A view on commodities
- Thread starter DSM
- Start date
Hi PreSap,
Saudi Arabia has made a statement yesterday that it is willing to raise output to meet further demand. That has had a negative impact on crude. Quoted here :
Exclusive: Saudi Arabia ready to raise oil output further to meet demand - Reuters, June 11
http://finance.yahoo.com/news/exclusive-saudi-aramco-says-no-113928183.html
Saudi Arabia is ready to increase its oil output in the coming months to a new record to meet a rise in global demand, despite increased domestic use, a senior state oil company official said on Thursday. Ahmed Al-Subaey, Saudi Aramco's executive director for marketing, told Reuters the world's top oil exporter was already talking to prospective Indian buyers for additional oil.
Saudi Arabia increased production in May to around 10.3 million barrels per day (bpd) - its highest rate on record - as a result of increased global demand. Any increase in production in a market which already faces a glut would signal that OPEC is unrelenting in its decision to maintain global market share. The strategy is seen as a major factor in the sharp decline in oil prices over the past year.
"We have plenty of crude... You are not going to see any cuts from Saudi Arabia," Al-Subaey said after meeting Indian oil officials in New Delhi. Saudi Arabia has historically lowered its oil exports during the summer months when domestic demand peaks due to scorching temperatures and the need to power air conditioning. "We have enough in reserves and we have enough production to do so. We will match whatever the need is. If the market requires it, we will provide it," he added.
Last Friday, the Organization of the Petroleum Exporting Countries agreed to leave its output policy unchanged for another six months. India was expected to be the main demand growth engine in the second half of this year while Chinese oil demand was stabilizing, The Aramco executive added.
***
One may wonder why Saudi Arabia is making statements that will have a negative bearing on Crude prices, it's main export earner. It's simple really, Saudi Arabia's strategy is to ensure that crude prices are low enough to hit/hurt shale oil producers in the US - even if it means taking some pain for itself in the short run. How long can this strategy be successful is questionable though....
Saudi Arabia has made a statement yesterday that it is willing to raise output to meet further demand. That has had a negative impact on crude. Quoted here :
Exclusive: Saudi Arabia ready to raise oil output further to meet demand - Reuters, June 11
http://finance.yahoo.com/news/exclusive-saudi-aramco-says-no-113928183.html
Saudi Arabia is ready to increase its oil output in the coming months to a new record to meet a rise in global demand, despite increased domestic use, a senior state oil company official said on Thursday. Ahmed Al-Subaey, Saudi Aramco's executive director for marketing, told Reuters the world's top oil exporter was already talking to prospective Indian buyers for additional oil.
Saudi Arabia increased production in May to around 10.3 million barrels per day (bpd) - its highest rate on record - as a result of increased global demand. Any increase in production in a market which already faces a glut would signal that OPEC is unrelenting in its decision to maintain global market share. The strategy is seen as a major factor in the sharp decline in oil prices over the past year.
"We have plenty of crude... You are not going to see any cuts from Saudi Arabia," Al-Subaey said after meeting Indian oil officials in New Delhi. Saudi Arabia has historically lowered its oil exports during the summer months when domestic demand peaks due to scorching temperatures and the need to power air conditioning. "We have enough in reserves and we have enough production to do so. We will match whatever the need is. If the market requires it, we will provide it," he added.
Last Friday, the Organization of the Petroleum Exporting Countries agreed to leave its output policy unchanged for another six months. India was expected to be the main demand growth engine in the second half of this year while Chinese oil demand was stabilizing, The Aramco executive added.
***
One may wonder why Saudi Arabia is making statements that will have a negative bearing on Crude prices, it's main export earner. It's simple really, Saudi Arabia's strategy is to ensure that crude prices are low enough to hit/hurt shale oil producers in the US - even if it means taking some pain for itself in the short run. How long can this strategy be successful is questionable though....
I remember reading somewhere that the cost of production of shale is ~ 30 dollars ... so for the Saudis to flush the American shale producers out of business Crude would have to sustain below 30 for quite some time ...
also i really doubt if the Americans will let Saudi Arabia to hurt its economic interests by causing mayhem in its Shale gas industry ... we could possibly see operation Saudi freedom if crude oil hits $25 ...
also i really doubt if the Americans will let Saudi Arabia to hurt its economic interests by causing mayhem in its Shale gas industry ... we could possibly see operation Saudi freedom if crude oil hits $25 ...
PreSap,
Also posting 4 crude charts. First two are intraday 5M and 15M. The other two are for taking direction. One is 30Day 240M Chart, 5EMA - (which is actually 20EMA on 60M chart. However 240M chart gives a more clear representation) I also look at the daily TF. If all four charts are in synch, it is perfect setup, though as day traders we need to trade as per signals in the smaller TF, (5M and 15M) with crude being volatile, it does not take much time for reversal to happen, and so we need to keep a small SL.
Also posting 4 crude charts. First two are intraday 5M and 15M. The other two are for taking direction. One is 30Day 240M Chart, 5EMA - (which is actually 20EMA on 60M chart. However 240M chart gives a more clear representation) I also look at the daily TF. If all four charts are in synch, it is perfect setup, though as day traders we need to trade as per signals in the smaller TF, (5M and 15M) with crude being volatile, it does not take much time for reversal to happen, and so we need to keep a small SL.
Hi Nirav,
The cost of production of shale oil may be different for different producers. Had read sometime back that new rigs are not being ordered/planned, there are lay offs at marginal fields, and the operational rig count is showing a negative trend.... The low cost producers will survive though....
As regards political scenario there are contradictions - everybody (but the US consumers, US Auto industry) wants higher prices, but higher prices attract more producers. And the reality (in my view) is that US may not have as much influence over Arabs - though they have symbiotic relationship (feed of each other) America today, inspite of its economic (or falling economic) might and military poweress, is getting shown thumbs by countries right from Turkey, North Korea, Iran, Syria, Pakistan, Venezuela, Cuba, Afghanistan, Iraq etc.... not to speak of Mexican drug gangs and ISIS etc. And we are not even talking about Putin/Russia and China.... It's a complicated world we live in....
The cost of production of shale oil may be different for different producers. Had read sometime back that new rigs are not being ordered/planned, there are lay offs at marginal fields, and the operational rig count is showing a negative trend.... The low cost producers will survive though....
As regards political scenario there are contradictions - everybody (but the US consumers, US Auto industry) wants higher prices, but higher prices attract more producers. And the reality (in my view) is that US may not have as much influence over Arabs - though they have symbiotic relationship (feed of each other) America today, inspite of its economic (or falling economic) might and military poweress, is getting shown thumbs by countries right from Turkey, North Korea, Iran, Syria, Pakistan, Venezuela, Cuba, Afghanistan, Iraq etc.... not to speak of Mexican drug gangs and ISIS etc. And we are not even talking about Putin/Russia and China.... It's a complicated world we live in....
Hi Ankur,
Usually, I take a break after NSE closes on Fri. Today however, could not go out, so was at home.... It's a personal choice, no other reason....
Re. your query, Supertrend is a good tool, but as with all tools must be clear as to when it can be used..... to give an analogy, one cannot use chisel at all times, but only when required.... so too with hammer or a saw etc. Similarly, Supertrend has to be used as a guide to trade, as it will give a lot of false signals in a rangebound market. Just because Crude or anyother underlying is above/below Supertrend setting (or of anyother indicator) it does not mean that Crude has to go more lower or higher.... Understanding this, will save you a lot of money and grief. Hence you should have a system to trade rangebound market and another to trade trending market. For this you will have to note down what constitutes either.....
Usually, I take a break after NSE closes on Fri. Today however, could not go out, so was at home.... It's a personal choice, no other reason....
Re. your query, Supertrend is a good tool, but as with all tools must be clear as to when it can be used..... to give an analogy, one cannot use chisel at all times, but only when required.... so too with hammer or a saw etc. Similarly, Supertrend has to be used as a guide to trade, as it will give a lot of false signals in a rangebound market. Just because Crude or anyother underlying is above/below Supertrend setting (or of anyother indicator) it does not mean that Crude has to go more lower or higher.... Understanding this, will save you a lot of money and grief. Hence you should have a system to trade rangebound market and another to trade trending market. For this you will have to note down what constitutes either.....
Hi DSM,
I remember some days before you mentioned that u are not trading or friday or half day. Any specific reason for the same.
As today i have seen too many wrong signals on 5M time frame on crude
please suggest as i am using supertrend with filter
thanks
I remember some days before you mentioned that u are not trading or friday or half day. Any specific reason for the same.
As today i have seen too many wrong signals on 5M time frame on crude
please suggest as i am using supertrend with filter
thanks
PreSap,
Have previously traded regularly the counter move with a good % of hits once the market has weighted in on the inventory data. I.e what we essentially do is wait for the market reaction in either direction, check for some congestion bars and then take a contra-trade. The Target will be 2x+ the SL, which generally will be a little higher/below a single 5M bar. I do not trade inventory these days - as there is much of timelag and volatility, and hence consider it an avoid, which I guess makes it 1-0 for Algo vs. Human traders. However, I would trade inventory data if there is a good setup with inventory data and HTF in agreement with the 5M chart....
BTW there is news of Iran nuclear deal falling in place with P5+1 members likely to get into an agreement by the deadline of 30th Jun. If this happens, Iran will be able to offload much of its oil stored in its supertanker fleet which if happens, can cause a down trending move in Crude. Crude is sideways, (or in a congestion zone, having breached the 20 DMA (downwards) twice. So watch out for crude around that date....... and do follow up on news of the Iran Nuclear deal.
Have previously traded regularly the counter move with a good % of hits once the market has weighted in on the inventory data. I.e what we essentially do is wait for the market reaction in either direction, check for some congestion bars and then take a contra-trade. The Target will be 2x+ the SL, which generally will be a little higher/below a single 5M bar. I do not trade inventory these days - as there is much of timelag and volatility, and hence consider it an avoid, which I guess makes it 1-0 for Algo vs. Human traders. However, I would trade inventory data if there is a good setup with inventory data and HTF in agreement with the 5M chart....
BTW there is news of Iran nuclear deal falling in place with P5+1 members likely to get into an agreement by the deadline of 30th Jun. If this happens, Iran will be able to offload much of its oil stored in its supertanker fleet which if happens, can cause a down trending move in Crude. Crude is sideways, (or in a congestion zone, having breached the 20 DMA (downwards) twice. So watch out for crude around that date....... and do follow up on news of the Iran Nuclear deal.
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