crude from Bakken and West Canada are selling at as low as $50 pb. Keystone pipeline Canada section can drive WTI down instantly. I suspect the Canada section was blocked because of US oil producers lobbying rather than apparently environmental claims by Obama.
Don't doubt that theory. Banking and oil industries are full of the loud mouth parasite types who'll sell out their country for a dollar.
I think you'll be wrong there, the price of oil is unlikely to completely collapse because it is very expensive to produce it in a few parts of the world so the price could only collapse if the world could do without a supply from those areas. Could the world do without oil from the North Sea for example? No? Well then the price can't fall below what it costs to produce in the UK and Norway... If you really wanna short oil though, get a good CFD broker that doesn't charge a lot to hold positions over night, unless you live in the USA that is, in which case you can't trade CFDs. You would need to hold the position for a long-time waiting for an oil price collapse, it won't happen over night. A price spike could happen over night though, like if some country were to stop producing like Libya did recently, but a collapse isn't so sudden. It is far easer to reduce production by a couple of million barrels over night than it is increase production by a couple of million barrels over night, so a short based on an expected price collapse is a long term bet. The other danger when shorting stocks and commodities is of course that there is no limit on how high the price can go when you're short, but it can never go to below zero if you're long... Be extra careful with shorts...
Source? Those discounts are no longer around. Bakken is only about a $5 discount to WTI, West Canada grade is trading around $19 below WTI, but it's heavy and sour, apples to oranges. Instantly? Do you have any idea how long it takes to get a pipeline system designed, built, and flowing?
That was from my memory. Here is somewhat evidence: http://www.mining.com/2012/06/05/ma...p-canadian-crude-crashes-through-60-a-barrel/ I agree it may take couple of years to build the pipeline after the decision to build.
Markets are looking into the future so they will react to the prospect of pipeline being built not when oil starts flowing (historical event in the markets).
Even if your premise regarding the macro trend for raw crude is exactly correct, the nearer term severe upside risk you are exposing yourself to in terms of an incidental geopolitical 'flight-to-quality' bid overwhelms it. You can be correct on a macro sense, but can you weather a 25% drawdown on contract price times the leverage ? For months at a time ? We are awash in Crude Oil. Plenty of supply on the market - even at $110 per barrel. The limited hydrocarbon resource is distilled products - chiefly, unleaded gasoline. Refining infrastructure and capability is far more limited than the raw crude oil. That, IMO, would be the smarter long.
What is your uncle point? Will you add to it at say 92 or 93? Good luck man I'll be right with you all the way to 70.
I do not have an exact number. Here is what may make me exit: It crossed 50 daily ma, it should come back soon; Coming EIA Crude inventory report should make it come down. I will exit otherwise; then re-enter later.