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The CL Crude-analysis Thread
Started:December 17th, 2014 (02:33 PM) by tturner86 Views / Replies:125,404 / 1,754
Last Reply:15 Hours Ago (01:02 AM) Attachments:450

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The CL Crude-analysis Thread

Old December 14th, 2015, 03:42 PM   #1421 (permalink)
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Well the current price environment represents the fact that not only does supply currently surpass demand, but storage is becoming very full as well. As such for oil prices to rally I think the supply-demand balance needs to (or is perceived to) change. I do not think that this is something that will happen quickly.

Looking forward into the future (many months, probably years out) I think supply-demand will over correct the other way. Demand is continually increasing and will continue to do so. On the supply side though, I think we will see some (many?) bankruptcies this year, and wells that need to be developed, because we will need their oil in the future, won't get developed. As such I think production will drop to the point that it cannot meet demand and we will have another oil squeeze. All just my opinion, and as I say, could be years to materialize.

Other Opinion's?

@klemenlogar, why do you think $60 is crude's 'fair' price?

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Old December 14th, 2015, 11:39 PM   #1422 (permalink)
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klemenlogar View Post
Hey Mike nice to know that. What trading method are you implementing for trading CL?
I am orderflow trader using volume, delta, volume profile and footprint charts. I like to sell top edges in downtrend and buy bottom edges in uptrend. Interesting to know about how you guys trade CL? Mike are you constantly profitable trader?

When trading oil i use a variety of strategies anything from trend following, open range breakout, certain gann techniques, cycles, some of my own developed strategies that use time and price and here goes nothing risking to be ridiculed on here... i also use Astrology and have a financial Astrologer.
I trade long term contracts and day trade crude but never scalp i wait for my opportune time and trade. I think its important to develop a few systems and and put them in your toolbox as then you can trade different circumstances. My main strategy is great risk management, this is old news but can never be emphasized enough, its more important to focus on how to stop drawdowns than having a million different strategies. If you stop the bleeding the profits will come by default.
I trade Brent on London open and then switch to WTI by US open or carry through on the Brent, At times I trade the local Oman contract as well but liquidity isn't the greatest. I look at the sessions individually and also as a whole. I break the day down into sections and trade 30,4hr and daily, weekly and monthly charts. Getting a "feel" for the market is under appreciated in this Algo age and understanding the psyche of market participants, especially in the oil market as its a commodity we can't live without and many companies also have to hedge their positions as what happened not long ago in October at $50.

@SMCJB , @klemenlogar
One major factor i trade long term on is geopolitical/strategic interests especially in this region, this is a major factor in the oil trade that isn't spoke of as much as it should.
A quick example is the recent OPEC meeting anyone having dealt with Saudis and Persians would know that production would never be cut , Russians are huge players in all this too and one needs to understand the psyche and motivations of the different groups.
A big deal has been made of the over supply of Iranian oil coming back to the market, but the fact is that they continued to sell their oil under the radar through out the sanctions, same situation as in the Mark Rich days, the oil was still following regardless of what was being reported by politicians and the press.

Apart from all this there also factors such as the illegal crude trade that has always existed but recently is rampant due to the Syria/Iraq situation. It effects market prices much more than the media would lead you on to believe, as that oil eventually reaches NATO countries, it is not sold back to the desert. It has a severe impact on prices, i have had personal experience from a physical standpoint on this.
This is another factor involved that can make the supply/demand equation unbalanced, then there is China to name the biggest and all the oil storing they are undertaking and no matter what WSJ or Bloomberg tells us about China storage fact is we have no idea about their capacity, this is a country preparing for a another population explosion after lifting the child ban. There are so many factors to include into the equation.

Overall i try to keep things simple i have been trading crude a few years now and have been profitable. The best advice i was given and trading system i know of is risk management. All my risk is planned in advance and i never execute on emotion and my stops are more likely to be time based than price.
I use fundamentals and technical and look at things on a global macro level. The macro view and geopolitics are extremely important, why else would the US spend Trillions over the years to "protect" the Middle East. (oh and ignore the talking heads!)


Last edited by DubaiOilTrader; December 15th, 2015 at 01:45 AM. Reason: added info
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Old December 15th, 2015, 04:02 AM   #1423 (permalink)
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DubaiOilTrader View Post
I trade Brent on London open and then switch to WTI by US open or carry through on the Brent

Do you have a preference for brent or WTI? In your experience how do they differ in term of intraday trade?

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Old December 15th, 2015, 04:30 AM   #1424 (permalink)
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Do you have a preference for brent or WTI? In your experience how do they differ in term of intraday trade?

I prefer Brent as it suits my trading hours. Brent is cheaper to trade for me and ICE commissions are lower than Nymex, liquidity is the same.
Main differences are that Brent is more of a financial speculation product than WTI, not many are taking physical delivery on Brent. Majority of physical Brent oil (GCC) is sold at a discounted rate, the Brent price is just used as a price guide to negotiate on.

Intraday both are well behaved on their own, but once UK(EU) and the US are trading on the same session, anything goes lol.
Since your in Australia i have had the experience of trading from that time zone as i worked in Sydney previously, i would personally focus on Uk trading hours and leave the US/UK session alone as it has great rewards but huge risks, you really need to have your risk management in place cause its when usually the volatility begins.

Hope that helps

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Old December 16th, 2015, 12:58 AM   #1425 (permalink)
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DubaiOilTrader View Post
I prefer Brent as it suits my trading hours. Brent is cheaper to trade for me and ICE commissions are lower than Nymex, liquidity is the same.
Main differences are that Brent is more of a financial speculation product than WTI, not many are taking physical delivery on Brent. Majority of physical Brent oil (GCC) is sold at a discounted rate, the Brent price is just used as a price guide to negotiate on.

Intraday both are well behaved on their own, but once UK(EU) and the US are trading on the same session, anything goes lol.
Since your in Australia i have had the experience of trading from that time zone as i worked in Sydney previously, i would personally focus on Uk trading hours and leave the US/UK session alone as it has great rewards but huge risks, you really need to have your risk management in place cause its when usually the volatility begins.

Hope that helps

Thanks for sharing. Who are the major players in the brent contracts since it is more of the "paper" product. Does the physical producers trade actively in brent?

How about companies like airlines, bunkers etc ?

You are absolutely right about the hours, US session would mean I have to stay up late at night. However I have been looking at brent and CL for the past 2 months including their spreads, somehow I actually find CL price actions easier to read during the RTH.

You mentioned you are using a time based stop, could you elaborate? How many ticks do you usually aim for intraday?

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Old December 16th, 2015, 02:07 AM   #1426 (permalink)
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jonc View Post
Thanks for sharing. Who are the major players in the brent contracts since it is more of the "paper" product. Does the physical producers trade actively in brent?

Major players are commercials that need to hedge their positions. Funds: traders such as Pierre Andurand, Andy Hall (though he is a long term guy) and many others the City of London is full of traders. Banks do a lot of trading and last but not least are companies like Vitol, Trafigura, Gunvor etc that use the contracts to hedge against their actually deliveries. Physical producers in this region and places like Russia have sold the majority of oil in forward contracts or separate contracts with the buyer at a set discounted rate off Platts or Brent price depending on the product sold. Day to day prices don't do much for them except use them as a guide. Prices/contracts are always negotiated.

How about companies like airlines, bunkers etc ?

Commercials hedge their positions to ensure profitability, they come in at certain price levels. As i mentioned before we saw them come in hard in Oct as prices ran up and over $50 as they all taking advantage of that price to hedge production at $50 as a minimum expecting things to get worse (this is why the US fracking industry hasn't gone belly up yet, they are not profitable and have huge debts only thing keeping them alive apart from cheap money is that they hedged production 2 years ago). We saw it go to 54 then the floor just dropped out.
And i know for a fact that companies such as Emirates hedge a lot and actually make mone of the trades too (jet fuel), they use JPM. But they have been caught out and lost money in the past, though the bank doesn't care they always make money on commissions lol


You are absolutely right about the hours, US session would mean I have to stay up late at night. However I have been looking at brent and CL for the past 2 months including their spreads, somehow I actually find CL price actions easier to read during the RTH.

CL is easier to read due to it being more of a "true" market. Everyone has there preferences you need to go with what makes you confident. I only prefer Brent due to price and i actually like the volatility.

You mentioned you are using a time based stop, could you elaborate? How many ticks do you usually aim for intraday?

Time based stops are important in my opinion. i.e. i buy WTI @ 5000 with a the idea i want to be flat by end of day. if i buy at 11 and the price at 1115- 1130 is still hovering around 5000 thats a bad deal. That means anyone can get in on my trade at any time.
time based stops means that when your entering the market you should be getting a great deal long or short, a deal so good that others can't buy in at that price 30 mins later.
The longer you hold a trade the more chances you have it will go against you, but in saying that i don't mean hold 1 sec i mean the longer you hold and its not working the risk goes up.
Time stop can be as simple as saying i give this trade X amount of time to work, if not i close it and reassess the situation, the market didn't behave the way my analysis expected.
Intraday moves i go for are small, i look for a 24-33 point minimum and use contract size to earn, always staying within my risk parameters on total equity. If it happens i caught the trend it can turn into 100+ points, once over 30 i use a tight stop to secure my profits. You be surprised how much money once can make by being conservative.


In my humble opinion Oil needs to be viewed as macro and geopolitical, i originally started out trading ASX many years ago and the reason i switched to oil was due to the real world factors that effect oil and the volatility, which then lead me to move to the Middle East to get more of a ground zero feel what what goes on.

Thanks for taking the time to read my post


Last edited by DubaiOilTrader; December 16th, 2015 at 08:09 AM.
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Old December 17th, 2015, 12:18 PM   #1427 (permalink)
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Some selling action from today.
I sold top edge when i saw correct orderflow at yesterday POC. It was trade with the strong holders. Trade has more of the potential to go lower but i decided to squeeze my trail stop little closer since we get the biggest volume of the day after we broke the lows so it might be profit taking from the institutions. Anyways it was +52 tick trade and not a bad day at all for one trade. Comments and questions welcomed...

Regards

It seems you are still trading the jan contract, the feb one has already more volume today.

Take your Pips, go out and Live.
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Old December 17th, 2015, 12:51 PM   #1428 (permalink)
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klemenlogar View Post
Enaugh volume for my trade side I am changing tomorrow....

Ja, it would be only informative.

Take your Pips, go out and Live.
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Old December 18th, 2015, 06:16 AM   #1429 (permalink)
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Interesting

Interesting: How low can it go?
Yahoo!

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Old December 18th, 2015, 08:01 AM   #1430 (permalink)
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@klemenlogar

Selling/ buying edges

Shane Handy ?

Good thing

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