Trading Note
June 10th, 2009WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
UPDATE 2: I Pared It Down at $39.60
I sold 80% of my position at $39.60, and stop-limited the rest at $39.
Shine on you wild diamond.
UPDATE 1: Stop Didn’t Get Hit
I didn’t get taken out yesterday and it’s up again today. I’m moving the stop up to $39.
“Pigs get slaughtered, Kevin. Pigs get slaughtered.”
That’s all I hear in my head as I look at that chart.
—End Update—
I’ve set a stop at $38.50 on my entire USO position. This has been an outstanding trade for me, and I want to keep it that way. I don’t like the way these indicators look and there’s a shooting star on the WTI 2 hour. That’s it for me until these oscillators unwind hard.
If it should manage to crank higher again, I’ll move the stop up.
Via: Wall Street Journal:
Crude futures surged above $71 a barrel Wednesday as an unexpectedly large decline in U.S. oil inventories confirmed that supplies are beginning to tighten.
Light, sweet crude oil for July delivery recently traded $1, or 1.4%, higher at $71.01 a barrel on the New York Mercantile Exchange. July crude set an intraday high of $71.65 a barrel, a seven-month high. Brent crude on the ICE Futures exchange traded 76 cents, or 1.1%, higher at $70.38 a barrel.
Oil prices began to rise late Tuesday after the American Petroleum Institute, an energy industry group, reported a 6 million-barrel draw on crude stockpiles in the week ended June 5. Analysts surveyed by Dow Jones Newswires had given an average forecast of a 700,000 barrel decline.
The Department of Energy will release its oil inventory data at 10:30 a.m. EDT.
“The market was surprised,” said Morgan Downey trader at Standard Chartered. “We are going to $90 dollars before OPEC opens the spigots.”
The Organization of Petroleum Exporting Countries has cut production by at least 3 million barrels a day, well above the amount that the global economic downturn has reduced demand, Downey said.
“Until OPEC increases production or consumers are reluctant to bear high prices we are going to see an increase in the crude price,” Downey said.
Prices topping $100 a barrel could prompt OPEC to raise production, a Kuwaiti official said Wednesday.
“All OPEC members are concerned about high oil prices and they do not want very high prices,” Nawal Al Fuzaia, the oil ministry’s assistant undersecretary of economic affairs, told Zawya Dow Jones. Fuzaia said $100 is a very high price for oil and a price range of $70-75 would be suitable for investment in oil production.
While analysts are expecting oil inventories to fall in U.S. government data, they also predict an 800,000 barrel increase in gasoline stockpiles, while distillates, including heating oil and diesel, are seen increasing by 1.5 million barrels. Analysts see U.S. refineries operating at 86.8% of capacity, up 0.5 percentage point.
Some market participants are still wary of the spike in oil prices in recent months, as demand remains weak and inventories were recently at their highest since 1990. The oil price has more than doubled from their February low.
The weakening of the dollar against the euro has also boosted the oil price in recent days, as investors are looking at commodities as a hedge against inflation. But tightening supplies are currently the main factor, traders said.
“The weakness in the dollar is taking a back seat over the inventory data today,” said Peter Donovan, vice president at Vantage Trading said.
Front-month July reformulated gasoline blendstock, or RBOB, recently traded 97 points, or 0.5%, higher at $1.9764 a gallon. July heating oil recently traded 1.41 cents, or 0.8%, higher at $1.8217 a gallon.
did you get out? USO was over $39 at one point today. I am liking my (meager) returns from this trade but am also considering locking in gains.
It’s still open; came within 17 cents of hitting it. I think. Anyway, $39.04 just now.