Crude Oil and oil markets

Global Markets Commodities Oil and Gold
749

Difficult question, Dale! :slight_smile: I do seriously value your input here, but:

The original reason for starting this thread was simply to create a place here well away from the forex beaten track where I could peacefully develop my own knowledge of the oil industry and my approach to trading crude as a commodity without disturbing others who have no interest in oil.

At that time I was a complete Newbie concerning commodities and oil (some 2 years back) and i really didn’t want to influence others with my naivety - or have to even bother thinking how others might interpret what I write here. But things have now moved on and, whilst I still consider myself a total beginner in oil trading, I am now more content, and confident, to share thoughts with others with similar interests such as you.

The only reason why I included “and other stuff” in the title was to cover other occasional personal “junk” that I felt like writing about that had nothing to do with the topic of oil! :slight_smile:

In other words this thread is more like a personal journal about oil trading and the oil industry in general and my biggest concern is to avoid attracting the volumes of one-line nonsense that plagues so many other threads here. That works as long as the content is oil which no one is interested in here :slight_smile:

I am still not good at this stuff and I am still a beginner with oil, so I really don’t want my own feeble efforts here trying to achieve something worthwhile to be further diluted by the typical trolls and nonsense posts.

So, whilst I enjoy, value, and appreciate very much your contributions here (and, of course, the other serious contributors who call in from time to time), I fear that the expansion you suggest will attract the flies (and the trolls) around the jam pot!

So maybe it would be better to start a new thread for that topic and I would be interested to follow it too! :slight_smile: I do look in on your other thread but, like I said, it is a long way from my own trading style and covers instruments that I know nothing about and so I have nothing really to say there that would be of any value ( not that anything I say has any value anyway! even here! :slight_smile: )

What do you think?

750

Yes I can well believe that - I have them every day - and often the same ones (somethings I never learn!! :smiley: )

One of my most common Newbie questions that I ask myself: "Why on earth did I do that!!! :joy:

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751

Hmmmnnn…

That’s the main reason I was thinking to NOT start a new thread i.e. trolls and inane questions.

But I hear you. And all good.

Actually it would make sense to discuss this on my thread given that it’s really supposed to be as it applies to the performance of my system (this with hindsight i.e. after asking you above).

Let me do that. But then if wouldn’t mind just taking checking in there and taking a squiz at my questions.

752

Sure! I am sure I will learn some things there too!

This is the main reason why I even keep a thread here. It is really strange how writing things down in a public place really clarifies one’s own thoughts even without any input from others. But the external input also helps a lot provided it is genuine.

I really don’t have time or patience for the trolls and inane stuff. Anyone who writes that kind of stuff is clearly either a troublemaker or a non-serious trader/loser - neither classification interests me at all.

Sometimes, though, there appear here on BP some serious beginners with serious intentions and the right attitude and prerequisites, and it is always nice to try and help them along the way and shorten the learning curve. There are also some very nice people here who are just nice to talk with! :slight_smile:

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753

Well I posted on my thread. See what you and @GilasTrading think.

My thread keeps me in check!!! LOL!!! Much easier to do when you know there’s others (probably all of three people anyway) looking over your shoulder to see if you’re on the level or not. And I guess nobody wants to make an idiot of themselves e.g. over trading, losing big, and then having to make public excuses for their behavior!!! LOL!!! Well not me anyway. Got enough egg on my face from my first few years to last me thanks.

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754

Well back to “other stuff” that I doubt will be of any interest to anybody else and shouldn’t attract undue attention:

Again (and purely for the sake of curiosity of course):

Why is the Hang Seng in Hong Kong taking such a hammering??? It’s been trending down with only the weakest attempts at a pause since the beginning of this month (May). This not having happened to any of the other indices (Asian included).

I started looking around last week for the fun of it to see if I could find anything correlated to this. Only thing I could find was a chart of GBPHKD. Interesting chart. But have no idea if there’s any correlation or relevance.

One EXTREMELY interesting chart though: ever looked at USDHKD??? No??? Me either until yesterday. Don’t think I’ve ever seen a chart where resistance is so obvious that even a blind man could see it. Is this because of a currency peg or something??? Since January 2018 price seems to hit a brick wall (almost in the literal sense). Never seen that before. And if you look further back when it was at its low. Same thing. Like a flat line or table top. Almost like it’s bounded between there and where it is now. Never seen this.

One could even argue that when it hits that top line there is nowhere for it to go but down. Unless there is a peg in place and some wise person decides to remove it while you’re asleep of course.

755

:joy: Yeah, it happens!

These Asian markets are way outside my scope. I’ve never looked at any HKD pairs, nor the Hang Seng come to that!

Maybe someone else might have some expertise ?

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756

I have an answer for you, but I thought you didn’t want to know such things as funda as it would affect your trading?

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757

You make a good point.

Hit me with it anyway. Really curious. Not going to affect anything. I’m long anyway. Not fully committed yet but will certainly not second guess any signals i.e. the trade will turn out whatever way it’s going to turn out no matter what I know or don’t know.

Put another way: there’s nothing you or anybody else is going to say that will make me bail on the trade or not follow my signals. There. It is said out in the open and in public so no going back on it.

And this different from my Gold trade of last year anyway i.e. not ignoring signals or holding onto something when my trading system has been screaming to get out and trade in the other direction. Big difference.

And for fun take a look those HKD pairs I mentioned. Also curious to know what’s up with that USDHKD chart. Don’t worry though. Even if I were tempted: thanks to the ESMA restrictions and minimum position size on that pair at my broker I don’t have enough money in my account to open a position large enough on that pair to be able to make anything worthwhile. Those big drops on that chart only amount to 300 or so pips anyway so it’s a bit deceiving. But really curious as to the brick wall.

758

China markets are not completely free markets, whether the yuan or stocks. If you noticed I was shorting China index several times when it showed bullish TA signals intraday. The Chinese government can force Chinese banks and institutions to try to prop up the market but it will always fall these days aftermarket. HKD and Hang Seng more accurately reflect the risk being priced in I believe in the US China trade war issue. Plus Hong Kong is the closest market to be affected by any China events.

There you go, you asked for it this time. Hope it really doesn’t factor in to your trading.

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759

I do nothing just for fun in trading, always for a profit as well :wink:

Hahaha quite the reminder of how differently we trade, you saying ONLY 300 pips. I’m quite happy with “just” 15-30 pips on each position.

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760

This very true!!! LOL!!!

761

Last week witnessed oil’s worst decline so far this year and took us back to March price levels. So is this the start of a new downtrend or just an over-reaction to a breakout from a longish, rather narrow, consolidation period?

The downside:
The sell-off was initiated by the EIA data released last week showing another build in crude oil stocks compared with an anticipated draw. But raw crude is not the only inventory item included in the EIA data. In fact, one source stated that:

”The main reason why the EIA data was so negative was because inventories rose in all categories except residual fuel oil, resulting in a combined increase of 16.33 million barrels”.

But whilst the US inventories are high profile, they do not show the entire global situation and the US market has its own factors affecting stock build-ups including high production rates in the shale region and a lack of physical pipeline to transport it.

But the bearish tone is not just about excessive supply. The black clouds gathering over the black gold are also due to concerns over the global growth outlook. Cracks are beginning to appear in the growth prospects of many countries in the fall-out from the US-China trade war.

There are serious concerns that the global economic situation has reached a peak and that there now prospects of a new oil glut forming. And this fear seems to be overiding the geopolitical pressures right now. For example, the IEA said that global oil demand grew by 640,000 bpd in the first quarter year-on-year, which is a notable downward revision from its previous estimate of a 1mill bpd increase.

We have recently seen a lot of news about outages from Venezuela and Iran, as well as problems in other producer countries and pipeline contamination in Russia. And we have also seen high-profile prospects of proxy wars in the Gulf. But in spite of so much potentially bullish news being thrown into the ring, the markets didn’t react at all – and then came the EIA data……

The upside:
Whilst there is no doubt that oil is reacting to genuine economic concerns, it is unlikely that the OPEC+ group (which meets again in June) will discontinue or ease their current production restrictions if there is any sniff of a new oil glut on the horizon. So this is more likely to be only a temporary correction to an otherwise somewhat stabilised supply/demand situation.

Whilst the buildup in inventories and weakness in prices are mostly the result of a perceived widely spread reduction in demand, mostly due to the trade war, the supply concerns are still very much present. Whilst many of these risks are already accounted for, there are still political instabilities in other producer area, like Libya, that can enter into the supply equation at any time.

Also, although the current concerns regarding the US-China trade wars are a real and present danger, how likely is it that the leaders concerned are really going to allow this to degenerate into a full crisis and a global recession?

Mr Trump, for sure, has his eye on the looming presidential elections and low oil prices and a strong economy and equities markets must be high on the agenda as the accountable results of the ”America First” campaign so far.

In addition, oil is not a homogenous commodity and an over-supply of US shale does not compensate for shortages in other grades due to the geopolitical constrictions.

Oil is living exciting times once again – and trading opportunities arise alongside it!

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762

And that you’re so quiet???

I see your Oil is currently dropping like a stone. Suits me. Finally an opportunity to scale-in to almost full positions on both.

And in just sitting starting at all of this stuff with the daily pivots on my charts I think I’ve seen something that could very well work (for me anyway). May take it to the relevant thread.

763

Hi Dale,

Concerning oil , there hasn’t really been much to say- or as one commentator puts it:

“Oil markets have found themselves torn once again between supply fears and an economic slowdown, with oil prices now having stabilized at a lower level.”

But, on balance, oil prices seem to be slightly more responsive to equities prices and that raises the question, why trade oil when one can trade the indices! - and that is what I have been doing.

I entered SP500 yesterday on a 4H chart sell signal and waited - and waited, but nothing happened and so when it started to head back up again I quit with a -35pips. But then, a little later, the sell signal was renewed and I rode the short down to last week’s low for a little over +200 pip gain. This morning gave another sell opportunity and again pulled in a good return. I am now flat.

But that was indices and not oil so there was nothing to write about here. The only interesting matter was the issue of China retaliating to the US tightening of trade war conditions with thinly veiled threats to restrict US access to China’s rare earth minerals. This was interesting, I had never heard of these elements and their markets previously!

China is a major supplier of rare earth minerals to the US. This is a group of (17) rare chemical elements used in all kinds of high-tech consumer electronics and even military equipment. Restrictions, or even a total ban, on exports of these to the US could send their prices sky high and cause some difficulties for a wide number of US firms.

But what is also really interesting here is the following comment;

“In a commentary headlined “United States, don’t underestimate China’s ability to strike back”, the official People’s Daily noted the United States’ “uncomfortable” dependence on rare earths from China.”

But such things are of little interest to the average BP member so I didn’t bother writing about it - but it was good trading it! :smiley:

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764

Points. Please. Points. Not pips!!! LOL!!!

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765

I’m more concerned with their colour than the name :smiley: . OIl often talks in ticks rather than pips, but for me a pip is a pip even went it isn’t! :smiley:

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766

BBBlasphemy I tell you. Blasphemy!!! LOL!!!

Yeh. I read you or hear you.

Reason why this stuff doesn’t do it for me:

Yip. Could drive prices sky high. So to your average person (like me): BAD thing. Stocks MUST go down SURELY. To Wall Street: the higher the better. Companies beat their forecasts. Not saying this is correct. Point is I have seen things where it would be safe to assume, at least by any logical and sane person, that stocks should go one way. Next time you look they’re going in the total opposite direction with a vengeance.

And this just been on TV now. Some obscure Chinese newspaper just happened to mention that an unnamed and unofficial source within the Chinese Government noted that China COULD retaliate with earth metals. And we see a sell off. Frightening. Fickle. For me: try and understand this stuff and make trade decisions based on it at your (my own) peril is my experience.

Another fine example. At least to a logical person I think. War. Bad thing. No it’s not. Defense companies make a fortune. Oil fields get bombed. Less oil. Higher prices. LOL!!!

Matter of fact not five minutes watched an interview with Trump where he is saying that he is being held to ransom or being encouraged by what he called the Industrial War Machine. Dunno if it’s just a cop out but sounds about right to me whichever way you slice it.

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767

Absolutely! That is the main reason why I only trade based on what the charts are telling me about what the majority of participants are doing. The only frustrating thing sometimes,as with my first trade yesterday, is that one can be right and in line with one’s charts - but nothing seems to happen! Then you wait and wait and eventually doubt your own rationale…

Very often things do not go quite as anticipated. For instance, we bought a new bird feeder for our garden this morning:

20190529_142606
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768

That is SOOO funny particularly in context!! ROFLMAO!!!

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