Ok just filled on my CL option trades. Took quite a while as the spreads in the option markets are very wide. CLZ8 was 137.90 when the trade was placed. Sold December 2008 CL (CLZ8) 170P for $4980 and purchased the December 2008 CL( CLZ8) 110C for $3760 for a net credit of $1220.
If you really want to talk about the fundamentals of the oil market, a thread on ET is probably not the correct forum. Anyway it is a long process, IMO, to understand the fundamentals of this extremely complex market. Even if someone on ET was an expert, why would they give away 1000s of hours of research for free? The biggest online forums for oil industry technicians are perhaps at peakoil.com and theoildrum.com although those sites are certainly biased in favor of a long position.
I dont know when we are going to hit a top, but that's why I'm playing this with options. I'm trading technicals...technicals don't always work, but they help a lot in entries. On a fundamental basis I ve seen many shorts get hurt over the past 6 months in Oil. Here some fundamentals that I see. We know that with recent prices rising, we know that more people in the US are using their debit/credit cards than cash. Even with that, Mastercard purchases of gasoline (gallons) are down on a year over year basis. Airlines are also cutting back flights and seat capacity further. Locally there is a lot of demand destruction. Rush hour in Phoenix used to be terrible, bumper to bumper in many places all on the freeway and max speeds of 20-40. Now its 20-40 in some places and able to go normal speeds in some parts.
What options are you buying? I believe the main problem still is the dollar. The action today from the Fed didn't help much. On long term i believe CL has to come down. Anyone watched the two analysts yesterday on PBS?
Here's my analysis of the oil market. 1) It's a bull market (doh), so you ought to be long most of the time, and pick bottoms not tops. 2) Fundamentals very bullish 3) Technicals and momentum very bullish 4) Sentiment sceptical 5) Risk is high due to political controversy caused by higher prices, and the fact that the move has run very far, in a fairly short time. Therefore the logical position is to be long a medium or moderate amount. The trading plan should be to add on dips, and exit part of your adds into resistance and/or when the market has gone way beyond prior highs and looks overdone. Keep the core position, and keep some of each add that you make. I was bearish on oil at $95-100 last year, but simply by letting the market tell me what to do I've ended up doing pretty nicely from the long side since it broke $100 convincingly. Trade what you see, not what you think. Ultimate exit should be done into a parabolic price blowoff combined with sentiment capitulating to the bullish side, OR if there is a major shift in the market tone or fundamentals, causing serious price weakness (e.g. if there are gargantuan supply numbers and the market gets hammered; or if you get some "buy the rumour sell the news" effect).
A few dollars is less than the daily range in this market. A good short will be a move to 120 and lower, not a move to 133 lol. Same way, I am not getting excited if oil moves up $3 one day. To be long here you need to expect 145-150 at least. Since your risk is easily $10 per contract, shooting for $5 is kinda nuts.
This is not technical trading. You appear to start with a haphazard bias that oil is too high and so you shorted CL on a prediction that it would come down. And you are prepared to wait as long as it takes. This is just prediction operated over a number of days. Equally where you have views offered on this thread of news factors or underlying demand/supply factors then this is just attempting a fundmentals assessment of this market. To play CL technically, daytrade. Harness the wide daily movements to make a series or number of linked profits per day. You must use an accurate methodology to do so. And either you know this market intimately or you need to do the work beforehand in order to know this market intimately.