be in play.
Refiners could help a little if ordered by the majors b/c they can build up gasoline inventories something they have refused to do b/c they get killed on the margins and have in the past so they are smarter about running at max capacity these days when us consumer demand just isn`t there, especially in the non-seaonal months, but they could make the oil inventory numbers look a litle better if they went into gasoline inventory build mode, but still this is only a temporary solution is Lybia is back running smooth and Iraq starts producing more towards their potential as that trend suggests---i keep coming back to that line from margin call---paraphrased in many forms "the numbers just don`t add up" or "the numbers just don`t make sense anymore"!
I understand currency devaluation, but unlike gold the storage constraints of Oil have already caused a divergence between the precious metals and oil, so oil cannot play that role which most traders on Wallstreet and hedge funds want it to be just an investment vehicle like the S&P.
If the Fundamnetals really have a major trend going in the wrong direction, longs actually have risk in just parking money in crude and expecting a positive return like they try to do the first quarter of every year, remains to be seen if this year 2013 is different.
Mind you none this matters that much to day trading because I want to know what Oil is going to do in the next 20 minutes, not six months
But the US production numbers just keep climbing, and is part why the spread narrowing debate regarding keystone isn`t as simple as Goldman`s star analyst believes, plenty in the refining business who don`t see it going to 4 dollars early next year.
I think ultimately (this is a big if b/c we don`t have enough solid continuation to have an established trend in these fundamentals) but if the fundamentals keep playing out like this, the numbers just don`t add up, either the saudi`s and the cartel are going to have to cut back production, and stick to them or things are going to get quite interesting in the oil market and $69 could actually be in play.
Refiners could help a little if ordered by the majors b/c they can build up gasoline inventories something they have refused to do b/c they get killed on the margins and have in the past so they are smarter about running at max capacity these days when us consumer demand just isn`t there, especially in the non-seaonal months, but they could make the oil inventory numbers look a litle better if they went into gasoline inventory build mode, but still this is only a temporary solution is Lybia is back running smooth and Iraq starts producing more towards their potential as that trend suggests---i keep coming back to that line from margin call---paraphrased in many forms "the numbers just don`t add up" or "the numbers just don`t make sense anymore"!
I understand currency devaluation, but unlike gold the storage constraints of Oil have already caused a divergence between the precious metals and oil, so oil cannot play that role which most traders on Wallstreet and hedge funds want it to be just an investment vehicle like the S&P.
If the Fundamnetals really have a major trend going in the wrong direction, longs actually have risk in just parking money in crude and expecting a positive return like they try to do the first quarter of every year, remains to be seen if this year 2013 is different.
Mind you none this matters that much to day trading because I want to know what Oil is going to do in the next 20 minutes, not six months
ammo the refining business has been tough business and some years has actually been subsidized by the big integrated oil companies b/c you cannot pass through all your costs to us consumers we just don`t like to pay for gas like europe.
But they have been forced to get smart and they started a couple years ago pegging gas to brent oil, now this really helped refiners in the gulf coast so they can buy wti, set up their refineries for wti, and sell gas based on the brent input price, this arbitrage became so profitable that they started exporting gas because of this large wti/brent spread and pegging to brent.
US inventories would be much higher, and gas prices much lower if the US wasn`t exporting so much gas right now (might be 20% would have to verify that, just a number stuck in my head) but hey it is a world commodity and there just aren`t a lot of modern refineries out there b/c not in my back yard, and a historically low margin business.
The shale plays do need a higher price, but gasoline inventories not really related as lower inventories mean higher crude oil inventories which in some sense is bearish for oil - remember shale competes with the oil price not gasoline- so less gasoline inventories, lower demand from refinerers for oil, larger builds for oil, eventually bearish pressure on crude, oil prices lower, tougher margins for shale producers.
That`s why we have seen much higher gasoline prices relative to the input prices of crude, thus refining margins have kicked ass the past year, and thus the stocks prices, throw in gasoline pegged to brent, and if your a refiner with access to wti- your legally stealing(lol)
But in some sense you are right ammo as gas prices have pushed up brent, as lower inventories, refining outages, exports, etc. have made the end product supply concerns drive the input product price, especially in brent, which then drives up wti as the highest the spread has gotten is 23ish on rollover issues.
But ultimately larger oil inventories levels, exacerbated by lower refinery demand, is bearish for crude and bearish for shale projects, i.e., why should I buy oil from x, when I am stored to the max at cushing already.
It is a complicated relationship,which takes 6 month trends to play out fully in price, but the bigger question and when i was at BP they have an excellent market intel assets, they are forecasting a pullback in oil, they cannot say what the exact price will be or when it exactly happens, but all the oil majors probably agree that there will be a sustained pullback in oil.
The developed countries growth is negative, the emerging market economies cannot sustain the rate of growth during the building explosion in china, due to infrastruture constraints, low hanging fruit, other issues and prices have been higher than the fundamentals dictate so everybody and their uncle has been looking to pump oil out of the ground for projects, and throw in fuel efficiency gains; if everybody is online there is too mjuch oil being produced versus consumed each day and storage starts to become an issue.
But pricing in what a pullback is is a tricky analysis: who is to say that the last three years haven`t been the pullback as when you factor in inflation oil has spiked, but oil hasn`t gone anywhere over the last 3 years when you factor in all the currency devaluation going on so any price analysis must include in nominal terms what the price is, but marathon is selling one of their shale plays because they don`t think future price in the short term is gong to make much sense for this project versus other projects.
It all depends but if we get above 400, we are at 375mm now and this is us storage not wti storage, so this includes brent, wti, etc. then no matter how much bernanke prints, price is set by funds investing in oil, well those same funds can short oil, if the fundamentals are so bearish that your swimming in oil, and there is an interesting notion that the lower prices go countries in opec actually pump more to get the same revenue, and quotas get violated, that we could have a pullback and trading range in the 60-70 range, and for me that would constitute a major pullback, and I think a lot of fat would be trimmed from big oil companies personnel-because right now there are people without pusles working in those companies right now
But they have been forced to get smart and they started a couple years ago pegging gas to brent oil, now this really helped refiners in the gulf coast so they can buy wti, set up their refineries for wti, and sell gas based on the brent input price, this arbitrage became so profitable that they started exporting gas because of this large wti/brent spread and pegging to brent.
US inventories would be much higher, and gas prices much lower if the US wasn`t exporting so much gas right now (might be 20% would have to verify that, just a number stuck in my head) but hey it is a world commodity and there just aren`t a lot of modern refineries out there b/c not in my back yard, and a historically low margin business.
The shale plays do need a higher price, but gasoline inventories not really related as lower inventories mean higher crude oil inventories which in some sense is bearish for oil - remember shale competes with the oil price not gasoline- so less gasoline inventories, lower demand from refinerers for oil, larger builds for oil, eventually bearish pressure on crude, oil prices lower, tougher margins for shale producers.
That`s why we have seen much higher gasoline prices relative to the input prices of crude, thus refining margins have kicked ass the past year, and thus the stocks prices, throw in gasoline pegged to brent, and if your a refiner with access to wti- your legally stealing(lol)
But in some sense you are right ammo as gas prices have pushed up brent, as lower inventories, refining outages, exports, etc. have made the end product supply concerns drive the input product price, especially in brent, which then drives up wti as the highest the spread has gotten is 23ish on rollover issues.
But ultimately larger oil inventories levels, exacerbated by lower refinery demand, is bearish for crude and bearish for shale projects, i.e., why should I buy oil from x, when I am stored to the max at cushing already.
It is a complicated relationship,which takes 6 month trends to play out fully in price, but the bigger question and when i was at BP they have an excellent market intel assets, they are forecasting a pullback in oil, they cannot say what the exact price will be or when it exactly happens, but all the oil majors probably agree that there will be a sustained pullback in oil.
The developed countries growth is negative, the emerging market economies cannot sustain the rate of growth during the building explosion in china, due to infrastruture constraints, low hanging fruit, other issues and prices have been higher than the fundamentals dictate so everybody and their uncle has been looking to pump oil out of the ground for projects, and throw in fuel efficiency gains; if everybody is online there is too mjuch oil being produced versus consumed each day and storage starts to become an issue.
But pricing in what a pullback is is a tricky analysis: who is to say that the last three years haven`t been the pullback as when you factor in inflation oil has spiked, but oil hasn`t gone anywhere over the last 3 years when you factor in all the currency devaluation going on so any price analysis must include in nominal terms what the price is, but marathon is selling one of their shale plays because they don`t think future price in the short term is gong to make much sense for this project versus other projects.
It all depends but if we get above 400, we are at 375mm now and this is us storage not wti storage, so this includes brent, wti, etc. then no matter how much bernanke prints, price is set by funds investing in oil, well those same funds can short oil, if the fundamentals are so bearish that your swimming in oil, and there is an interesting notion that the lower prices go countries in opec actually pump more to get the same revenue, and quotas get violated, that we could have a pullback and trading range in the 60-70 range, and for me that would constitute a major pullback, and I think a lot of fat would be trimmed from big oil companies personnel-because right now there are people without pusles working in those companies right now
Yeah Ammo sorry
Trading is different than analysis
So must large oil firms and I-Banks have research departments and Trading Desks and they talk, etc.
But ultimately, your job as a trader is to make money so regardless of what your research department says, you have to figure out "what is priced in" a corporate way of saying that all the great research doesn`t mean crap, if price goes the other way, and you lose money!
All the highest paid analysts are so bad at predicting where price goes, just look at all the analysts calls the past 3 years they are really bad, it is amazing how they keep their jobs, but if everbody is that bad, it is becuase it is that hard to predict-they do the best they can.
Trading is equally hard, most of the large desks make money through frontrunning, size, inside info, cheap hedging costs, etc. and did I mention SIZE
The retail trader actually has to be the best trader in the world, literally if they are trading CL and profitable every year as a lot of the institutional strategies and advantages really negatively affect the retail trader the most.
But if you can figure out how to turn your disadvantages into strengths, and create a little niche for yourself by identifying trading patterns and setups before they are happening based upon experience and skill, have the unussual mental makeup to withstand a lot of impulse control scenarios thrown at you, trade so that the math works, build a trading bankroll, and just have the right kind of personality (cannot be rigid, unless your rigidity just fits perfect with market behavior, and markets don`t change) than maybe you can make a living trading, and trading cl.
But look at all the dedicated poeople through the 3 years plus of this thread who come in here dedicate 3 months to this project, and then they are gone, so many people have come and gone through this thread, it is pretty obvious that a) there are much easier instruments to trade, and even those are hard as hell. 2) CL literally crushes peoples/trader`s souls not to mention their trading accounts!
This thread is more a thread about an elephant graveyard of caracses (sorry about the grammer and sentence structure was up late last night with eurpean open so just typing badly) sort of like climbing mount everest and going by frozen bodies on the way up to the summit, it is literally that hard, humans were not meant to breathe cl air without oxygen tanks
gl to all kindred cl survivors, a rare breed indeed
Trading is different than analysis
So must large oil firms and I-Banks have research departments and Trading Desks and they talk, etc.
But ultimately, your job as a trader is to make money so regardless of what your research department says, you have to figure out "what is priced in" a corporate way of saying that all the great research doesn`t mean crap, if price goes the other way, and you lose money!
All the highest paid analysts are so bad at predicting where price goes, just look at all the analysts calls the past 3 years they are really bad, it is amazing how they keep their jobs, but if everbody is that bad, it is becuase it is that hard to predict-they do the best they can.
Trading is equally hard, most of the large desks make money through frontrunning, size, inside info, cheap hedging costs, etc. and did I mention SIZE
The retail trader actually has to be the best trader in the world, literally if they are trading CL and profitable every year as a lot of the institutional strategies and advantages really negatively affect the retail trader the most.
But if you can figure out how to turn your disadvantages into strengths, and create a little niche for yourself by identifying trading patterns and setups before they are happening based upon experience and skill, have the unussual mental makeup to withstand a lot of impulse control scenarios thrown at you, trade so that the math works, build a trading bankroll, and just have the right kind of personality (cannot be rigid, unless your rigidity just fits perfect with market behavior, and markets don`t change) than maybe you can make a living trading, and trading cl.
But look at all the dedicated poeople through the 3 years plus of this thread who come in here dedicate 3 months to this project, and then they are gone, so many people have come and gone through this thread, it is pretty obvious that a) there are much easier instruments to trade, and even those are hard as hell. 2) CL literally crushes peoples/trader`s souls not to mention their trading accounts!
This thread is more a thread about an elephant graveyard of caracses (sorry about the grammer and sentence structure was up late last night with eurpean open so just typing badly) sort of like climbing mount everest and going by frozen bodies on the way up to the summit, it is literally that hard, humans were not meant to breathe cl air without oxygen tanks
gl to all kindred cl survivors, a rare breed indeed
The terms "dedication" and "three months" are a collosal oxymoron. Anyone just getting started with CL cannot begin to understand its price behavior in that blink of an eye, let alone begin to seriously trade effectively.
Which is exactly why so many aspiring "traders" in this thread like everywhere else in the public realm fail in a hurry. They are not in the least bit serious: all they do is give trading in general and/or CL in particular a half-assed gambler's shot.
Someone who is serious about trading CL will get themselves a proper education and then spend a year or two focused on trading CL with that info. Anything less is mere dicking around... which of course is the lifeblood of sustained & perpetual moneyflow into professional CL traders' accounts
