Oil price discussion and analysis

[wavepicker]

Re: OIL AGAIN!

Oil down 2.8% on last nights session so far.
Not sure whether it wil happen, but from an EW perspective would not mind seeing a retest of the high or even a very minor new high before this thing goes the way of everything else traded in USD.

Have placed my short bets on oil stocks i.e STO.

Hang onto your bowsers and beer cases. Cheaper Oil is coming soon, albeit for a temporary period!!

 

[ShareIt]

Re: OIL AGAIN!

Oil down 2.8% on last nights session so far.
Not sure whether it wil happen, but from an EW perspective would not mind seeing a retest of the high or even a very minor new high before this thing goes the way of everything else traded in USD.

Have placed my short bets on oil stocks i.e STO.

Hang onto your bowsers and beer cases. Cheaper Oil is coming soon, albeit for a temporary period!!

Took a short myself on WPL after a light volume pull up to the 20 MA... STO did have nice spike up today, but some large selling volume late in the day.... Last leg up with volume seems dangerous and likely for a fall inthe coming days.... what is your current outlook... still short?

 

[Uncle Festivus]

Re: OIL AGAIN!

Took a short myself on WPL after a light volume pull up to the 20 MA... STO did have nice spike up today, but some large selling volume late in the day.... Last leg up with volume seems dangerous and likely for a fall inthe coming days.... what is your current outlook... still short?

Be careful with the stock shorts a la Origin 40% in one day. WPL boss implies WPL is now worth $100. Commodity consolidation in progress! Short oil direct?

 

[ShareIt]

Re: OIL AGAIN!

Be careful with the stock shorts a la Origin 40% in one day. WPL boss implies WPL is now worth $100. Commodity consolidation in progress! Short oil direct?

I took a short on the stock.... might be worth $100 and I think it is a great stock long term, but for now it looks overbought and price speaks, it's worth what people are willing to pay and right now that is $57...... i think i will buy up if it hits $52 (20 MA on the weekly)... all speculation though

ps... oil has more to drop in my opinion, needs to test $110

 

[wavepicker]

Re: OIL AGAIN!

Took a short myself on WPL after a light volume pull up to the 20 MA... STO did have nice spike up today, but some large selling volume late in the day.... Last leg up with volume seems dangerous and likely for a fall inthe coming days.... what is your current outlook... still short?

Hello Share It,

I added to my short today, and will do so again early next week. I always enter positions partially in case they move a little earlier than expected.

Expect Oil to move up this evening, but I think this rally, as in Gold will be short lived 1-2 days. (see 1 Hr cycles charts attached) prices for now have made too far an excursion from the Nominal level and small retrace should occur to 113-114

Cheers

 

[ShareIt]

Re: OIL AGAIN!

Hello Share It,

I added to my short today, and will do so again early next week. I always enter positions partially in case they move a little earlier than expected.

Expect Oil to move up this evening, but I think this rally, as in Gold will be short lived 1-2 days. (see 1 Hr cycles charts attached) prices for now have made too far an excursion from the Nominal level and small retrace should occur to 113-114

Cheers

we got the test of the $110, so a bounce is expected.... oil is at $113 now... STO looks like a great short... way over extended! might take some PUT options on monday.... WPL failed to break above $57, the 20MA and 5MA...... also it has a M pattern plus the A pattern forming, so a drop is still on the cards

 

[wavepicker]

Re: OIL AGAIN!

we got the test of the $110, so a bounce is expected.... oil is at $113 now... STO looks like a great short... way over extended! might take some PUT options on monday.... WPL failed to break above $57, the 20MA and 5MA...... also it has a M pattern plus the A pattern forming, so a drop is still on the cards

Got the the start of the small rally as expected from the last chart. Could be short lived though.

STO extended slightly further than I thought. It's very hard to get the timing 100% spot on consistantly, I aim for 3-5 trading days. As mentioned earlier that is why I make partial entries and for that matter exits. At this stage looks like it may topout togther with the broader market next week some time

 

[ShareIt]

Re: OIL AGAIN!

Got the the start of the small rally as expected from the last chart. Could be short lived though.

STO extended slightly further than I thought. It's very hard to get the timing 100% spot on consistantly, I aim for 3-5 trading days. As mentioned earlier that is why I make partial entries and for that matter exits. At this stage looks like it may topout togther with the broader market next week some time

I'm calling the turn on STO monday or tuesday, just had a really good look at it in detail and I think i will run for those PUTs.... a beautiful hangman with heavy volume, all indicators overbought... higher highers on price but not on momentum.... what more could you want

 

[rederob]

Re: OIL AGAIN!

Hello Share It,

I added to my short today, and will do so again early next week. I always enter positions partially in case they move a little earlier than expected.

Expect Oil to move up this evening, but I think this rally, as in Gold will be short lived 1-2 days. (see 1 Hr cycles charts attached) prices for now have made too far an excursion from the Nominal level and small retrace should occur to 113-114
Cheers

Or a large retrace to over $116 which caught many short.

 

[wavepicker]

Re: OIL AGAIN!

Or a large retrace to over $116 which caught many short.

Fair enough rederob, you can be as picky as you like. Yes it rallied 2 dollars more than I expected. Sometimes we do get slight overshoots. The method I am using is under development and I have not said at any time it is 100% accurate. But does it have to be 100% accurate to take a trade? The method is very dynamic not static. Targets are continually updated based on the price and cycles in play at any given time. Just understand that the perfect sytem does not exist, there have to be tradeoffs.

In this instance on the very short term (1 hr chart) it showed there was a high probablility for a short term rally. We got that rally. What else would you want?

For your info I did not trade oil the commodity either long or short, these charts are for info. If I did trade it my initial target would have been 113-114, but then as more data came to hand it would have been easy to see that it was going slightly higher due to cycle expansion/contraction, so my strategy would be to take partial profits at 114 and then let the rest ride

Now if you have a better strategy than this for trading the market in the short term I and others would sure like to see it. If you do, it would surely have to be based on T/A because you long term F/A stuff simply does not cut it to trade this timeframe!!

As can be seen, I think this rally might be done on the very short term. If it is going north again then it has to pullback at least back to 113-114 anyway. This is a short term strategy

 

[ShareIt]

Re: OIL AGAIN!

Or a large retrace to over $116 which caught many short.

I agree with Wavepicker... and the reason being is because a price quoted is just an area of resistance, could be more, could be less.... $115 to me is the resistance area and a rally to this point is what I have been expecting...

ok, so it goes to $116.50... and that is totally fine in my books as the market is ALWAYS looking to throw out the weak hands and a break over $115 would have done just that if it now heads back below $115.... a lot of people would have jumped on board once it crossed $115, i know i would have in the past.... if the price can hold above $115 (a retrace to this level) for a couple days, then I would say Oil is going up further and it negates a drop.... but if it just continues up with no pause or retrace, then we have an overbought rally on emotion and they usually don't last

 

[rederob]

Re: OIL AGAIN!

I agree with Wavepicker... and the reason being is because a price quoted is just an area of resistance, could be more, could be less.... $115 to me is the resistance area and a rally to this point is what I have been expecting...

ok, so it goes to $116.50... and that is totally fine in my books as the market is ALWAYS looking to throw out the weak hands and a break over $115 would have done just that if it now heads back below $115.... a lot of people would have jumped on board once it crossed $115, i know i would have in the past.... if the price can hold above $115 (a retrace to this level) for a couple days, then I would say Oil is going up further and it negates a drop.... but if it just continues up with no pause or retrace, then we have an overbought rally on emotion and they usually don't last

Oil has been overbought for months.
Oil has been rallying for months.
People have wanted to short it for months.
Whatever "emotion" is driving oil is obvious only to those getting emotional about its price.
As I only buy and sell equities, the oil price is only relevant to the extent it affects the equities I hold: WPL and OSH remain my major holdings and I have a small holding in BPT which I am considering adding more too when there is a major retrace - to well below $100 - of the oil price.
I note that from time to time some commentator or analyst comes out with a view that oil prices will decline considerably for reasons they are hard pressed to explain.
Digging deeper, I usually discover these folk are latching onto the coat tails of peak oil debunkers.
It's intellectually possible to debunk peak oil because the "curves" that Hubbert and his adherents ascribe to are seldom shaped in the way commonly depicted. Not surprisingly, when oil production is mapped over time for wells, or fields, production can jump about a fair bit. For example, as modern extraction techniques are applied to maturing wells, it is possible to "re-peak" its output.
The debunkers seem less willing to debate the obvious. That is, when production output is "averaged" over a reasonable period, a peak is always reached and wells\fields go into a prolonged period of decline.
The fundamentals for oil are relatively simple.
There is more than enough oil to meet present global demand.
There is inadequate capacity to induce enough oil out of the ground to meet that demand.
It is suggested that the Saudis can get another 3million barrels per day from their fields because many well heads have spare capacity. Despite multibillion capacity expansions the Saudis appear to be struggling to maintain output, let alone increase it.
What is important about the data is that it is not "snapshot" stuff: It's based on information over recent years.
If the Saudi's are struggling, with their massive reserves, little wonder other national producers are flat out, with minimal excess capacity.
Clearly this type of "fundamental" view does not make for short term trading.
It's not what I do, and I make no pretense to have a clue about short term movements in oil price.
On the other hand, I have a slight clue about when it's a better time to add to my existing oil holdings: And in the manner that I trade, it is not now.

 

[ShareIt]

Re: OIL AGAIN!

Oil has been overbought for months.
Oil has been rallying for months.
People have wanted to short it for months.
Whatever "emotion" is driving oil is obvious only to those getting emotional about its price.
As I only buy and sell equities, the oil price is only relevant to the extent it affects the equities I hold: WPL and OSH remain my major holdings and I have a small holding in BPT which I am considering adding more too when there is a major retrace - to well below $100 - of the oil price.
I note that from time to time some commentator or analyst comes out with a view that oil prices will decline considerably for reasons they are hard pressed to explain.
Digging deeper, I usually discover these folk are latching onto the coat tails of peak oil debunkers.
It's intellectually possible to debunk peak oil because the "curves" that Hubbert and his adherents ascribe to are seldom shaped in the way commonly depicted. Not surprisingly, when oil production is mapped over time for wells, or fields, production can jump about a fair bit. For example, as modern extraction techniques are applied to maturing wells, it is possible to "re-peak" its output.
The debunkers seem less willing to debate the obvious. That is, when production output is "averaged" over a reasonable period, a peak is always reached and wells\fields go into a prolonged period of decline.
The fundamentals for oil are relatively simple.
There is more than enough oil to meet present global demand.
There is inadequate capacity to induce enough oil out of the ground to meet that demand.
It is suggested that the Saudis can get another 3million barrels per day from their fields because many well heads have spare capacity. Despite multibillion capacity expansions the Saudis appear to be struggling to maintain output, let alone increase it.
What is important about the data is that it is not "snapshot" stuff: It's based on information over recent years.
If the Saudi's are struggling, with their massive reserves, little wonder other national producers are flat out, with minimal excess capacity.
Clearly this type of "fundamental" view does not make for short term trading.
It's not what I do, and I make no pretense to have a clue about short term movements in oil price.
On the other hand, I have a slight clue about when it's a better time to add to my existing oil holdings: And in the manner that I trade, it is not now.

OK... you are obviously a long term investor and you are completely right in your views, oil stocks will continue to go up I believe in the long term, as you have pointed out...

I am more about the short term and am simply stating that oil stocks are way over extended for now and I believe they will come in a little....

 

[rederob]

Re: OIL AGAIN!

Putting some numbers to the "fundamentals".
Monthly production peaks are:
All Liquids: the peak is July 2006 at 85.47 mbpd (revised 0.07 mbpd), the year to date average production in 2007 (9 months) is 84.32 mbpd ( 0.04 mbpd), down 0.25 mbpd from 2006 for the same period.
Crude Oil + NGL: the peak date remains May 2005 at 82.09 mbpd (unchanged), the year to date average production for 2007 (9 months) is 80.99 mbpd ( 0.21 mbpd), down 0.35 mbpd from 2006.
Crude Oil + Condensate: the peak date remains May 2005 at 74.30 mbpd (unchanged), the year to date average production for 2007 (9 months) is 73.09 mbpd ( 0.14 mbpd), down 0.48 mbpd from 2006.
NGPL: the peak date is February 2007 at 8.01 mbpd ( 0.02 mbpd), the year to date average production for 2007 (9 months) is 7.90 mbpd ( 0.07 mbpd), up 0.13 mbpd from 2006.

The supply "gap" is mostly made up from oil sands and biofuels.
Each year the gap will grow larger unless crude makes a turnaround.
Given the unparalleled expenditure on drilling\exploration in recent years, with only moderate success on the oil front, that's not an easy ask.

 

[wavepicker]

Re: OIL AGAIN!

OK... you are obviously a long term investor and you are completely right in your views, oil stocks will continue to go up I believe in the long term, as you have pointed out...

I am more about the short term and am simply stating that oil stocks are way over extended for now and I believe they will come in a little....

Ditto, Ditto, and Ditto.

I don't understand why the arguments exist between these long term investors and the shorter term swing traders on this forum. Their goals are more long term ours are short.

It's that simple. There is no right or wrong

 

[Smurf1976]

Re: OIL AGAIN!

The supply "gap" is mostly made up from oil sands and biofuels.

There's also an argument that someone, somewhere is drawing down stocks rather heavily to help close the gap as well. Not just oil companies or governments, but also consumers - home heating oil tanks not being filled to the top, electric utilities drawing down fuel oil inventory and so on.

My gut feeling (and that's after rather a lot of research) is that even if we held both producton and consumption flat from now on, we'll still hit the wall rather spectacularly. That is, once you count biofuels using up all the grain stocks, oil tanks not being filled etc I think we're already using more than we're producing. It will only get worse as you said.

Oil won't run out overnight, that's not how it works. But someday I do think we'll see physical shortages and they'll come out of "nowhere" much like the sub prime crisis and any other major event catches most by surprise. $2 or even $5 a litre is certainly a problem, but not being able to get petrol etc at any price in your local area because the servo and the wholesaler that supplies it have run dry is a far more serious situation and one that I fear is coming.

...

Agreed with those commenting about short term versus long term. Different objectives.

 

[rederob]

Re: OIL AGAIN!

Although the US is getting less relevant to price considerations of commodities as time goes by, its consumption of oil will not be surpassed for a long time to come.
Irrespective of any technical considerations, the bottom line for many analysts is "inventory" followed by "capacity".
2008 sees US oil inventories below average.
It sees capacity utilisation below average.
Apart from gasoline, other fuel stocks are also below average - especially heating oil, which is regularly setting cyclical lows (as refiners overcompensate with gasoline output).
The question needs to be asked about what will change the present situation.
The immediate answer is that the US has no answer.
In fact, looking to the horizon you still won't find an answer.
If there is an answer, it will come from overseas - by tanker.... lots and lots more of them.
It's why the speculators can afford to speculate with some abandon.
You see, the consumers can still afford to pay through the nose.
And pay they will.

 

[So_Cynical]

Re: OIL AGAIN!

STO closed up 81 cents today...so much for the shorts.

Tomorrows another day right.

 

[kransky]

Re: OIL AGAIN!

Oil won't run out overnight, that's not how it works. But someday I do think we'll see physical shortages and they'll come out of "nowhere" much like the sub prime crisis and any other major event catches most by surprise. $2 or even $5 a litre is certainly a problem, but not being able to get petrol etc at any price in your local area because the servo and the wholesaler that supplies it have run dry is a far more serious situation and one that I fear is coming.

I dont think we will ever see full-on lack of availability of petrol (while there is demand for it)..

i think oil will simply get more and more expensive and we will learn to use less and less of it. Until we barely use any of it and petrol stations like they exist today no longer exist. You just wont use petrol for personal transport. But petrol will still be available for other things.. at a very high price.

I am thinking 20-50 years down the track mind you.

 

[rederob]

Re: OIL AGAIN!

As can be seen, I think this rally might be done on the very short term. If it is going north again then it has to pullback at least back to 113-114 anyway. This is a short term strategy

Presently trading at yet another record high - over $120 as I post.