This thread started before the big break in oil and call that break. In a rapid 3 day drop the CL June contract dropped
$ 20.20 from 114.83 (2 May) to 94.63 (5 May). Then crude bounced around and form a wedge. In the thread simple estimation techniques we used this wedge formation as an exercise and got a target of approximately $85. (See: estimating the measurement of the wedge forming in crude oil.)
This evening I watched the talking numbers video of 22 June Katie Stockton of MKM Charting Oil's Decline mentions an estimate of $84 dollars and "one of my model $85-87". These estimates would be for the cash contract and the futures price would be higher depending on the date target - so perhaps her estimate is equal to ours of $85.
- "it is below the 200d MA
-"intermediate conditions indicate oversold and you will probably see a buying opportunity"
She continues to mention a "loss of momentum" of gold because of the basing action in the DX.
Katie Stockton, MKM Partners
(Always remember estimates are estimates. Also realize that the phrase "target of" does not equal final target for the move, just the next target.)
So on the 24th the mainstream is calling 'short' to 85 Close = 91.24
"I will continue to be short oil until $85 - $80, then wait for a signal to enter long."
Tom Weber, Managing Director at PFGBest
"Thursday June 23, 2011
Possible bounce targets are shown on the graph (97.82 or the less likely 98.67)." Close=92.35
"Tuesday, June 28, 2011
Worried that CL will bounce tomorrow and have put in a buy at 92.05 to close my short in o/n GTC.
"Wednesday, June 29, 2011
Open positions: none
Notes: when as high as 95.84 - glad to be out."
------------------------------------------------------------------- Al Brooks says:
On Friday June 24, 2011, 9:18 am EDT The International Energy Agency's decision to release 60 million barrels of oil from strategic reserves is a form of 'macroeconomic stimulus' that may backfire by actually sending prices higher in the medium term.
Worried about the anemic economic recovery in the developed world, the IEA release represents nearly 2.5 percent of global supply, with half the extra oil (New York Mercantile Exchange: CLCV1) coming from the U.S. strategic petroleum reserve.
"Definitely a game changer," said Tom Weber, Managing Director at PFGBest of the IEA release. "I will continue to be short oil until $85 - $80, then wait for a signal to enter long."
Other traders also shared the view. Daryl Guppy, CEO of Guppytraders.com said the IEA move was "a one-off and does nothing to dent China demand. Look for retest of $100 and higher before end of 2011. Trade short, too soon to fade the downtrend."
QE by Stealth?
Greg Priddy, global oil analyst at Eurasia Group said the reasoning behind the decision "represents the use of strategic oil reserves as a means of macroeconomic stimulus."
Andre Julian, Chief Financial Officer at OpVest went further suggesting "perhaps President Obama used his authority to artificially push the price of crude down in the short-term because the Fed has used up the arrows in their quiver."
"With QE2 coming to an end, a very pessimistic view given by Bernanke on the pace of the recovery, and not much commitment to extend stimulus in the short-term one of the best ways to help the economy recover is to lower the price of oil by injecting supply into the market," he added.
Dennis Gartman said the U.S. contribution to the reserve release was not insignificant and argued that it was done with one eye on ensuring President Obama's re-election in 2012 since U.S. consumers were still reeling from a surge in gasoline prices. "This was a political decision entirely, and nothing more," Gartman said.
The consensus view amongst traders and analysts was that the IEA release wasn't supported by the fundamentals of a well-supplied global oil market. "Yes, we have some Libya premium still in the market but we are not massively short of crude supply," said Tom James, Director & Co-Founder at Navitas Resources Pte Ltd.
"Understanding the move today was like trying to solve the Rubix Cube in the dark," said John J. Licata, CEO and Chief Commodity Strategist at Blue Phoenix Inc. "Adding so much oil to the marketplace when there is no rise in demand was troubling. At the end of the day this was a Fed-like move focused on pricing to help get the Europeans and the U.S. out of a jam (politically and economically). This was a wasted bullet that wasn't even used when crude oil was above $140 a barrel."
Jonathan Barratt at Commodity Broking Services agreed that there was no need for the extra oil since prices were "going down on its own accord." The reserve release was "an aggressive move to lower primary inputs to grow western economies faster...a dangerous game when eastern economies are trying to slow down," he added.
Good trading to everyone.
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