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Crude Oil

Oh Crude!!What's with all this volatility!To begin with, if you did see my earlier post on Crude, I would want to admit to have counted the waves wrongly. What i expected to be a third wave top was in fact a wave v top and the pullback i was considering to be wave iv pullback turned out to be a much deeper wave II pullback. If you follow Elliot waves you would have gotten an idea what i am talking about, if not then do not bother. Here is what is important thing to focus on. Where is the crude standing on this chart? It is at the most important spot that it could be at right now. i. this area of 73-75$ zone is a previously tested horizontal support/resistance zone. ii.$74.09 is the 61.8% retracement level of the May-Sep rally. iii. this is also a area of support from the lower boundary of the rising channel. This therefore is the most important confluence zone for crude and the level that will determine whether it will head to the 60$ mark or the 100$ mark from here. I have made the necessary changes to my wave counts and I am definitely on the $100 team and not the 60$ team. Wave iii will achieve wave i equality at $107(Elliot wave projection). On the downside the swing low of 72.22 is the crucial support level to watch out for.
TVC:USOILLong
by neeraj_2_sharma
Are Recession Fears Still Looming? Gold is Flying Gold has enjoyed an impressive rally over the last 5 weeks - up 6% in the month of October. Historically, gold has always been the quintessential “flight-to-quality” asset. Whenever there are geopolitical or macroeconomic fears permeating financial markets, gold has outperformed. As it stands, December gold is on the brink of retesting the psychologically significant $2,000/oz level. So is the recent price strength evidence of investors’ fears of a looming recession? What other evidence would support this? www.tradingview.com Crude Oil is Crying Crude oil has fallen as sharply as gold has rallied. Since the swing high to 89.85 on October 29th, crude oil prices have fallen more than $13/barrel - settling at $72.90 on Thursday. Price contractions of this magnitude are typically demand driven, which would be another feather in the cap of demand growth fears on behalf of market participants. But, how could you explain the recent performance of the S&P 500, Nasdaq, and Russell 2000? In short - interest rates. As we near what is expected to be the end of the Fed’s rate hike cycle, equities have performed very well in anticipation of rates eventually coming down. The primary reason that the Fed would halt rate hikes, or begin lowering rates would come as a result of economic slowdowns. Stocks Are Strong All in all, the American economy has proven resilient. The rally underway in the equity markets has been substantiated by strong economic data, and disinflationary CPI readings. The proverbial “canary in the coal mine” could be consumer credit and lower-than-normal personal savings rates. However, there are very few signs of a robust economic breakdown coming in the immediate future in the United States. Check out CME Group real-time data plans available on TradingView here: www.tradingview.com Disclaimers: CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
COMEX:GC1!
by Blue_Line_Futures
WTI Crude oil front expirationOverview: with today's fall in price, having reached $73.80 support area, and with a divergence on RSI, we consider close the corrective structure ABC on the daily time frame. Strategy: Moderate bullish position's delta , Our current position's delta: +0.30 Bullish first target: $75.00/$75.30 Bullish second target: $76.00 Mandatory rebalancing level / Stop loss: on breakout of the daily's low Bearish first target: $73.00 Bearish second target: $72.20
NYMEX:CL1!Long
by DeltaZeroProprietaryTrading
Primer on Crude Oil Crack SpreadEver dreamt of being an oil refiner? Fret not. You can operate a virtual refinery using a combination of energy derivatives that replicates oil refiner returns. Crude oil is the world’s most traded commodity. Oil consumption fuels the global economy. Crude is refined into gasoline and distillates. Refining is the process of cracking crude into its usable by-products. Gross Processing Margin (GPM) guides refineries to modulate their output. Crack spread defines GPM in oil refining. This primer provides an overview of factors affecting the crack spread. It delves into the mechanics of harnessing refining spread gains using CME suite of energy products. UNPACKING THE CRACK SPREAD Crack spread is the difference between price of outputs (gasoline & distillate prices) and the inputs (crude oil price). Cracking is an industry term pointing to breaking apart crude oil into its component products. Portfolio managers can use CME energy futures to gain exposure to the GPM for US refiners. CME offers contracts that provide exposure to WTI Crude Oil ( CL ) as well as the most liquid refined product contracts namely NY Harbor ULSD ( HO ) and RBOB Gasoline ( RB ). Crude Prices Crude oil prices play a significant role in determining the crack spread. Refining profitability is directly impacted by crude oil price volatility which is influenced by geopolitics, supply-demand dynamics, and macroeconomic conditions. Higher oil prices lead to a narrowing crack spread. Lower crude prices result in wider margins. Expectedly, one leg of the crack spread comprises of crude oil. Gasoline Prices Gasoline is arguably the most important refined product of crude oil. Gasoline is not a direct byproduct of the distillation process. It is a blend of distilled products that provides the most consistent motor fuel. Gasoline prices at the pump in the US vary by region. Price differs due to differences in state taxes, distance from supply sources, competition among gasoline retailers, operating costs in the region, and state-specific regulations. CME’s RBOB Gasoline contract provides exposure to Reformulated Blendstock for Oxygenate Blending (RBOB). It is procured by local retailers, who blend in their own additives and sell the final product at pumps. RBOB is blended with ethanol to create reformulated gasoline. It produces less smog than other blends. Consequently, it is mandated by about 30% of the US market. RBOB price is thus representative of US gasoline demand. Each CME RBOB Gasoline contract provides exposure to 42,000 gallons. It is quoted in gallons instead of barrels. The contract size is equivalent to one thousand barrels like the crude oil contract. Distillate Prices Distillate or Heating Oil is another important refined product of crude oil. Distillate is used to make jet fuel and diesel. Demand for distillate products is distinct from gasoline demand. A substantial portion of the North-East US lack adequate connection to natural gas. Hence, the region depends on HO for energy during winters making HO sensitive to weather. CME NY Harbor ULSD contract ("ULSD”) provides exposure to 42,000 gallons of Ultra-low sulphur diesel which is a type of HO. ULSD contract is also equivalent to one thousand barrels. Chart: ULSD Price Performance Over the Last Twenty Years. TRADING THE CRACK SPREAD The crack spread can be expressed using the above contracts in three distinct ways: 1) 1:1 SPREAD This spread consists of a single contract of CL on one leg and a single contract of one of the refined products on the other. This spread helps traders to express their view on the relationship between single type of refined product against crude oil. It is useful when price of one of the refined products diverges from crude oil prices. 1:1 spread is also useful when there are distinct conditions affecting each of the refined products. 2) 3:2:1 SPREAD This spread consists of (3 contracts of CL) on one leg and (2 contracts RBOB + 1 contract of ULSD) on the other leg. The entire position thus consists of six contracts. It assumes that three barrels of crude can be used to create two barrels of RBOB and one barrel of HO. This trade is better at capturing the actual refining margin. It is commonly used by refiners to hedge their market exposure to crude and refined products. 3:2:1 spread is used by investors to express views on conditions affecting refineries. 3) 5:3:2 SPREAD Spread consists of (5 contracts of CL) on one leg and (3 contracts of RBOB + 2 contracts of heating oil) on the other leg. This spread captures the actual proportions from the refining process. However, it is much more capital-intensive. FACTORS IMPACTING CRACK SPREAD Seasonality, supply-demand dynamics, and inventory levels collectively impact crack spreads. Seasonality Mint Finance covered seasonal factors affecting crude oil prices in a previous paper . In that paper, we described that crude seasonality is influenced by variation in refined products demand. In summer, gasoline demand is higher, and, in the winter, distillate demand is higher. Seasonal price performance of the three contracts is distinct leading to a unique seasonal variation in various crack spreads. Summary performance of the three spreads is provided below. Chart: Seasonal price performance of Crude, its refined products, and their spread (excluding years 2008, 2009 and 2020 in which extreme price moves were observed) Refiners strategically time their operations based on seasonal trends, ramping up refinery capacity ahead of peak demand in summer and winter. This involves building up inventories to meet anticipated high demand. However, this preparation often results in a narrowed spread just before peak utilization. As the spread reaches its lowest point, refiners take capacity offline for maintenance. Subsequently, crack margins begin to expand as refined product supplies dwindle, aligning with decreased crude oil consumption. This results in a gradually increasing spread through high consumption periods. Supply/Inventories Supply and inventories of crude oil and refined products influence crack spreads. When inventories of refined products remain elevated, their prices decline narrowing the spread. When the production and inventory of crude oil is elevated, its price declines leading to a widening spread. On the contrary, low inventories of refined products can lead to a wider crack spread and low inventories of crude oil leads to a narrower crack spread. Demand Refinery demand has a self-balancing effect as higher refining requires higher consumption of crude which acts to increase crude oil prices. Demand for crude oil and refined products is broadly correlated. However, there are often periods when demand diverges on a short-term scale. Economic activity and available supplies drive demand for refined products. During periods of high economic growth, refined product consumption is robust pushing their price higher. Demand for refined products can precede or lag demand for crude oil from seasonal as well as trend-based factors. This lag can be identified using the crack spread. Sharp moves in crack spread pre-empt moves in the underlying which act to normalize the spread. CURRENT CONDITIONS There are two trends defining the crack spread currently: 1) Divergence in demand & inventories of gasoline and distillates: Low demand for gasoline is evident due to expectations of an economic slowdown while gasoline inventories remain elevated. Though, distillate consumption remains high as inventories are declining and lower than the 5-year average range. Chart: Divergence in inventories of distillate and gasoline (Source – EIA 1 , 2 ). Moreover, inventories of gasoline and distillates are higher than usual. Both factors together have led to a gloomy outlook for refined product demand. Gasoline stocks have started to increase while distillate stocks are still declining. When refined product inventories are elevated investors can position short on the crack spread in anticipation of ample supply. Conversely, if refined product inventories are low, investors can position long on the crack spread. Chart: Divergence in refined product inventories in US (gasoline rising and distillate declining). 2) Declining crude price and tight supplies: In September, Saudi Arabia and Russia announced supply cuts extending into January. Globally, this led to a supply deficit of crude oil. Supplies of crude in the US was particularly stressed as refiners increased utilization to build up inventories while margins were high and exacerbated by a pipeline outage. Chart: Crude Oil inventories in US have stabilized in September and October. Following increase in oil prices, refining activity has slowed, and supplies have become more stable. When inventories of crude are stable or elevated, it indicates less demand from refiners. Investors can opt to position long on the crack spread anticipating ample crude supply. Chart: US Refinery Utilization and Crude Inputs have slowed in October. Although, crude oil supply cuts from Saudi are going to continue until January 2024, there is no longer a deficit as consumption has slowed down. Together, both trends have caused a sharp collapse in the crack spread. Value of the 3:2:1 crack spread has declined by 50% over the past month. Prices of refined products have been affected more negatively by low demand than crude oil. Inventories and supply situation for refined products is more secure than crude oil. Still, seasonal trends suggest an expansion in crack spread once refined product inventories start to be depleted. HARNESSING GAINS FROM CHANGES IN CRACK SPREAD Two hypothetical trade setups are described below which can be used to take positions on the crack spread based on assessment of current conditions. LONG 3:2:1 SPREAD Based on (a) sharp decline in crack spread which is likely to revert, and (b) seasonal trend pointing to increase in the crack spread, investors can take a long position in the crack spread. This consists of: • Long position in 2 x RBF2024 and 1 x HOF2024 • Short position in 3 x CLF2024 The position profits when: 1) Price of RBOB and ULSD rise faster than Crude. 2) Price of Crude declines faster than RBOB and ULSD. The position looses when: 1) Price of Crude rises faster than RBOB and ULSD. 2) Price of RBOB and ULSD declines faster than Crude. • Entry: 63.81 • Target: 79.12 • Stop Loss: 55.73 • Profit at Target: USD 45,930 ((Target-Entry) x 1000 x 3) • Loss at Stop: USD 24,240 ((Stop-Entry) x 1000 x 3) • Reward/Risk: 1.89x LONG 1:1 HEATING OIL SPREAD Based on relative bullishness in distillate inventories plus stronger seasonal demand for distillates during winter, margins for refining heating oil will likely rise faster than gasoline refining margins. Focusing the expanding crack margin on a 1:1 heating oil margin spread can lead to a stronger payoff. This position consists of Long 1 x HOF2024 and Short 1 x CLF2024 . The position profits when: 1) Price of ULSD rises faster than Crude. 2) Price of Crude declines faster than ULSD. The position will endure losses when: 1) Price of Crude rises faster than ULSD. 2) Price of ULSD declines faster than Crude. • Entry: 36.15 • Target: 42.79 • Stop Loss: 32.3 • Profit at Target: USD 6,640 ((Target-Entry) x 1000) • Loss at Stop: USD 3,850 ((Stop-Entry) x 1000) • Reward/Risk: 1.72x KEY TAKEAWAYS Crack spread refers to the gross processing margin of refining (“cracking”) crude oil into its by-products. Refined products RBOB and ULSD can be traded on the CME as separate commodities. Both are representative of demand for crude oil from distinct sources. There are three types of crack spread: 1:1, 3:2:1, and 5:3:2. a. 1:1 can be used to express views on the relationship between one of the refined products and crude. b. 3:2:1 can be used to express views on the refining margin of refineries. c. 5:4:3 can give a more granular view of proportions of refined products produced at refineries but is far more capital-intensive. Crack spreads are affected by seasonality, supply, and inventory levels of crude and refined products, as well as demand for each refined product. A low-demand outlook for refined products of crude is prevalent due to expectations of an economic slowdown. MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
Editors' picks
NYMEX:RB1!Long
by mintdotfinance
12
Signs of oil move.Hi. I'm starting to learn Lorentzian Classification. Thought it would be a good idea to take a chart that is hard to figure out with my standard methods (like Ichimoku). OK, let it be WTI Crude Oil. I additionally adjusted native indicator settings and added: - Source hlc3 - Show default / dynamic exits - Use Worst Case Estimates - Use EMA filter period I turned on 3 month chart. Oh. Interesting. So, those green crosses are the default exits. It is interesting that every time after printing such a signal the candles go under the midline. Ok, I'll just watch it. Oil will probably be cheaper later this year than it is now. However, it may happen next year.
TVC:USOIL
by averkie_skila
2
$CL1! / $USOIL LongsHi, today i will bring you an idea of a USOIL Long Setup, in this case i'm using basic concepts, considering the war of Israel vs Palestine too, i'm searching for longs since we will have an IRL>ERL Cycle as we had in LTF, which is where we took the Weekly FVG on OTE and then went for OTE again and reacted to the OB, now i expect us to take the pending Daily FVG and then make a pullback to the last Sell Side Liquidity Zone using it as a Breaker to strengthen our move straight to Half of the Monthly BISI where we will enter in longs.
NYMEX:CL1!Long
by zeratrading
USOIL Trading IdeaBased on Simple Technical Analysis ( Trendline + Support & Resistance ) Risk Disclaimer: Please be advised that I am not telling anyone how to spend or invest their money. Take all of my analysis as my own opinion, as entertainment, and at your own risk. I assume no responsibility or liability for any errors or omissions in the content of this page, and they are for educational purposes only. Any action you take on the information in these analysis is strictly at your own risk. There is a very high degree of risk involved in trading. Past results are not indicative of future returns. Good luck :-)
FX:USOILLong
by ShahedZare
WTI Crude oil - front expiration Technical Analysis: Today, the WTI Crude Oil futures experienced a negative extension in their price, and they reached an important support level around $75. On an hourly basis, it seems like wave 3 may have exhausted. This suggests a potential change in the price direction. Scenarios: 1. Scenario 1 - Positive Rebound. It's realistic to expect a rebound in the price to around $80. This means the price may go up from the current level. Strategy for Scenario 1: - Set the position's Delta to positive, following your investment criteria. - First target: $77.50 - Strategy on reaching target 1: Set the position's Delta to zero - Second target: $79 - Strategy on reaching target 2: Set the position's Delta to zero 2. Scenario 2 - Negative Acceleration. If the price breaks down below today's low of $74.91, we could see a further decline to around $73.90. This would indicate a negative acceleration in price. Strategy for Scenario 2: - Set the position's Delta to negative, following your investment criteria. - First target: $73.90 - Strategy on reaching target 1: Set the position's Delta to zero - Second target: $72.50 - Strategy on reaching target 2: Set the position's Delta to zero Summary: The technical analysis suggests a potential short term technical change in the price direction. We consider a positive rebound strategy if the price hold level $75. I the price drops below $74.91 experiencing a negative extension, we will consider a short strategy. Make sure to follow your investment and adjust your position's Delta accordingly to manage your risk. Investment criteria we highly recommend: CONSERVATIVE strategy: max position's Delta value (+/-) 0.20 MODERATE strategy: max position's Delta value (+/-) 0.30 AGGRESSIVE strategy: max position's Delta value (+/-) 0.40 Please note that investing in derivatives involves hight risks. We strongly advise against invest in future or options naked (not hedged), and to carefully follow your investment strategy criteria and risk management. Delta Zero Technical Analysis team
NYMEX:CL1!Long
by DeltaZeroProprietaryTrading
1
Crude Oil to $160?😳 (Stop Harbouring Iranian Petroleum Bill)The U.S. House of Representatives has passed a bill called ‘Stop Harbouring Iranian Petroleum’. The purpose of the bill is to do all the following listed above🔺 But in more simple terms, the plan of the U.S. government is to pull Iran into the war & shift blame onto them, for the genocide currently going on in the Middle East. They’ll say Iran is funding the war & the only way to stop that is by blocking & putting a price cap on Iranian Oil. They do this knowing Iran will likely block off the ‘Strait of Hormuz’ as a retaliation. What happens now? Saudi countries can no longer use the Strait of Hormuz to export their Oil, which’ll create supply shortage for Western nations. This’ll lead to Crude Oil prices shooting higher & forcing more people towards electric vehicles & products📈
TVC:USOILLong
by BA_Investments
2
WTI OIL Hit both bearish targets. Time to buy again?WTI Oil (USOIL) hit both our 79.00 and 75.00 targets on the H&S sell call we made (see chart below) on October 30: The trend on the 1D time-frame evolved into a Channel Down that broke below the 1D MA200 (orange trend-line) but hit on Wednesday it's bottom (Lower Lows trend-line) and is so far holding. As the 1D RSI touched the 30.00 oversold barrier, we have a strong buy signal emerging as every time in the last 2 years the 1D RSI got oversold, Oil always rebounded to reach the 1D MA50 (blue trend-line) at least. The 1D MA50 has been the Resistance since October 24 and as Support 1 (73.85) is very close, we turn bullish again after a long time to target the top of the Channel Down at 82.00. Notice that this correction got closer to the 1W MA200 (red trend-line) which is the ultimate long-term Support and the one that held on 5 different times from mid March to June (closed all 1W candles above it and eventually led to September's High). ------------------------------------------------------------------------------- ** Please LIKE 👍, FOLLOW ✅, SHARE 🙌 and COMMENT ✍ if you enjoy this idea! Also share your ideas and charts in the comments section below! This is best way to keep it relevant, support us, keep the content here free and allow the idea to reach as many people as possible. ** ------------------------------------------------------------------------------- 💸💸💸💸💸💸 👇 👇 👇 👇 👇 👇
TVC:USOILLong
by TradingShot
4
Crude Oil Futures ~ Golden Pocket Support (2H Intraday)NYMEX:CL1! intraday mapping/analysis. Crude Oil Futures finding support on Golden Pocket + lower range of descending parallel channel (white dashed) confluence zone after flat bottom break, while hovering above lower range of ascending parallel channel (green) + 66% Fib confluence. Price action accumulating while digesting recent sell-off Bias leaning towards bullish reversal to re-test break aka "return to scene of crime", TBC Heavy confluence zone(s) underneath to keep price elevated (unless wrecked by major economic/geopolitical news catalyst) Breakout above accumulation to validate bullish reversal &/or tap parallel channel (green) + 66% Fib confluence & rip back up to trigger fake dump/liquidity grab Eyes on US Yields for correlation (linked via Related Ideas) Set alerts - wait for trade to setup - hyper-awareness for potential oil manipulation by either OPEC+ or US (SPR refill narrative)
NYMEX:CL1!
by BlueHatInvestor
Crude Oil Futures ~ November TA Outlook (4H Intraday)NYMEX:CL1! chart mapping/analysis. Note: TradingView chart B-ADJ adjusted for contract changes Crude Oil Futures capitulating from early October rally despite ongoing Middle East tensions & geopolitical uncertainty. Only macroeconomic narrative/headwind that would override war escalations is increasing probability of global recession-induced demand destruction, IMO. Notes: Flat bottom pattern development = bias towards bearish price action, TBC. Crude Oil = highly manipulated trade with ongoing short-risk from Saudi Arabia &/or Russian market intervention - trade at your own risk to capital.
NYMEX:CL1!Short
by BlueHatInvestor