Short squeeze on oil

Discussion in 'Commodity Futures' started by thehangingman, Jan 14, 2007.


    What do you think? Oil will keep going up in electronic trade and then the floor trading will open on Tuesday for a mad dash to cover short positions.

    I can picture some grandstanding on Monday. They already have a few White House officials stating that they wont rule out attack on Iran. Then we see Chavez and company at it again.

    Somehow I feel this was all one big setup. If you went short before the 3 day weekend, then your in for a big squeeze when the floor trading begins. Its already up past 53 bucks in electronic trading as I type this.
  2. Who would be stupid enough to open a net short position in market that has been down 20% in just two weeks, especially ahead of a three day weekend?
  3. i agree...the risk reward on the short side on a long weekend after RECORD heat for the past 2 weeks was like UTOPIA situation

    thank god im long USO's overthe weekend


  4. toc


    Oil can correct another 15% from here on before finding support. But am not taking any positions, as oil is very much influenced by political news and events.
  5. last part of that Bloomberg article:

    $50 Crude

    "In London, Brent crude oil for February settlement rose 27 cents, or 0.5 percent, to $53.22 a barrel at 11:48 a.m. Singapore time. The contract will expire tomorrow. The more active March contract was at $53.74, up 30 cents.

    Crude oil may fall toward $50 a barrel as plunging U.S. fuel consumption bolsters stockpiles in the world's biggest energy consumer, a Bloomberg News survey found last week. Twenty of 47 analysts, traders and brokers, or 43 percent, said prices will decline this week, while 11 expected an increase and 16 forecast little change, according to the survey.

    U.S. fuel demand declined to 19.6 million barrels a day in the week ended Jan. 5, the lowest since April 2004, an Energy Department report on Jan. 10 showed. Gasoline, heating oil and diesel supplies surged, according to the report.

    Hedge-fund managers and other large speculators switched from a net-long position to a net-short position in New York crude-oil futures in the week ended Jan. 9, according to U.S. Commodity Futures Trading Commission data. That means bets on prices falling outnumber wagers that oil will rise.

    Speculative short positions outnumbered long positions by 22,358 contracts on the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Last week, traders were net-long 2,194 contracts"
  6. back under $53 ... some size has traded on CL in european trade
  7. My rough opinion, emphasize *rough*, is that now is the time to buy these energy stocks. They are the only sector in the market that is well off their highs.

    The only question is how much further is oil going to dive. Somehow, I dont believe this is about the weather or any of the other excuses bandied about in the media. Why did oil suddenly tank right after New Years? Why was New Years the dividing line where everyone suddenly dumped all their contracts?

    I believe that OPEC will somehow stop the receding tide of oil prices and there is a lot more political volatility ahead.

    I have taken this opportunity to load up on some low single digit energy plays that have snapped back very nicely.

    I do have this sinking feeling that oil is somehow going to fall into the land of no return. . .however it is that common fear that has always made me money. If I went into Microsoft or CISCO right now (like everyone else is doing), then I bet they would turn on me quick.

    Oil will rise and the DXD will outperform as a result.
  8. Just in case, you are in a NYMEX sweet crude trade and feel insecure when the US markets are closed, you can always spread it against the Brent Crude futures.