Trading Crude Oil - Page 13
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  1. #121
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    Quick update on the above. Price did try an early dip but it was short-lived. And since then the hourly has been sandwiched all morning between the rising blue pipeline below and capped by the daily pivot above.

    We will inevitably see a break of one or the other during the NY session, but right now it is sit and wait......and, from a day-trader's perspective, when it does break, how far will it be able to go today without a push from some new input factor?
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  2. #122
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    Well, as expected, it was a quiet day going nowhere. Price tried a bit on the downside, then on the upside, and now in the middle.

    If we look at the day on the 15m chart then it shows clearer the lack of significant day-trade opportunity. We may well still see some action in the closing moments as positions are adjusted ahead of the Easter break.......

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    I've got some oil-related stuff to add here over the weekend, but we return to trading on Monday, when the USOil CFD's are again open. In the meantime, have a great Easter weekend and drive carefully......
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  3. #123
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    Default What is a barrel of crude oil?

    If no one nowadays actually buys a barrel of oil and it is usually transported via tankers or pipelines, why do we then talk about oil in terms of barrels? And what, exactly is a barrel of crude?

    The origins of the oil barrel go back to the 1860’s and the start of the oil boom in Pennsylvania USA. In those days, oil from the fields was moved by men, wagons and horses to the rail stations and docks, and any liquid products requiring a leak-proof container were stored in wooden barrels.

    As the oil industry was booming, the volume of oil being produced from the new wells was so great that early producers were using any watertight containers they could get their hands on, whatever the size. In fact, one of the most common sources came from the whisky industry, which was already transporting whisky in wooden barrels with a standard size of 40 gallons.

    But since the variety of different container sizes was misleading and was causing disputes between buyers and sellers, the early oil producers in Pennsylvania decided they, too, needed a standard unit of measure. So they also adopted the idea of the 40 gallon barrel for themselves, but added an extra 2 gallons to cover spillages on route to their destinations and thereby settled on the standard wine tierce which was two gallons larger than the standard whisky barrel.

    Barrel makers (coopers) had already been producing watertight 42-gallon wooden barrels since the time of Richard III, who set the size of a tierce of wine at 42 gallons in 1483-1484. A 42-gallon tierce weighed more than 300 pounds when filled with crude oil– which was about as much as a man could reasonably handle. Also twenty barrels fitted on a typical barge or railroad flatcar. Bigger casks were unmanageable and anything smaller was less profitable.

    The barrel, or "tierce" was therefore officially adopted by the oil industry in 1866 when a handful of America’s earliest independent oil producers met in Titusville, Pennsylvania, and agreed that henceforth, 42 gallons would constitute a barrel of oil, and released the following circular:"

    "Whereas, It is conceded by all producers of crude petroleum on Oil Creek that the present system of selling crude oil by the barrel, without regard to the size, is injurious to the oil trade, alike to the buyer and seller, as buyers, with an ordinary sized barrel cannot compete with those with large ones. We, therefore, mutually agree and bind ourselves that from this date we will sell no crude by the barrel or package, but by the gallon only. An allowance of two gallons will be made on the gauge of each and every 40 gallons in favor of the buyer."

    Henceforth purchasers of oil would know exactly how much they were buying at one time and thereby King Richard III's English wine tierce became the American standard oil barrel.

    A few years later, in 1872, 42 gallons became the standard for the Petroleum Producers Association, and in 1882, the U.S.G.S. and the U.S. Bureau of Mines adopted the standard as well.

    Nowadays, however, pumping crude into 42 gallon vessels would not be efficient or economical so it’s generally pumped straight into tankers or cargo ships, but the concept of the barrel has stuck.

    As a result, the 42-gallon oil barrel has become the unit of measure rather than the actual physical container.
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  4. #124
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    Default What do we get from a barrel of crude oil?

    Maybe the first thing that comes to mind when we think of crude oil is gasoline and engine oil. But crude oil provides an amazing range of products, many of which we use every day without even thinking of their origin. For example, shampoos and lotions, food preservatives, fertilizers, plastics and packaging.

    Each barrel of crude oil produces about:

    - 20 gallons of gasoline
    - 12 gallons of distillate fuel oil (diesel fuel and heating oil)
    - 4 gallons of jet fuel

    From the residue, the refineries also produce over a dozen other petroleum products such as gas, asphalt, lubricants, as well as various components used by the petrochemical industry to make a wide variety of chemicals and plastics, which appear in a huge range of end-products.

    Here is a partial list of products containing by-products from petroleum refining, found on one website:
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    This brings back the old chemistry lessons at school around fractional distillation

  6. #126
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    Quote Originally Posted by Jezzode View Post
    This brings back the old chemistry lessons at school around fractional distillation
    Yes, me too!
    I guess oil is just about the most versatile raw material on earth. I often wonder what the history books will write about the era of hydrocarbons, which will probably be no more than about 300 years of our entire history - but what an impact!

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    I just read that China is theatening to suspend supplies of crude oil to North Korea if they go ahead with a sixth nuclear test.

    Apparently, China supplies North Korea with 90% of its oil requirements and such a move would paralyze the entire country in a very short time.

    A very disturbing build-up of tensions going on in that region..........................

  8. #128
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    ...........and yet still, I read in another article that China is now the No.1 buyer of US crude....??

    In February, China overtook Canada as the top destination of US crude exports.

    So China buys crude from the US....and North Korea buys crude from China?

    And in the meantime, the US sends the USS Carl Vinson+entourage to the Korean peninsular......

    To be sure, this is a strange world!

  9. #129
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    Crude Oil markets are open today after the Easter weekend, but unless something unexpected is released or occurs (as is certainly always possible in today's rather intensive environment), then I guess it will be a thin and quiet one.

    To summarise where we are at present:

    Bullish:

    OPEC/NOPEC is still maintaining a super high level of compliance with the agreed production cuts - and strong optimism that the programme will be extended to the year-end at the next OPEC meeting on May 25th. Also currently exempted countries, Libya and Nigeria, may also then be brought into the deal.

    The weekly release from the EIA has started to show signs of inventory declines as refiners step up the pace as we head into the traditional summer driving season after their maintenance periods. If this is combined with a significant general increase in demand as the US economy improves then the rate of decline in inventories could start to speed up. (stocks elsewhere globally already declining)

    The geopolitical picture is very intense at present with commentators looking at the Syrian situation and the US/China/North Korea developments as well as the low ebb in US/Russian Federation relations.

    Bearish:

    Recent downgrades in projected global oil demand growth, including the IEA, who dropped their own overall estimate for this year to 1.3 million barrels per day. It cited in particular demand slowdowns in India, Russia, the U.S., Korea and the Middle East.

    Huge crude global stockpiles are still putting the brakes on oil price gains. For example, the OECD storage levels at 330 million barrels are still above the five-year average, which is a key metric that OPEC has been highlighting in its arguments for production cuts.

    Neutral:

    One interesting point of view is that any upward movement of prices resulting from the OPEC cuts in production would only encourage a higher production rate from the US shale regions and other non-OPEC countries, which would neutralise the impact of the cuts and place a corresponding downward pressure on prices.

    Neil Atkinson, the IEA’s head of oil industry and markets, and editor of the agency’s monthly report, says:
    "We're seeing demand growing fairly steadily in the oil market and we think that the balance is coming together slowly but surely and the numbers are there to support it. We think that as the year progresses that rebalancing will become more and more apparent in the drawdown of actual physical stocks,"

    Daily chart:

    A pull-back from the resistance band (blue) starting around 53.75 and formed from the highs reached following the start of OPEC's cuts. Now supported by that (red) band between 52.50 and 52.30.

    The 5-Day low has now jumped to 51.47 (from 7.4.). Position started at 48.45 on 29.3.

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    4 Hour chart

    Still in the pull-back from the resistance region - waiting for close back above the pipeline ribbon

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    1 Hour chart still in pull-back - possibly to the support band at 52.50 to 52.30. Looking for a bounce off that confirmed by a close through the yellow/green bands and a upward cross in the pipeline ribbon.

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    I am only looking to buy at present, mainly due to the geopolitical risks around. But also waiting for a good signal before entering and not anticipating or pre-empting the bottom here.

    The arguments surrounding the changing supply and demand picture do not give me any clear view one way or the other, but on balance, I still go with the reducing stocks and continuing production cuts putting upward pressures on prices.
    Last edited by Manxx; 04-17-2017 at 05:41 AM.

  10. #130
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    A quiet range so far today, as expected. We had one spike up which I believe was due to comments from the Saudi Arabian energy minister assuring that OPEC will do what is needed to bring balance to the global supply/demand equation. But it was short-lived and the market has settled back towards its lows for the day, at least for now......

    This spike can be seen on the 15min chart (which is very useful on quiet, directionless days). I didn't trade it as I am not sitting in front of a PC all day in this kind of quiet trading just in case something might turn up (or down!), but it shows how a break through to the upside would have still scraped a small gain even though the move was not sustained.

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    I did have a buy order all day at 52.50 which was not hit. I have now cancelled it as a hit at that level late in the trading day could easily lead to further falls. Better to return to it in the morning.........
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