Oil Output Cuts in 2017 - How to Trade the First Quarter

Oil Output Cuts in 2017 - How to Trade the First Quarter

By Joseph Rokop

OPEC and non-OPEC members have agreed to cut their total oil production over the course of 2017 to an average of approximately 1.7 million barrels per day (bpd).

Saudi Arabia, the world’s oil kingpin, and has pledged to implement its’ share of the cuts immediately in January and Saudi Arabia’s Gulf Allies are expected to do the same. Non-OPEC countries, such as Russia, will be executing their cuts more gradually over the first half of the year.

Evidence of the production cuts should slowly impact the supply/demand balance going into the second and third quarters which will then be evident in oil's price. 

From a demand standpoint, fuel consumption in North America generally increases as the weather warms and we shift into driving season.  In addition, Saudi Arabia fuel consumption increases in the summer months as a result of AC usage in the Middle East.

Why It’s Important to Track and Analyze Your Trades

Why It’s Important to Track and Analyze Your Trades

by Edify Trading

Expert traders typically track and review their trades consistently. On the one hand that may seem like a lot of work and of course no one wants to experience or relive the occasional day of losses. However, there are real, concrete benefits to tracking and reviewing your trades.

First and foremost, analyzing your trades helps you define who you are as a trader.  Theoretically, each trader is either a buyer or a seller, a bull or a bear. That characteristic certainly does not mean that as a buyer you only go long.  But if you do have a tendency to go long, and you record your behavior over time, you’ll be able to track your success rate in going long. Thus, if going long consistently surpasses going short, inherently you’re a bull.

Another key to analyzing your trades is the use of a trading journal. As a trader one needs to have a trading plan which include goals and set targets. A trading journal will not only allow you to assess the overall goals and performance of your trading activities in an organized fashion, but will also help clarify your strengths and weaknesses as well as determine your ability to handle pressure. Journaling is very valuable for methodology verification and historical records which allows you to look back over your trades to determine precisely what was affecting your results.

This Thing May Get Pummeled....

This Thing May Get Pummeled....

by Joseph Rokop

Premise

On Holiday Mondays we generally see an overreaction to any weekend news.  If there is a large move due to lack of volume, as we see on holidays, look for a large correction the next day, Tuesday.

Analysis

Today, Crude entered a price discovery zone and hit significant resistance at 51.50.  Going into Tuesday, beware of buying in the 51.00-51.60 region as we've established a pivot point around 51.37.

Today's Outlook

If we stay here the remainder of the day, this theory should hold that much more true. I will be playing VERY small in this HVA with only 1 or 2 futs.  

How to Manage a Meandering Market: Trading Execution 2016

How to Manage a Meandering Market: Trading Execution 2016

By Joseph Rokop

Since the beginning of the second quarter here in 2016, I've expressed my concerns about the lack of a clear breakout in crude. Now, as we head into the middle of the third quarter, it seems not much has changed. Over the course of the next six to eight months, our long term swing trading opportunities may be severely limited. We will most likely settle into a highly congested volume area (HVA) around the 45.00 level at +/- 4.00 with 2.00 extensions until the OPEC meeting in Vienna on November 30th. 

Javier Blas, a Bloomberg Analyst, also states that we will most likely trade within this tight range. However, Javier believes the top of the range could be upwards of 60.00/bbl which is in fact outside of my HVA level. I would, perhaps, agree that a temporary range extension is possible if the potential oil production freeze by OPEC and Russia does in fact occur.  

I will be playing the potential breakout to the upside as that has a much larger extension ceiling while also keeping a close eye on all news out of the Middle East and Russia. In the event the freeze does get passed, the upward blast will likely be short lived and we will fall back into a slightly higher HVA range around the 52.50 level at +/- 2.50 with 1.00 extensions.

Demystifying The Supply Side of Oil: Fall 2016

Demystifying The Supply Side of Oil: Fall 2016

By Joseph Rokop

The supply side of oil can be quite confusing because of the number of factors and variables that influence the ebb and flow of this particular commodity.  This year global production continues to expand despite the oil industry's overall cuts to investment.  

Non-OPEC production has actually decreased across the board.  The United States has scaled back production by over 1 million barrels per day since April of 2015.  China and Latin America have also seen declines in production rates.

Yet the world still has a glut of petroleum as OPEC countries have stepped in and filled the void left by other oil majors. The International Energy Administration (IEA) reported that Iran, Iraq and Saudi Arabia have dramatically scaled up production in the Middle East.

Was the Recent “Biggest Weekly Crude Stock Draw" Actually Real?

Was the Recent “Biggest Weekly Crude Stock Draw" Actually Real?

By Joseph Rokop

Shock and awe reigned this past week in the Crude market. There are times when we see an extreme headline that shocks the market into a state of huge volatility, initiating massive moves that seem extreme. Last week on September 7th we saw just that.

According to the Energy Information Administration (EIA), U.S. crude stocks plummeted over 14 million barrels for the week ending September 2nd due to Tropical Storm Hermine, making it the biggest weekly drawdown since 1999.  

For those of you following the Crude Market this quarter, you’ve no doubt read a bevy of information about the potential Oil Production Freeze by OPEC and non-OPEC countries such as Russia.  The media has constantly gone back and forth on this issue, injecting a muck of confusion into the mix for the average retail trader. 

It’s a Cruel Summer for Crude

It’s a Cruel Summer for Crude

By Joseph Rokop

This summer has been an interesting one to say the least for crude. When I saw this article about gasoline and distillate stockpiles sitting in bizarre territory I just had to take a look.

THIS SUMMER’S BIZARRE STATE OF CRUDE

One of my favorite authors is John Kemp, a Reuters Market Analyst, who states that gasoline stocks have actually shown an “unusual counter-seasonal build up” in summer months. Whereas distillate stocks have actually exhibited an “uncharacteristic draw down” in summer months.

Logically, gasoline stockpiles would wane in the summer due to driving season (as demand and consumption is on the rise) and distillate stockpiles would build due to warm weather in the Northern Hemisphere (as demand and consumption drops). But according to the U.S. Energy Information Administration this is not the case.

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