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The CL Crude-analysis Thread
Started:December 17th, 2014 (02:33 PM) by tturner86 Views / Replies:125,745 / 1,754
Last Reply:December 4th, 2016 (01:02 AM) Attachments:450

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The CL Crude-analysis Thread

Old August 20th, 2015, 01:39 PM   #1241 (permalink)
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Upupandaway View Post
Where do you guys think Oil will stop at? It's at a trend line now, well going through it.

my first short was at 42.43 and I'm adding to that now. I think predicting where it will stop is like picking tops and bottoms so I avoid it. I'll ride this until it is over...if it is 30 or 40 doesn't matter.

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Old August 20th, 2015, 01:43 PM   #1242 (permalink)
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Been out of town for a week.
Be interesting to see what happens tomorrow when Sep has expired.

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Old August 20th, 2015, 04:22 PM   #1243 (permalink)
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Quoting 
Higher imports largely accounted for the reported 2.6 million barrel increase in commercial crude stocks, though refinery processing also slipped as a result of problems at BP's Whiting refinery in Indiana.

Increased imports are not particularly surprising since refiners and traders currently have a strong incentive to maximise the amount of crude in storage.

The contango in futures prices implies the market will pay around 75 cents per barrel per month to store oil in the United States between September and December.

At one point last week, the fourth-quarter contango was running at almost $1 per month, far above the cost of leasing tank space and financing the inventory.

Refining margins for turning crude into gasoline have softened in recent days but remain at some of the highest levels in the last decade.

Refiners can earn around $17 per barrel for converting every barrel of imported oil into gasoline, up from about $11 this time last year, before operating costs, depreciation and taxes.

There is an enormous incentive for refiners to stock up on relatively cheap crude, maximise sales of expensive gasoline, and hedge to lock in the generous refining margin.


Quoting 
As long as the financial incentives are right and storage space is available, it makes sense to fill it, which should result in more tankers arriving in the United States over the next few weeks and months and an increase in reported stockpiles over the fourth quarter.

Whether strong imports and stock builds are bearish is a matter of perspective.

In one sense imports and rising stocks are not really new information since they should have been anticipated because of the structure of crude and gasoline futures prices.

In another sense, they underscore how much surplus crude is around in the market.

COLUMN-US oil imports rise as contango encourages storage: Kemp | Reuters

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Old August 20th, 2015, 05:12 PM   #1244 (permalink)
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Took some profit but I am still in holding a few contracts at 41.63

on an unrelated note I had a 30% gain in my trading account today. First time I had a crazy day like this.. feels good.

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Old August 21st, 2015, 12:31 AM   #1245 (permalink)
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In an attempt to learn more, I ran some historical data and was looking at seasonal correlations. I noticed some interesting correlations and also some shifts in seasonal patterns:

(purple box = RBOB > ULSD / green box = ULSD > RBOB)


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From 2006 (and perhaps prior) Gasoline seemed to trade at a premium to ULSD between February and July on what seems to be a consistent basis. This correlation has shifted since 2012 when it narrowed to between February and April, and since 2014 has began trading at a premium between April and July. It will be interesting to see how the current RBOB>ULSD trade continues as it's currently still trading at a premium since April 15.


Concerning ULSD I couldn't see much correlation other than that usually toward the end of Autumn/Start of Winter we would see ULSD trade higher, however from 2011 I noticed that ULSD began to form a pattern of trading at a premium between September and February.

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Old August 21st, 2015, 01:08 AM   #1246 (permalink)
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I've been travelling for a week again so have not been sat in front of a screen.
Not sure if today's movement was a function of Sep expiring or maybe some bad settlements last night, but wow, what a strange move.
  • Sep/Oct spread +29c ... okay that was maybe just expiry
  • Oct/Nov +14c... still strong
  • Nov/Dec +2c, Dec/Jan +3c, slightly out of character given the magnitude of U/V and V/X
  • Jan/Feb +8, Feb/Mar +10, Mar/Apr +9, Apr/May +8 ?!?
Guess the whole world hates the Nov/Jan spread.


CobblersAwls View Post
@SMCJB and other spreaders;

I'm currently looking at expanding my knowledge on trading spreads, in particular within energies. I have been testing out the CLV5/CLZ5 spread, taking the view that the spread will tighten. I have been recording the daily moves, looking for the spread to either break out wider to around the $2.60 level (stop) or tighten to around the $1.00-$1.16 level (target).

Well you must be a happy man. Market plummets but the spread you have on narrows. Nice call.


ElChacal View Post
It cannot be as simple as backwardation and contango, can it?

I'm not sure exactly what you mean but it's arguably as simple as price up, price down.

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Aufidius View Post
on an unrelated note I had a 30% gain in my trading account today. First time I had a crazy day like this.. feels good.

Congratulations, although with a swing of that size I wonder whether you are potentially using too much leverage.

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Old August 21st, 2015, 01:34 AM   #1247 (permalink)
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SMCJB View Post
Market plummets but the spread you have on narrows.

Would you say this is pretty uncharacteristic then? I would like to know if there's any sound reasoning towards the move or if it was dumb luck? (negating the argument most trading is )



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Also, and sorry if this is a painfully retarded question but - the scatter diagram - is this a simulated projection of possible outcomes from the CLQ4/CLQ5 spread, with orange indicating our current position? I'm unfamiliar with these types of charts.

Cheers!

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Old August 21st, 2015, 11:09 AM   #1248 (permalink)
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In reverse


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Also, and sorry if this is a painfully retarded question but - the scatter diagram - is this a simulated projection of possible outcomes from the CLQ4/CLQ5 spread, with orange indicating our current position? I'm unfamiliar with these types of charts.

I'm trying to show the relationship between backwardation/contango and outright price levels.

This chart is showing the 2nd month contract on the x-axis and the (2nd-14th) spread on the y-axis. Hence for last night/Aug 20th, the 2nd month contract was Oct (V5) and (2nd-14th) spread was Oct5/Oct6 (V5-V6). Tonight this will roll to Nov since Sep expired yesterday.

The Orange Diamond on the chart shows where we were last night (V5=4132, V5/V6=-707). Hence based upon this relationship for the last year, we would have expected V5/V6 to be as much as $2 wider given how low V is.

Note that tonight if the market is unchanged today Month 2/X5 will be 4209 and X5/X6 will be -674.


CobblersAwls View Post
Would you say this is pretty uncharacteristic then? I would like to know if there's any sound reasoning towards the move or if it was dumb luck? (negating the argument most trading is )

It's very very crude but it would imply that based upon what we have seen over the last year, contango should be steeper than it was last night based upon current prices.

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Old August 21st, 2015, 11:29 AM   #1249 (permalink)
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Old August 21st, 2015, 12:30 PM   #1250 (permalink)
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SMCJB View Post
The Orange Diamond on the chart shows where we were last night (V5=4132, V5/V6=-707). Hence based upon this relationship for the last year, we would have expected V5/V6 to be as much as $2 wider given how low V is.

Nov currently -103 on the day
Nov5/Nov6 +18 on the day, which is good for @CobblersAwls
Divergence continues.

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