Oil Dump ? ?
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Started by Richard - May 16, 2018, 1:06 p.m.

I realize looking at the charts, oil looks just fine, but for some reason my gut says we are very top heavy and a DUMP down to about $65 is about to happen. I am long 1 contact of Dec 2020 with  enough money to hold it through any large drop.  Just curious if anyone else sees it. 

Comments
By Jim_M - May 16, 2018, 1:28 p.m.
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Would you sell at this point?  Other than a chart tech reason (if you can come up with one other than it "feels" heavy) what other reason is there?


By metmike - May 16, 2018, 1:33 p.m.
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"EIA raises Brent crude oil price forecast by $7 per barrel in 2018 but expects prices to gradually decline through 2019"

https://www.eia.gov/petroleum/weekly/


"In the May Short-Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) forecasts Brent crude oil prices will average $71 per barrel (b) in 2018 and $66/b in 2019, $7/b and $3/b higher, respectively, than was forecast in last month's STEO."

Figure 1. Monthly crude oil spot prices

By metmike - May 16, 2018, 1:41 p.m.
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https://www.eia.gov/dnav/pet/pet_stoc_wstk_dcu_nus_w.htm


Looks like gasoline and crude stocks were down 3 and heating oil around unch:



By Richard - May 16, 2018, 2:33 p.m.
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I am still long term bullish and the government opinion in these reports are propaganda but I realize you are trying and that is fine.

1) Looking at the daily chartL

http://stockcharts.com/h-sc/ui?s=USO&p=D&b=5&g=0&id=p07515859418

From the high of late march to the high in mid april to the high we are now, the price moves higher but the MACD does not confirm. We have a double bearish divergence.

2) In some respect to the COT report, it is more bearish now then I can ever find. You can make excuses that this time is different and in respect it is. Like the fact that the Commercials are more short now then ever, but then again, open interest is also at an all time high, so you could argue you would expect that. The large traders are also more bearish now then I can ever find.

3) I now that I can reaching here with #3, but it seems really odd that Trump kept saying that May 12 he would tell everyone about Iran deal and then out of nowhere he says it on May 7th that it would be on May 8th. On may 7th before that event, oil was about to get through $72 and I think a big short was in a panic and forced he to state early to stop the market. Without that announcement, all the uncertainty for 4 more trading days would have been very bullish for the market. Why did he announce at that time and not wait 5 more days? Kind of odd but that is how gov works.

By Jim_M - May 16, 2018, 3:29 p.m.
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I'm more aligned with this guy's way of thinking.  

https://www.yahoo.com/news/m/c32ed24c-0dec-3467-bae3-49f90f36291b/ss_oil-prices-could-rise-to-%2485.html

But to be fair, a drop to $65 isn't that much of a drop.  Sounds more like a fantastic busying opportunity.

By Richard - May 16, 2018, 4:19 p.m.
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Yea, I think I am over thinking it and should calm down and stay long. No changes to my position. Thanks

By metmike - May 16, 2018, 8:06 p.m.
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Agree richard but not with your price forecasting ability years out.

You understand the fundamentals in oil as well as anybody but to give a price range in 2020 is crazy enough but to go out to 2026 is insane. 

There is just too much time for everything to change.


Fracking for instance completely blew up every bullish energy forecast before fracking.


By Richard - May 16, 2018, 9:24 p.m.
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Yea. My broker emails everyone daily comments and they went short today in WTIC at $71.30 stop $72.10. It freaks me out when intelligent people are going short and I am currently long. As far as the long term forecast, I am not sure. That seems easy to see for me, at least for oil. I am glad the Bull is back. The past 5 years have been painful and depressing.

By metmike - May 16, 2018, 10:03 p.m.
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It will be very unusual for CL to keep going higher, especially at this rate if the Dollar keeps going higher, especially at the recent rate. 


Am thinking the strong DX is one of the things killing beans right now.