MCX CrudeOil Fundamental News Discussion.

#1
Hello Trader,

I am starting the Thread to understanding fundamental news effect on MCX crude price.

The benefit of the thread is going to a small and new trader,so that they can make safe or positional trade.

Like every Wednesday 8pm inventory makes effect on crude prices,number of news around the world that are fixed by their time and their effect are not can be ignore.

So dear trader i invite all of you to make here the list of such affair by time and what can be possible is they are more than expected or in negative.

Let make crude trade more safe and fruitful.
 

smartcat

Active Member
#2
Extremely difficult to do positional trades on commodities using Fundamental analysis. Looking at inventory data or news alone will result in losses. Crude prices are dependent on whole lot of unrelated factors like Middle Eastern tensions, strength/weakness of US economy, hurricanes, Chinese Export data, Europe jobless claims and so on.

But do you know what crude prices depends heavily on? The USDINR exchange rate - because crude prices are denominated in USD, but you trade in INR. You then have to analyze FII inflows into India, current account deficit, RBI interest rates etc etc.

It's best to take the technical analysis route.

But if you don't want to do that (for some reason), buy & hold crude oil futures & roll it over every month - Jim Rogers style. Crude oil prices have historically gone up 10% per year in the past 20 years in Indian Rupee terms. Since you are taking 95% leverage in the futures segment, your returns will be pretty decent - even after you account for the phenomenon of Contango (do a Google search for what it means). But you need to have enough capital to hold on to your positions, because crude oil is pretty volatile.
 

bpr

Well-Known Member
#3
Extremely difficult to do positional trades on commodities using Fundamental analysis. Looking at inventory data or news alone will result in losses. Crude prices are dependent on whole lot of unrelated factors like Middle Eastern tensions, strength/weakness of US economy, hurricanes, Chinese Export data, Europe jobless claims and so on.

But do you know what crude prices depends heavily on? The USDINR exchange rate - because crude prices are denominated in USD, but you trade in INR. You then have to analyze FII inflows into India, current account deficit, RBI interest rates etc etc.

It's best to take the technical analysis route.

But if you don't want to do that (for some reason), buy & hold crude oil futures & roll it over every month - Jim Rogers style. Crude oil prices have historically gone up 10% per year in the past 20 years in Indian Rupee terms. Since you are taking 95% leverage in the futures segment, your returns will be pretty decent - even after you account for the phenomenon of Contango (do a Google search for what it means). But you need to have enough capital to hold on to your positions, because crude oil is pretty volatile.
nice post.
what if the long term trend changes?
what if some alternative fuel arrives?
Crude oil can go to zero in no time.
I am skeptical for long term holding crudeoil.
 

smartcat

Active Member
#4
nice post.
what if the long term trend changes?
what if some alternative fuel arrives?
Crude oil can go to zero in no time.
I am skeptical for long term holding crudeoil.
Commodities can never go to zero. Even salt, that is in abundant supply, has a price. Anyway, I don't think anybody will hold crude oil for long term, other than Jim Rogers kind of "investors". I held crude oil futures for one year, and it gave brilliant returns. But soon, as I realized that trading crude oil using technical analysis is better! ;)

But if anybody decides to hold crude for the long term, and are worried about price crashes because of alternative fuels or more crude discoveries, then they can easily hedge their positions by investing in Indian stocks (Index mutual fund, for example)

Because, if the long term trend (because of abundant supply/alternative fuel) of crude oil is down, then half of India's problems will be solved. Crude oil & its end products cause more than half the inflation we have. Inflation will fall to 3%. RBI will lower interest rates. Consumers will borrow & spend more. Industrialists will invest more. Nifty will then go into another orbit :D
 

bpr

Well-Known Member
#5
Commodities can never go to zero. Even salt, that is in abundant supply, has a price. Anyway, I don't think anybody will hold crude oil for long term, other than Jim Rogers kind of "investors". I held crude oil futures for one year, and it gave brilliant returns. But soon, as I realized that trading crude oil using technical analysis is better! ;)

But if anybody decides to hold crude for the long term, and are worried about price crashes because of alternative fuels or more crude discoveries, then they can easily hedge their positions by investing in Indian stocks (Index mutual fund, for example)

Because, if the long term trend (because of abundant supply/alternative fuel) of crude oil is down, then half of India's problems will be solved. Crude oil & its end products cause more than half the inflation we have. Inflation will fall to 3%. RBI will lower interest rates. Consumers will borrow & spend more. Industrialists will invest more. Nifty will then go into another orbit :D
Hmm agreed to some extent.
But during market crash of 2008 both Crude oil and market tanked so no effective hedging can be done for these cases.
 

smartcat

Active Member
#6
Hmm agreed to some extent.
But during market crash of 2008 both Crude oil and market tanked so no effective hedging can be done for these cases.
Crude oil crash in 2008 was because of global financial crisis, not because of alternative fuel discovery or new oil discoveries. My hedging comment is applicable only to the above two scenarios.

If you want a hedge against global risk events, you need invest in Gold and USD (both can be done via taking futures positions). Gold went up, and USD went up (against the rupee) in 2008 - 2009.
 

ashu1234

Well-Known Member
#7
Hmm agreed to some extent.
But during market crash of 2008 both Crude oil and market tanked so no effective hedging can be done for these cases.
Crude oil crash in 2008 was because of global financial crisis, not because of alternative fuel discovery or new oil discoveries. My hedging comment is applicable only to the above two scenarios.

If you want a hedge against global risk events, you need invest in Gold and USD (both can be done via taking futures positions). Gold went up, and USD went up (against the rupee) in 2008 - 2009.
Scenario building is always fascinating and no two scenario may exactly work out same in future. Earlier Crude and Nifty moved in sync together, relation being growth the connecting factor. It was argued that economic activities are at its peak and emerging economies will consume more and to fulfill their need more oil will be required as it is the major source of power, no matter what if any alternative source come by in future its hard to replace machinery, power plants and transportation means which are already using oil based engines. Then came the crises and now again the rebound. Yes in short term crude oil may ease pressure on our import bills but still crude usage will always be the lead indicator of the growth. Its hard to take contrary call on Index and crude, see present scenario too our Index and crude both are in the upper band.
 
#8
I am very happy to see that people are taking interest and about the topic and some them left their valued opinion, I really thankful to them.

But again i want some basic fundamental knowledge to share here from experienced people so that new and small trader can get benefit of that,as i said in the previous post like data time schedule that can affect the crude price.

such things more thing are missing here,
give your best of knowledge so that society can get benefited.

Hope lot of reply ....
 
#10
I use technical analysis for crude oil trading.
I use Ichimoku standard settings for Crude Oil 5min chart. Just entering on crossover in favour of cloud is best entry. B.Band(20,2) is used to identify Flat market and do not enter there. ADX(14) is used to identify end of trend.
Consider 30min chart horizontal lines as major support/resistance as it is major timeframe for intraday.
That's it! I never failed in this strategy.
You can try it and evaluate.
 

Similar threads

Intraday Higher Leverage

Save up to 90% in brokerage and get higher leverage for intraday trades.

Name:Phone:
Email:City:
State:
Are you a day trader?