Crude Oil Tanking

[Kevin 10]

I do not trade oil but have been observing it on a daily basis for the last few months. Oil has tanked from approx $80 in July $67. Is there any fundamental reason behind this?

 

Is this move a correction? What is your opinion on oil prices and for a trader who is considering going long. Thank you

[Soultrader 12]

I do not trade oil but take a look at this article by specmav.

 

http://www.traderslaboratory.com/forums/general-discussion/202-oil-supply-demand.html

[Follow The Trend 10]

I dont trade oil directly, although it has an effect on all of our lives, whether this be the price of fuel, or the cost of food in the shops (higher transportation costs).

 

I think that the oil price will have another run soon, as the Middle East situation is getting worse. It just takes one of the big Middle East countries to stand up against America, and we have big problems. Middle East against the West - the "warm" war?

[ezduzzit 10]

Hmm.. I wish I could offer you a succinct estimate of when crude will return to $70 or $80 a barrel or greater, but if I was really that good at projecting price of such commodities, you would have to pay me more than you would make on your trades to get me to divulge it heh, heh.

 

I think we can rest assured that the "oil games" are far from over and that present crude prices won't stay in the cellar for long.

 

I daresay that nobody who really knows the answer to this quandry shall breathe even the slightest whisper to you about when it shall happen. Some say love makes the world go around, while the oil industry execs are quite certain that is pure poppycock because they own most of the world and they know better!

 

Is going long on crude a good idea while it is still in the low $60's? Well I think that comes down to the same three questions you ask yourself before every trade:

 

1) What is your target profit;

2) How much are you prepared to risk; and

3) How long can you wait?

 

Any of us can hazard a guess after reading pronouncements from the various gurus, but as you have probably already seen, gurus seldom agree on very much.

 

No doubt oil "could" conceivably go down to $50 a barrel soon after you go long. However, I suspect that is not a highly probable scenario. Why is it you want to trade crude? Are you convinced it is going up soon and you just don't want to miss the big jump this time? If you are not knowledgeable in this commodity but you are still intent upon trading it, then find out who has the best record of profitable trade recommendations and take a small position piggybacking on their recommendations and see how it goes.

 

Happy Trading

[wsam29 10]

Longs liquidating to book profits, hedgers selling at high prices, late longs getting squeezed, shorts hitting the market.

 

Start preparing for an up cycle since spring is around the corner with these depressed levels.

 

Use Open Interest and volume for clues when the market may turn.

 

I for one do not have the same analyitcal resources as these big funds and players so just follow in their footsteps.

[The Bear 10]

I do not trade oil but have been observing it on a daily basis for the last few months. Oil has tanked from approx $80 in July $67. Is there any fundamental reason behind this?

 

Is this move a correction? What is your opinion on oil prices and for a trader who is considering going long. Thank you

 

I'm not sure about fundamentals since I ignore them to some degree, but I do listen to world events a bit....but in my opinion it is a correction and oil is still in a bull market overall. As far as going long...I have such a short term view, but I do think higher oil prices eventually.

 

Around christmas time alot of people thought crude was going long, then WACK more downside. We recovered very strongly though from that last down leg, so i'm pretty bullish on that. You never know though with oil, it may turn south in a heartbeat and fleece those bulls

 

Are you a commodity speculator? Are you considering going long CL contracts? These are what I trade.

[dalby 10]

i have a lot of oil in in my IRA.

 

i occasionally trade it.

 

my understanding (and I got this from a pit trader) is that a big part of the decline in oil was a cascading effect caused by MASSIVE hedge fund forced liquidation.

[The Bear 10]

Interesting. I could completely see that if that was the case. The real bullet to the temple was JAN 3 2007. There was MASSIVE selling this day and it literally 'spilled over a cliff'. I was actually almost bearish on DEC 26 2006, when I got stopped out of a swing trade...for a loss.

 

Anyhow the rally from the low in oil is huge. There was numerous times where I was still bearish on oil even up to the end of january...but I was getting no follow through.

 

The action right now though is in Gasoline. Has anyone been trading this? Take a look at the RBOB contract.

[dalby 10]

i've been a steady accumulator of oil on all weakness

 

i really see the downside risk in oil as much smaller than the upside potential and i like its disconnect from the equities markets.

 

also, a little geopolitical strife could send it soaring.

 

interestingly, on a longterm basis (decades), oil prices are POSITIVELY correlated with equity prices, however, the inverse is/was true in the much more recent past, which has led a lot of traders to falsely believe that lower oil helps equities, and higher oil hurts them

[The Bear 10]

i've been a steady accumulator of oil on all weakness

 

i really see the downside risk in oil as much smaller than the upside potential and i like its disconnect from the equities markets.

 

also, a little geopolitical strife could send it soaring.

 

interestingly, on a longterm basis (decades), oil prices are POSITIVELY correlated with equity prices, however, the inverse is/was true in the much more recent past, which has led a lot of traders to falsely believe that lower oil helps equities, and higher oil hurts them

 

Oh I totally agree with you. I see big time upside potential for oil. The next hezbollah or middle east incident could send it soaring again. I know this is pure guessing....but I really believe we MIGHT see 100.00 barrel oil in our lifetime.

 

When you say you are a steady accumulator....are you using the USO fund or CL ?

 

This site is awsome...but I wish there were more people that would talk about commodities.

[dalby 10]

i use USO for my IRA

 

i will sometimes trade QM (the mini) in my trading account