Not understanding crude supply and demand

Discussion in 'Commodity Futures' started by gaussian, Nov 15, 2019.

  1. gaussian


    I've been watching crude for the last week due to it being near peak crude consumption season for winter.

    There have been a handful of reports (EIA, OPEC, etc) that are generally bearish. Supplies are high, which should send the front month futures down as manufacturers begin offloading their glut of supplies into later delivery months (summer in particular).

    However, this isn't happening. /CL has been on a rally for basically the last 2-3 days. This doesn't make sense to me.

    What am I missing? Does supply and demand not work as expected in /CL?
    SimpleMeLike likes this.
  2. Real Money

    Real Money

    My guess is that it is correlated to S&P 500 and so it's tracking the stat arb play. That's just my off the cuff opinion and I'm no energies trader...
    bone likes this.
  3. gaussian,

    Crude oil daily charts reversed at support and currently trying to make a higher high. Prepare to Go Long.

    I never read the oil reports. Those reports could be lying. The charts do not lie me.

    The bulls have been attacking this resistance area the past two weeks, looking like they want to break it. So join the bulls.
    gaussian likes this.
  4. gaussian


    The only issue I have here is there is significant seasonality in crude. If this is just speculation noise, I suppose that's fine - but I guess I should've been more clear. I was trying to explain the seasonality of it, especially considering the east coast is preparing for a massive cold front.

    Technically I think you are correct, though. At least for the front month. It seems to be driven by speculative noise at the moment. These commodity futures are so strange to me sometimes.
    SimpleMeLike likes this.
  5. tiddlywinks


  6. gaussian,

    Yes, I can understand what you mean trying to understand the fundamental story.

    But for me and my keep-it-simple approach, I have no idea on earth what "seasonality in crude" even means or what OPEC stands for. I have no clue at ALL what that stuff means and do not care.

    I just look at the chart and use that to make decisions, that's enough of a challenge for me. That chart is not going to lie to me.
    Nobert and Real Money like this.
  7. Real Money

    Real Money

    This is why CL tracks S&P so well. It's a risk asset. The volatility is useful to speculators. Fundamentals be damned.
    Nobert and SimpleMeLike like this.
  8. Yes, I trade crude oil daily and I enjoy it. I enjoy it because it just moves. One way or the other, it moves. Why it moves, i have no idea on earth and do not care? Just move. All I care about is the damn price moving, I can handle the rest, just move up and down. Do whatever you want to do oil, I will right behind you. But never in front of you. You the master.
    Last edited: Nov 15, 2019
  9. Real Money

    Real Money

    SimpleMeLike is a trader. He is trading against other traders. The charts don't lie.

    When speculation is driving price, traders who trade off price action have an edge.
    comagnum and SimpleMeLike like this.
  10. bone

    bone ET Sponsor

    Yep. Overlay a Daily chart of the S&Pde 500 on the CL front month future. Generally speaking, broad stock market gains portend well for future economic activity - which increases the demand side of the equation.

    #10     Nov 15, 2019
    SimpleMeLike likes this.