Oil - Waiting for possible short re-entries
So the August low around 38 has been quite clearly broken, which is the main reason my overall bias is still short. In addition, we have the following fundamentals supporting shorts:
- Saudi Arabia's fighting a war for global power by trying to ruin competing shale oil companies. They know they need to be forceful with this, a bit like ripping off a bandaid. It's cheaper in the long run to be really strong now rather than continually having to scare those companies.
- Storage is high.
- Production hasn't been cut, quite the opposite, the ceiling has been raised.
In light of this, I favour shorts and am looking for good re-entry points. I think the August low point around 38 might be good and it's also a POC that has held a couple of days now. I'm basically using recent POCs as possible re-entry points, so 36.80, 37.50, 38.00 and if it overshoots a bit 38.50. Anything above that would force me to reassess.
The possible Fed rate hike might of course through a wrench in my plans, but for now I simply don't see a ton of reasons to go long. People kind of expect a rate hike and I don't expect this to change anything in the long run for oil. I might be tempted to take a few short term longs around 35ish SHOULD I get a strong signal though. In that case, If that move has strength, I'd still look for shorts around 40 even if it's strong.
- Saudi Arabia's fighting a war for global power by trying to ruin competing shale oil companies. They know they need to be forceful with this, a bit like ripping off a bandaid. It's cheaper in the long run to be really strong now rather than continually having to scare those companies.
- Storage is high.
- Production hasn't been cut, quite the opposite, the ceiling has been raised.
In light of this, I favour shorts and am looking for good re-entry points. I think the August low point around 38 might be good and it's also a POC that has held a couple of days now. I'm basically using recent POCs as possible re-entry points, so 36.80, 37.50, 38.00 and if it overshoots a bit 38.50. Anything above that would force me to reassess.
The possible Fed rate hike might of course through a wrench in my plans, but for now I simply don't see a ton of reasons to go long. People kind of expect a rate hike and I don't expect this to change anything in the long run for oil. I might be tempted to take a few short term longs around 35ish SHOULD I get a strong signal though. In that case, If that move has strength, I'd still look for shorts around 40 even if it's strong.
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