Oil Playbook ( 2021 )

Dec 26, 2020

Prices for Crude Oil are down -20% from last year which means the bearish outlook is priced in. The bearish outlook is that the -16% drop in consumption outweighs the -7% drop in production plus the 4% increase in inventory stockpiles. Bulls want to know if demand has bottomed or not and since consumption tends to be highest in Jan-Feb, it might have further to fall since travel is still lagging. However, exports have recovered and circling back, the -20% discount in crude prices indicate the market is fundamentally balanced given the uncertainty.

Production
2019 Average: 12,197
2020 Average: 11,318
%Change: -7.76%

Stockpiles
2019 Nov: 1,918
2020 Nov: 2,003
%Change: +4.24%

Consumption
2019 Average: 1,070
2020 Average: 916
%Change: -16.81%

Exports
2019 Average: 8,471
2020 Average: 8,407
%Change: -0.76%

Trading Strategy
Swings in the dollar index are primarily moving prices so this will create the trading opportunities in the near term. Get ready.


There is a momentum divergence on the DXY daily chart and the RSI has some room to run.


Crude prices have reached a resistance level.


If the Dollar index does start to rally then crude prices are going to waterfall. Best to wait for a decisive candle closing below the 10 day EMA before making a short trade.


Trading is risky. Don't do it.

Long oil/gas producer equities
KMI, LUKOY, EQT

Jan 4, 2021

Note

Bullish Divergence on DXY

Jan 4, 2021

Note

Fibonacci retracements to watch if the selling continues on Oil. The 0.618 lines up nicely with a macro fib level so that would be a very significant area to pay attention to, if it gets there...

Jan 15, 2021

Note

Still above the 10 day EMA so I am waiting for a close below and then switch to the 1 hour for a short entry. It's important to wait because like the last couple times, shorts got squeezed out.

Jan 15, 2021

Note

I've trimmed about 1/4 on some of my oil stocks LUKOY, KMI, RDS.B since they were up 20% -- but will definitely buy back if prices pull back.

Jan 25, 2021

Note

Opened a short position on QM oil futures. Looking down at the $50 level but will have to play it by ear.

Jan 25, 2021

Trade active

This is my DXY rally hedge trade in case it breaks higher -1 @ 51.975

Jan 26, 2021

Trade closed: stop reached

Spike to 53 blew out my stop loss. Not sure now if oil is looking to breakout higher from the Biden policy sentiment or roll over from a dxy rebound. Sidelines. Still buying dips in equities.

Feb 2, 2021

Note

Oil equities are likely to experience bullish pressure as a looming supply deficit is on the horizon. The charts are more or less similar so to illustrate this we can use LUKOY. A familiar looking basing pattern is forming now and the weekly MACD is indicating strength. Listed below are some energy companies I've been accumulating since late last year. All of them with a hefty dividend yield. LUKOY, KMI, RDS.B, EPD, ENB, BIP, CNQ

Apr 29, 2021

Note

Looks good. Buying dips here on QM and still accumulating large core positions in a broad set of equities.

May 20, 2021

Note

MACD is now rolling over, apparently. A waterfall might be in play, in which case, a buy opportunity on WTI and equities. Hurricane season is around the corner to threaten production, amplify the tighter supply narrative, and catapult price to new local highs.