Crude Oil and oil markets

Instead of the anticipated 3 mill build in US oil inventories, the release brought a small draw instead, which resulted in a temporary rise in prices by 50c or so, but it was short-lived. The fact that the upwards reaction was so mild only serves to emphasise the underlying bearishness for prices (in my opinion! :wink: ).

Charts are still neutral short-term and even the 4H is flat now so I guess I am out of the market today unless something happens after the Fed details later…and even then I would only look to sell at the present.


I found this nice chart on Bloomberg. It shows well how oil prices rose rapidly follwing the OPEC agreement last November and then the drop in price last week after the unexpectedly large increase in US inventories.

It also shows today’s blip to the upside (so far) and puts it into perspective with the overall picture. Whilst there is still a strong increase in new oil rigs in the US shale areas and doubts over an extension of the OPEC production cuts agreement it is hard to visualise at present any significant increase in prices…but let’s see! :slight_smile:


Well now, I guess, I come to the first tricky bit regarding interpreting what the charts are saying about price movements!

We saw a relatively mild rally in oil prices after the Fed rate increase as the dollar weakened but hardly what one could call a close correlation - as can be seen from this overlay - which again leaves an overiding negative feel about oil price:


But the 4H chart is neutral and the 1H =>5m all now positive. And in addition we are back above the Daily 200 SMA and currently also above yesterday’s pivot line.

Technically, I should be looking for buys from the short term charts but whilst the Daily chart still looks so strongly down (see below) and without any contradictory news to support a change to a bullish stance, it is very difficult to buy anything! It still feels like the bottom could fall out of this at any moment… but, on the other hand, look at that candle formation that took us back to close above the 200 SMA…!

At this stage in my learning process this is too contradictory for me to risk taking a view at this moment (especially in view of my aim to “earn as you learn” :slight_smile: )…so today, instead of sitting on my hands, I am probably going out for a walk on the (frozen) lake in the spring sunshine instead - and wait for the market to tell me what comes next! Let’s see how it looks later… :smiley:



Oh, and by the way, this was an interesting comment I picked up on Bloomberg!!!:

[I]"OPEC’s worst enemy isn’t U.S. shale drillers. It’s the hedges propping them up.

American oil explorers who survived the worst of the 2014-2016 market rout are shrugging off the 14 percent slide in prices this year from a high of $55.24 to less than $48 a barrel Tuesday. The price would have to drop to the $30s or lower to dent the bottom line of many drillers now working U.S. shale fields, said Katherine Richard, the CEO of Warwick Energy Investment Group, which own stakes in more than 5,000 oil and natural gas wells.

That’s because many producers have already locked in future returns with financial contracts that guarantee the price of their oil for most of the rest of the decade. Such resilience poses a dilemma for countries that agreed to an OPEC-led production cut aimed at tightening supplies to raise prices and relieve their distressed national economies.

“We’re in a boom again in Texas, despite what’s happening with prices lately,”*said Michael Webber, deputy director of the University of Texas’ Energy Institute in Austin. “The cowboy spirit is back. Hedging is playing a big role.”[/I]

…Locked in [I]future returns with financial contracts[/I] for the next three years??? But that is not just huge, that is surely Astronomical? Methinks, who is on the[I] other[/I] side of those contracts and how are [I]they [/I]hedged…sometimes the world of finance can be even more baffling than the search for the meaning of life itself! :slight_smile:

Venezuela is bordered by Brazil, Colombia and Guyana. It has a population of nearly 31 million.

The proven oil reserves in Venezuela are recognized as the largest in the world, totaling some 300 billion barrels, surpassing even those of Saudi Arabia.

Venezuela’s crude oil is very heavy by international standards, and as a result much of it must be processed by specialized domestic and international refineries. In addition to conventional oil, Venezuela has oil sands deposits similar in size to those of Canada. Venezuela’s Orinoco tar sands are buried too deep to be extracted by surface mining and the technology needed to recover such ultra-heavy crude oil may be very complex and expensive, and unless the price of crude rises some may remain undeveloped.

Venezuela has actually been an oil producer since 1914 and is another of the founder members of OPEC. Its oil revenues account for about 95 per cent of export earnings and the oil and gas sector accounts for approximately 25% of gross domestic product. As a result, the country has been very badly hit by both low prices and the drop in production.

Although Venezuela has enormous oil reserves, their development has also been seriously hampered by domestic political unrest. Misapplication of earlier oil profits has resulted in serious domestic problems. Earlier windfall profits were controlled by the government, which used that money to spend heavily on social programs and even borrowed billions more from overseas. However, this resulted in inadequate development of oil production and productivity as well as significant pollution problems - and when oil prices and production fell, it also left the country with a huge debt burden. Apparently, even the IMF has described Venezuela as the worst-managed economy in the world.

Problems still exist with high inflation, shortage of basic foods, goods and medicines, and a high crime rate.



Oil drills in Maracaibo Lake in Venezuela’s oil-rich Zulia state.

Indeed - very much so. I actually (slightly) know someone who lives in Venezuela, and she says that everyday life there (including internet access, quite widely) is an absolute nightmare and a disaster, at the moment. :33:

It seems that the earlier caution regarding the dubious upside potential mentioned above was indeed relevant and merited (at least so far!)!

After a brief upmove there was a clear sell signal and the price has fallen since then and is now back below the daily pivot (which is more or less the same level as the daily 200 SMA, which is also flat at present). Happy to say I am in on this move :slight_smile:

This is the 15m chart with the sell signal from both the ribbon and the MACD:


…and here was the exit from the above trade (5min chart signal) :). Now waiting for the next move:


…and with all those resources! Unbelievable!

…Carrying on from the above trade. There was a further drop and I couldn’t resist another entry (below). But it was a quick in and out this time. I left the green pips showing this time just to “prove” I’m not just inventing these things! :smiley:

Naturally, with the CFD’s 5-pip spreads these are expensive if one takes many of these kinds of multiple short moves - and by comparison, for example, if I were trading just from the daily charts, I would still be short the same one trade that started from level 53.60 on 2.3. and, of course, would be very content!! - but not all daily signals last so long or move so far! I am still happier (and mentally more stable!) chasing these short chunks from the main move rather than holding long term positions in such a volatile commodity even though, at least on this occasion, I am earning less than I would have now in that daily position if I had taken it.

The problem with short term trading here is that one has to try to be anticipatory rather than simply following (or chasing) the price, otherwise you are usually in either after a big chunk of the move has suddenly happened or, even worse, at the end of it!


I watched this dramatic film last night called “Deepwater Horizon”, about the true story events of the semi-submersible mobile offshore drilling unit called Deepwater Horizon that began on April 20, 2010.

The rig was built in 2001 to drill subsea wells for oil exploration and production. It was particularly notable for its advanced systems such as remote monitoring and information transmission from Houston, Texas, as well as in the rig’s operation and automation.


On that day, the rig was about to begin drilling off the southern coast of Louisiana. Soon after commencing operations a series of equipment malfunctions resulted in a massive blowout of seawater, drilling mud and methane gas. The gas component ignited into a series of explosions and then a firestorm. Finally, the mechanism for plugging the well was activated but failed…

There were 126 crew on board the rig and eleven workers were killed in the initial explosion. The rig was evacuated and the fire burned uncontrollably for a further 36 hours before the rig finally sank on 22 April 2010.

But the underwater oil spill continued until 15 July when it was finally closed by a cap. The Deepwater Horizon oil spill is considered the largest accidental marine oil spill in the history of the petroleum industry. In spite of massive operations to protect beaches, wetlands and estuaries from the spreading oil, extensive damage occured to marine and wildlife habitats and fishing and tourism industries. Even many years later various studies continue to reveal damage and deformities to marine life as a result of the oil spillage.

The results of numerous investigations into the causes of the explosion and record oil spill blamed defective cement on the well, cost-cutting decisions and an inadequate safety system,and systemic root causes.


According to Wikipedia, the ensuing legal proceedings resulted in 11 counts of manslaughter and a record-setting $4.525 billion in fines and other payments. In addition, apparently, as of February 2013, criminal and civil settlements and payments to a trust fund had amounted to $42.2 billion.

In September 2014, a U.S. District Court judge ruled that the oil company concerned was primarily responsible for the oil spill because of its gross negligence and reckless conduct and in July 2015, the company agreed to pay $18.7 billion in fines, the largest corporate settlement in U.S. history.

Charts continue mixed. Still not impressed with upside potential based on daily and 4H charts, but still waiting for 1H chart to confirm a sell signal before entering. Later today is the US oil rig count release which is sometimes provocative…

[I]“The Baker Hughes Rig Counts are an important business barometer for the drilling industry and its suppliers. When drilling rigs are active they consume products and services produced by the oil service industry. The active rig count acts as a leading indicator of demand for products used in drilling, completing, producing and processing hydrocarbons. This particular case represents the number of rigs drilling exclusively for oil.”[/I]

Well nothing interesting developed for me today. So I’m done for the weekend and wish anyone dropping by a sunny one. :slight_smile:

Actually, I’ve been thinking. This has been an incredible personal journey into starting commodities and surprisingly easy has been the transition! I know now already that I will not be returning to forex - ever. Crude was my starting point in life and now it will eventually be my end too, I am so at home here in the oil markets! :slight_smile:

But, I am thinking, it is [I]not [/I]forex and this [I]is [/I]a forex site, and [I]especially [/I]for Newbies in [I]forex[/I]. So this Friday feels very much like a crossroads, I find myself no longer reading other threads here and I am sure my stuff here about crude is of no interest to others either :). So like the proverbial ships that pass in the night (or was it oil tankers? :slight_smile: ) I feel a parting of ways here. It has been a real experience to be here on BP in very many ways. But all things end and this is that time…

Good luck to all newcomers to trading and may your careers be for you as long and as rewarding and as fruitful as mine has been for me!..

What a loss to BP that will be Manxx! You have so much knowledge to share and I’m sure there are many people here who are also interested in oil and in need of different perspectives. I’ve enjoyed your thoughtful and insightful posts (and this thread) and wish you well. Between the walks on your beautiful frozen lakes I hope you will find the time to pop back in occasionally ?:slight_smile:

Indeed - I agree with your entire post; thank you.

(I’m sorry not to have taken more part in this thread, by the way - I haven’t been so well, this week - and sorry to have seen Manxx’s post above only this morning :8: ).

told you a year ago manxx, once you go commodities you never go back to forex.

you should have listened to my advice earlier :stuck_out_tongue:

heres another advice (i didnt read the entire thread, so excuse me if you already mentioned it etc)
become a master in reading the cot report.
especially in commodities its the best tool you can ever find.

yes forex forum.
wish a happy time and sucess everyone trading 1/100 of a cent.

Hi Turbo!!! been a long time! :slight_smile:

You are probably right there! :smiley:

I just got [I][U][B]so[/B][/U][/I] bored with forex. Nothing else but Brexit (will it/won’t it work), Trump (will he/won’t he make US great again), EU elections (will they/won’t they be populist), add a sprinkling of terrorism issues here and there and a stumbling from one Central Bank statement to another and I wasn’t sure whether to be depressed or just hibernate for a few years…

But Crude Oil is a total industry, so many things to learn and wonder at besides just the price - it is [I][B]exciting[/B][/I]! :).

But, alas, it is (naturally) of no interest to anyone here, so I took it “home” and am building my own pdf on it instead of posting here where it is just in everyone’s way.

But one thing I do [I][U]still [/U][/I]enjoy about this site is the quotations at the bottom of each page. By way of example, I’ll leave you with a slightly modified one that I thought was funny:
[I]
“Trading is one percent inspiration and ninety-nine percent perspiration.”
[/I]

Ok, Jazzman, so if you have got this far from Turbo’s thread then: welcome! :slight_smile:

I ceased posting here since it seemed a bit selfish to occupy space concerning a commodity that is only of interest to me on a site dedicated to forex, but if it interests you, too, then that makes two of us - which maybe then constitutes a quorum? :slight_smile:

Not to say three of us, which constitutes a quorum 50% larger than the aforementioned one. :slight_smile:

Lexy, you could never be only 50% of anything! rather,at least 500%! :slight_smile: