Have yall seen the crude oil? It's drop over 600 ticks. I've NEVER seen that! Ever! It banged a support from 2003 and best I can tell (cause NT8 can't get me back that far ) its at 28.27.
yep, from Friday's close it dropped over 1400 ticks (at the LOD). Last week (OPEC+ meeting) Russians were not willing to cut the production, so as revenge Saudis cut their OSP (oil selling price) by $ 8.-- over the weekend and now we see the result of this oil-war .
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But see here is the thing. There are now two "tick gaps". A tick chart shouldn't ever have a gap in it, yet it does happen. Has been happening regularly on Oil every Monday morning. But there is now one from Fed 24 and one from today. These gaps are going to have to be filled, it's not like a time gap. These things are like freaking magnets. Soon as it trends in that direction, well shit, you know right where it's going. But Heck.....up till last week I'd never seen a tick gap take longer than three days to fill, so who knows.
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The first one is on Feb 23 the gap to fill is 53.61
The second one is on March 8 the gap to fill is to 41.68
You should be able to see this on a tick chart. Even if you have a template set to RTH. A tick Chart shouldn't ever have a gap! But when it does it's like a beacon saying, " HERE I AM,,, HERE I AM " lol
I've been watching oil for sixteen years. Up till Feb 23 I'd never seen a "tick gap" take longer than three days to fill. So, you know, it's going to get filled. And I'm sure you saw what happen today on oil? But it might drift first down to 17.12 before correcting. I say that because that's the next line of support. And the psychology is with that just like the tick gap price seeks those levels.
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Followed oil for over 20 years, I don't trade the futures. But I do get John Kemp (Reuters) charts.
This whole thing makes perfect sense from a playing to win point of view. The Shale drillers have been providing every marginal barrel for the world for several years. So OPEC keeps cutting production to maintain prices and the shale guys benefit. Putin saw an opening with the corona demand destruction and clearly the Saudis agree that now, when they are all going to get hurt anyway, is the time to eliminate shale drillers from the planet.
So three have filed so far and the bankruptcy attorneys in Texas and the Dakotas are going to be working overtime. The interesting thing to me is they are going to liquidate an entire industry, so the assets are worthless for now. If you think otherwise it could be a good time to pick up some acreage but my understanding is the leases require action, so you can't just sit on them for 5 years.
I expect that all those 28 year olds with Ivy Leage history degrees running hedge fund money will figure it out and short the snot out of the futures. I also expect the big boys will take those hedge funds to the cleaners on epic short squeezes.
I have seen that the big trading houses are leasing every drop of land storage and chartering most of the tanker fleet to cash in on this once in a generation con tango opportunity.
It is going to be exciting for the next couple of years.
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@Trailer Guy yup every concession I've ever known about had performance requirements mostly based on per acre/hectare to include minimum of 2D Seismic and Exploratory Drilling....some with much higher pre-req's than that. Many of them were well known to have 'producible' oil within the various rock formations in the basin so often the lease prices reflected that in an attempt to weed out the little guy and only go with the big drillers. Shale has always been difficult professionally and economically until recent times....the future sounds pretty bad for those guys, I feel for them. But like many things in life, oil is cyclical in nature and I don't doubt it will come back....stronger than ever with newer and cleaner technology that is more profitable than before..
Hope you and yours are well in this coronavirus fight we are in!
cheers
Johnny
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Important level that oil is back at. Technically, there's some resistance here. Even if oil goes back to 36 it would still be a normal move in this overall downtrend.... and to try to get a grasp on fundamentals is too difficult right now. I think it's important to pay attention to technicals.
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One thing different this time to the last big oil downturn is that a lot more of the shale assets are now owned by the majors who won't crumble as quickly as small producers.
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I've quit trading oil. It's a DOG, complete dog. What takes two to three hours on one setup can be done five or six times on the ES, same setup. Just pull backs. I mean it moves in big distances, but just a dog for patterns. The ES used to be like that. The ES now looks like oil did about two months ago.
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