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The CL Crude-analysis Thread
Started:December 17th, 2014 (02:33 PM) by tturner86 Views / Replies:125,785 / 1,754
Last Reply:December 4th, 2016 (01:02 AM) Attachments:450

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The CL Crude-analysis Thread

Old January 14th, 2015, 07:19 PM   #51 (permalink)
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CobblersAwls View Post
Sorry, I should have made it clearer, but with a 1 lot trade, each $1 move in CL is equivalent to $1,000. Therefore with a $20,000 account you could buy 1 lot CL at $20 and 'technically' hold it indefinitely.



Dont want to start an argument but the spreads are just going to kill you before it turns around and runs and CL can trade 10 or 20 for a few years before it goes back up. Sure if it does go back upto 100 u d make a killing or if you get a V bottom. But in either case you dont have to hold it indefinitely --either time it or get lucky

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Old January 14th, 2015, 07:26 PM   #52 (permalink)
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Dont want to start an argument but the spreads are just going to kill you before it turns around and runs and CL can trade 10 or 20 for a few years before it goes back up. Sure if it does go back upto 100 u d make a killing or if you get a V bottom. But in either case you dont have to hold it indefinitely --either time it or get lucky

No worries, this is what I'm looking for, holes in the logic. I know it's not as simple as how I've described but I wondered if something so simplistic could work with little intervention or trading. Simply set a profit target and let it run.

My concern was the spreads. I suppose if we take a 2 year window and say we pay $0.50 per month to roll then that's 24*0.5 = $12,000 itself! You'd need to constantly adjust your target to make the R:R worthwhile I suppose.

I was then wondering if this kind of logic would be applied by institutional speculators with deep pockets, but I suppose the argument remains the same, they'd still pay the spreads continuously.

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Old January 14th, 2015, 07:33 PM   #53 (permalink)
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The other hole in logic is that when you expect CL bounce based on production you are assuming that demand at that time will stay the same. I think the biggest threat to OPEC isnt from shale although that is there but I think the market is trying to price in the amount of reduction in demand from electric cars, who is to say that solar energy or even for that matter wind wont become a factor soon enough. Once these Solar and wind power generation becomes widespread and profitable, their definite next step is going to be transportation. We have never had the real push for clean energy like we are having now and countries like India and China are definitely up for it -much less pollution. That why so much resistance to Tesla in the USA-both from car dealers and from big ol oil.

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Old January 14th, 2015, 07:56 PM   #54 (permalink)
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@garyboy275 I'd question that demand side for the time being. With Oil being so cheap, it's going to be extremely difficult to persuade emerging economies such as India and China to choose the more expensive green energy options at the moment. India are in fact one the top beneficiaries of low Oil due to their high rate of imports (Here Are The Big Winners And Losers Of Low Oil Prices - Business Insider).

Unfortunately, I think these low prices in fossil fuels will actually undo a lot of the good work and progress that's been made in renewable energy in recent years. I agree that renewable energy will be the future as nations look to become self sustainable, but I cannot see it slowing demand any time soon.

I agree there's been a slowdown in demand, especially from China as their manufacturing has slowed, yet I think that once we see stores (such as in the US) start to dry up and some of the weaker producers blow up from over-leveraging, we will see some balance return to the markets. I'm also of the opinion that the lower we go, the sharper/faster the reversal will be once we start seeing some companies (eg shale) go bust and/or cuts in production.

Edit
Of course this is total speculation by me based on fundamental reasoning from things I have read/heard. I just enjoy discussions/debates on these subjects with different folk


Last edited by CobblersAwls; January 14th, 2015 at 08:09 PM.
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Old January 14th, 2015, 08:11 PM   #55 (permalink)
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Reminiscences of a Stock Operator: With New Commentary and Insights on the Life and Times of Jesse Livermore (Annotated Edition): Edwin Lefèvre, Jon D. Markman, Paul Tudor Jones: 9780470481592: Amazon.com: Books

If you haven't already read this book highly recommend it. What was true a 100 years ago is true today. What you are proposing is very interesting. Can anyone pull it off ? I don't know but sure would make for a great story if someone did. For me I'd probably need balls surgery


In my lifetime I ve seen real carnage only 2 times --2001 for nasdaq and 2008 for the stock market. Nasdaq came down to 900 or 1100 (can't remember now from a lofty 5000 in year 2000, I thought that we Might have no Nsdaq left. In 2008 When S&P was trading in 800 range I thought that we might actually have no stock market left at all but I still forced myself to buy little by little just cause I had lived thru an earlier similar period. And what do you know those things turned out to be gems. And I am a genius

My guess is things either go too far or not far enough. They seldom trade where most people want them to trade. And guessing before something happens isnt my forte.


Edit: My guess is we went too far already. It must have blown a hedge fund or two. The next 6 -12 months are going to be real interesting.


Last edited by garyboy275; January 14th, 2015 at 08:22 PM.
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Old January 14th, 2015, 08:27 PM   #56 (permalink)
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Reminiscences of a Stock Operator: With New Commentary and Insights on the Life and Times of Jesse Livermore (Annotated Edition): Edwin Lefèvre, Jon D. Markman, Paul Tudor Jones: 9780470481592: Amazon.com: Books

If you haven't already read this book highly recommend it. What was true a 100 years ago is true today. What you are proposing is very interesting. Can anyone pull it off ? I don't know but sure would make for a great story if someone did. For me I'd probably need balls surgery


In my lifetime I ve seen real carnage only 2 times --2001 for nasdaq and 2008 for the stock market. Nasdaq came down to 900 or 1100 (can't remember now from a lofty 5000 in year 2000, I thought that we Might have no Nsdaq left. In 2008 When S&P was trading in 800 range I thought that we might actually have no stock market left at all but I still forced myself to buy little by little just cause I had lived thru an earlier similar period. And what do you know those things turned out to be gems. And I am a genius

My guess is things either go too far or not far enough. They seldom trade where most people want them to trade. And guessing before something happens isnt my forte.

It was the first trading book I ever read and probably the best I'll ever read. It's actually been a while since I last read it so may revisit it. You're comments are interesting re 01 and 08. There's always that fear, what if one day we have such a crash we cannot recover? What if there's another Cold war and things escalate, will we still have a market to trade? I suppose it's part of the risk of being in the game, there's always the likelyhood of a black swan event, no matter how small the odds.

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Old January 14th, 2015, 08:30 PM   #57 (permalink)
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it is also interesting to note...

that cl has a -.91 correlation with bonds, and a +.97 correlation with canadian dollar, and a 1.00 correlation with rb, and that lead/lag relationships exist on a daily basis. maybe it's not the intention of the thread; but, the stuff i hear being discussed here on a daily basis, as intellectually stimulating as it is; is not going to make you money, on a daily basis.

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Old January 14th, 2015, 09:32 PM   #58 (permalink)
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CobblersAwls View Post
FEB, APR and JUN have lower OI from looking at the chart posted. DEC has 192k, whereas FEB has 158k (also expiring soon), APR has 115k and JUN 144k.

As for the correlation with DEC Oil and Eurodollars, I don't quite get the correlation, are you referring to the transfer of petrodollars? Please explain as I'm always looking to learn.

My bad, getting old and blind can't read the difference between Volume and OI!
My point regard Dec (month symbol Z) is that crude outside of the first 6 months has very little liquidity in any of the contracts other than December. If you page forward on Bloomberg you will see that Dec17 (aka CLZ7) has a spike in open interest, as does Dec18, Dec 19 etc etc.
i was just saying that i think you will find the increase in OI in December is not a function of anything market price related but a function of the fact that it's been a liquidly traded contract for many years.

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Old January 14th, 2015, 09:34 PM   #59 (permalink)
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garyboy275 View Post
Dont want to start an argument but the spreads are just going to kill you before it turns around and runs and CL can trade 10 or 20 for a few years before it goes back up. Sure if it does go back upto 100 u d make a killing or if you get a V bottom. But in either case you dont have to hold it indefinitely --either time it or get lucky

Agree, roll cost could be enormous. You could easily buy $20 oil, be holding $20 oil in a years time and lost $7.50 in roll costs.

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Old January 14th, 2015, 09:48 PM   #60 (permalink)
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DOE crude inventories released today. Build of 5.4million barrels to a total of almost 388 million barrels.
US crude stocks are the highest they've been in the last 15 years for this time of year by over 20 million barrels.
Only time US has had more crude in storage in the last 15 years was the spring seasonal peak in 2008 and 2013 when we peaked just below 400million barrels.
US Domestic crude oil production continues to increase and reached 9.2million barrels/day. This is over a 50% increase in the last 3 years, with Jan 2012 production below 6 million/day.

http://ir.eia.gov/wpsr/wpsrsummary.pdf

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