US OIL Short Opportunity
Updated
Catalysts:
Oil is trading at the highest level in more than three years
Trump tweeted sunday that Saudi King Salman bin Abdulaziz had agreed to boost oil production to the kingdoms maximum capacity
Crude oil exports from Saudi Arabia surged to a 15 month high in June as the Kingdom ramped up production and helped to convince OPEC to boost its overall supply
Oil price is being driven up by expectations of U.S. being able to drive Iranian exports to zero. If market participants will not be able to meet the demand from Iranian oil buyers prices will continue to rise. However Iranian exports are not zero yet and the world is exporting at record levels.
U.S. production levels are rising almost every report. Believing that production will continue to increase, this gives grounds to analyse inventory data.
Export data is seen to be in opposite relation to inventory data. Exports are reported every day, for the past week they were marginally higher. However, knowing that U.S. wants to drive Iranian supply to zero and will want to satisfy the resulting demand, they are probably increasing their production. If that is the case, then U.S. exports are nowhere close to being at the same levels as production. This leaves us with higher inventories. On top of that inventories last week were at record lows (-9.891M), prompting prompted analysts to leave their expectations low too (-8.239M), which makes it very easy for inventories report this week to surprise the markets.
Oil is trading at the highest level in more than three years
Trump tweeted sunday that Saudi King Salman bin Abdulaziz had agreed to boost oil production to the kingdoms maximum capacity
Crude oil exports from Saudi Arabia surged to a 15 month high in June as the Kingdom ramped up production and helped to convince OPEC to boost its overall supply
Oil price is being driven up by expectations of U.S. being able to drive Iranian exports to zero. If market participants will not be able to meet the demand from Iranian oil buyers prices will continue to rise. However Iranian exports are not zero yet and the world is exporting at record levels.
U.S. production levels are rising almost every report. Believing that production will continue to increase, this gives grounds to analyse inventory data.
Export data is seen to be in opposite relation to inventory data. Exports are reported every day, for the past week they were marginally higher. However, knowing that U.S. wants to drive Iranian supply to zero and will want to satisfy the resulting demand, they are probably increasing their production. If that is the case, then U.S. exports are nowhere close to being at the same levels as production. This leaves us with higher inventories. On top of that inventories last week were at record lows (-9.891M), prompting prompted analysts to leave their expectations low too (-8.239M), which makes it very easy for inventories report this week to surprise the markets.
Trade active
I have closed half a third of my position, as I think there is a chance some resistance after such a sharp movement. I will be looking for opportunities to reopen that third of my sell position shortly
Comment
Analysts revised their expectations of inventories upwards to -5200MM from -8239MM. Upward revision is negative for crude oil price, however now it is harder for crude oil inventories release to beat it, which leaves anyone who's on the short side during the release more risk. Crude oil inventories are going to be reported 11:00 (GMT -4, (eastern time))
Trade active
Sorry for the delay, I have closed another third of my position on June 5th after the Crude oil inventory report, I hope you all managed to catch that trade :)Trade active
Guys, I hope you all were still in this trade yesterday, woohoo :D However do remember, that we are in a bullish trend (It is always better to not trade against the trend), which leads me to closing half of my remaining position and take profit without exposing my self to the risk of prices climbing up.
Risk aside, you can see how the price is consolidating. I personally think that after such a sharp movement for the price to break the consolidation and go down to 65 is not realistic and can only happen in the dreams of a wave analyst, I believe prices may sharply fluctuate, which may expose us to more short term trading ideas
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.