duc's Commodity Trading Thread

[ducati916]

So this week [now] I'll close the Oil SHORT and wait for the COT.

The reason for this is that even on heavy selling, price declined, but not in the same magnitude as previously. So discretion is the better part of valour this week. I'll simply put the position back on next week.

jog on
duc

 

[ducati916]

Of course, this has had a major impact on my thinking:

jog on
duc

 

[ducati916]

Lots of politics [is there not always] in the oil patch.

U.S. Senate vote hamstrings Saudi Arabia. Saudi Arabia is aiming to cut oil production in order to boost prices, but the recent vote by the U.S. Senate to end the war in Yemen, even if it doesn’t become law, heightens the pressure on Riyadh to assuage American concerns. That gives President Trump more leverage as he demands lower oil prices from Saudi officials. Riyadh faces a choice between accepting painfully low oil prices or defying Washington by cutting production. Reports suggest they are going to try to thread the needle, opting for modest cuts that at least put a floor beneath crude prices. “President Trump has effectively put a ceiling on oil prices -- arguably this ceiling is about $70 a barrel Brent, maximum $75,” Thibaut Remoundos, founder of Commodities Trading Corporation Ltd., told Bloomberg. “It will be interesting to see if Saudi-Russia can keep the floor in place.”

jog on
duc

 

[ducati916]

So this week's COT numbers are out.

Gold: (-11,553) a +43% increase, which is a reduction of the SHORT position. I am going to stand aside in Gold next week. Too choppy for me atm.

Oil: (-112,071) which is a 14% increase in the SHORT position. I'll re-instate my SHORT position. This is an uncomfortable trade currently as previously stated, too far, too fast and markets tend to have bounces, particularly in bear markets. As I am out, I'll hope for a bounce higher to place the trade.

This is now possibly an inflection point between the COTs and Mr Sadjii. Who will prevail? Looks like I am trading against Mr Sadjii's prediction [position?] now.

jog on
duc

 

[notting]

It's a bullish sign -

 

[Triple B]

Interesting to note on the world gold council site a chart on cmx futures showing net longs going from positive to negative for the first time in a long time between the last report in July 18 and the first report in August. From $1224 to $1210 that week .
Seems we are now in that zone.

 

[ducati916]

Just a few comments on the COT chart which is constructed differently to my calculation.

So this chart is calculated to show the commercials buying as a %. That % is of the three year maximum buy/sell. So when you are at 90%+ the commercials are buying [counter-trend] and this is usually enough to halt a price decline.

To date, this has not happened. What has happened is that the Funds [algorithms] chase momentum, long/short and these volumes have resulted in the price moving significantly lower.

The commercials [in this chart] stepped up their buying, near the 90%+ mark, yet the overall position went even shorter than before. Which is why, absent news out of the political deals being made, I'll put back on the short position.

That being said, price has moved too far, too fast. I would expect a pullback, or if positive news from the US [Saudi's not cutting supply] then lower prices are almost a lock.

jog on
duc

 

[barney]

Appreciate your efforts/posts Duc

 

[ducati916]

Reports leaking out prior to the summit: https://www.reuters.com/article/us-...s-with-saudi-on-details-sources-idUSKCN1NY1GX

The Russian Energy Ministry held a meeting with the heads of domestic oil producers on Tuesday, ahead of a gathering in Vienna of the Organization of the Petroleum Exporting Countries and its allies on Dec. 6-7.

“The idea at the meeting was that Russia needs to reduce. The key question is how quickly and by how much,” said one source familiar with the talks between Russian oil firms and the ministry.

“Most people agreed that we cannot reduce immediately, it needs to be a gradual process like last time,” said the source, who asked not to be identified as he is forbidden from speaking to the media. The Energy Ministry declined to comment.

jog on
duc

 

[ducati916]

Appreciate your efforts/posts Duc

Thanks, always nice to be appreciated.

jog on
duc

 

[ducati916]

Unfortunately the leaked news article doesn't really help all that much.

1. The production will take time to cut. Prices fall until the cuts take place; or

2. Anticipating the cuts, the price of oil rallies.

Ultimately, the price action will determine the action that you [as a trader] will need to take. I still plan to reinstate the short position, but with news due next week, I'll close it again on the coming Friday. That is the plan.

My 'speculation' is that price falls, as getting political agreement between countries whose economies rely on oil revenues will be difficult. Add to that the US wants lower oil and the result will be effectively zero.

jog on
duc

 

[tech/a]

So now what seems to be happening is that the COT chart is taking a far less influential role as Fundamentals and speculation become the trading methodology.

I expect the results and discussion will become obtusive with no real direction or definitive positioning.

Hope I’m wrong.

 

[ducati916]

So now what seems to be happening is that the COT chart is taking a far less influential role as Fundamentals and speculation become the trading methodology.

I expect the results and discussion will become obtusive with no real direction or definitive positioning.

Hope I’m wrong.

No the COT report will continue to inform my positioning/timing. Rather, identifying the other variables that could inform a trading position, is only to elucidate those variables. If you notice, the two analysed options are non-conclusive.

As already stated, although the COT reports lag, they still seem to have a high enough success rate to make them profitable to follow, particularly when price is trending.

Gold, currently, is an example of when to step aside as the commercials themselves are flip-flopping.

jog on
duc

 

[tech/a]

So what is your position? Other than Flat Gold.
Have you opened and closed some trades I cant seem to track them.
If so what are the outcomes?
Are there any open trades?

 

[notting]

Pop this morning is indicative that the stronger hand seems to be looking to the demand side than the supply side at this point.

 

[ducati916]

So what is your position? Other than Flat Gold.
Have you opened and closed some trades I cant seem to track them.
If so what are the outcomes?
Are there any open trades?

Currently no open trades after closing Oil SHORT on Friday.

I will place another trade in Oil and it will be SHORT when US opens.

Outcomes: Gold: meh. Oil: $

jog on
duc

 

[Triple B]

I went long wti this morning. Looks like higher lows 4hr under $50. Then the leak now all shorts running for cover!hoping for a big long bounce for the next week. If cot was net short last report the can we assume they will start closing now ie buying.

 

[ducati916]

I went long wti this morning. Looks like higher lows 4hr under $50. Then the leak now all shorts running for cover!hoping for a big long bounce for the next week. If cot was net short last report the can we assume they will start closing now ie buying.

I will only trade during the US market hours, unless I already hold a position. But when entering a new position I prefer not to enter orders outside of market hours. I have a variety of reasons for this.

Re. the COT. The COT is historical and logic would dictate that the actual number means nothing as it is after all historic. Yet, it [seemingly] has an influence that is able to be traded.

The 'bounce' is unsurprising, in fact, I would be more surprised if it went straight down. Anyway, best of luck with your trade!

jog on
duc

 

[notting]

In the middle of last week when Trump signaled that they were making progress on some plan and working with the Chinese. Todays agreement to stall hostilities made stocks bounce big time as it did when Trump signaled but in the US oil took a pounding on the signal at the same time. That was a very bearish signal for oil.So it was very surprising to see what oil did today which was outperform the stocks which had the best day in about 16 months, in what appeared to be a reaction to some validation of what Trump said.

You'd think oil might have a had a little lift then drifted into the 6th Dec OPEC meeting for it's next short term trend
So either oil is not responding to the demand side at all or today's bounce on modest volume was a set up whilst the US markets were asleep.
It's worth remembering also that when Russia and OPEC cut production last time oil had a bit of a bounce but still drifted lower until Trump said he will reimpose sanctions on Iran. That was when the big move began and ended when he gave a big break to the sanctions which rendered them almost meaningless.
So if you can get anything out of that wash, you'd imagine that oil should continue to trend down. Will be very interesting to see what it does when the US markets hit their straps tonight. I sold today and am a bit short now as I think today's bounce is an anomaly.
I expect oil to head lower over all however and am waiting to buy it serious money in the low 40s .

 

[notting]

I should add that I think the cuts OPEC will announce will be modest because they will not want to aggravate Trump!