Ricks Picks

Don’t Believe Oil Prices Have Discounted the Worst


Here’s a headline that cries out to be rebuked: Oil Traders Have Already Priced in the Effects of Sanctions. I’m not so sure myself — am on record, actually, with a prediction that prices will top $80 a barrel before this run-up ends. I should mention that the headline was not in some rinky-dink newspaper that gets all of its non-local stories from the  Associated Press, but in the Houston Chronicle, which covers the energy sector insightfully and with great diligence. A companion story on the front page notes that Texas shale drillers could benefit from market disruptions caused by Trump’s planned sanctions against Iran, which is a major energy producer. The Chronicle story does make clear, albeit unintentionally, that if crude oil prices should continue to rise, it would have to be for some reason other than the sanctions. What the markets have not fully considered, as I wrote here earlier, is the possibility of war between Iran/Hezbollah and Israel. If it’s coming, energy markets are going to react in a way that will make the recent run-up in prices seem relatively mild.

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none May 10, 2018, 6:11 am

Backwardation is in place for the CL market and yet rising prices continue. More so for the longer time frame as mention CL started with a very large ‘short COT’ setup not really suitable over the long haul from the yearly lows to continue but it continues higher. This same process was in play during the late 2007 run to the highs in CL, suggesting COT’s where ‘caught to short’ and the ‘run to cover’ was created at a more aggressive rate upward.

COT’s numbers at major lows run towards the long side and then while rising selling is seen. Sometimes markets move this way as the Euro in 2007/2008 also in the same time fame and to note happening today.

There are several triggers in place, but mid May we are going to see a larger shift that will combine all these triggers for lower equity pricing. It will be fundamentally or technically and to the longer and larger degree.

This will confirm that the long Bull market has been killed. On a historical event scale I see it to be quite negative and not just a point where you look back and say ‘oh yea’, that might have been the place where everything change. In fact it will be like a light house beam of light from a far.

America has had a great shift and it is announcing it very soon. Suggesting such means that the next 15% INDU lower will meet or come close to a INDU ‘cave in’ number so this is a place to really observe.

The DXY has also a ‘cave in’ number at the 88 level, and the recent lower 20 week high (yesterday) about 3.4% from the recent low is in line trading and at the over head supply level of the ”’3 year”’ low ‘yearly evening star pattern’. The same as in 2003 just unreal.

Have a great day Rick.

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