I understand the drivers of bonds, stocks, even currencies (mostly macro-economic indicators) and gold (sentiment at the moment and as bottom the more or less the cost of mining it). What about oil? What do you look at for drivers of the price. Is geo-political risk expectation (middle-east, venezuela) more important as wars there maycut supply, or are you looking at the economy for demand. Or are is it more important the investments the oil majors are planning to make or not to make. At the moment I am just too unsure to even try to make a bet. Anyone knows how to look at it? Gold and stocks, technical analysis would mostly suffice as I have an idea what's is going on, but oil?
It is all about expected scarcity or abundance of supply (production in important players) vs economic growth and consumption. Sometimes, temporary problems in the value chain (closure of the suez canal or problems with pipeline infrastructure) alted prices momentarily. I recomend this book if you are really interested in the fundamental part of the business http://www.amazon.com/Commodities-Commodity-Derivatives-Modelling-Agriculturals/dp/0470012188
I believe there are so many speculators involved (big ones, like hedge funds, JPM, Goldman, etc) that a lot of what happens is more technical than fundamental. News events trigger overshoots of price because the algos of the big players force momentum and actual supply/demand seems to mean little from the "why oil prices did that" after-the-fact analyses. I strictly trade it intraday using price action and totally ignoring any news. If I was looking to swing trade it, I'd likely buy following a dip to a very major trend line or previous support level, or sell following a distant channel overshoot (on a daily or even weekly chart). Everything in between seems really sloppy, IMHO.
Me as well, but just out of curiosity is good to know what happens with the whole geopolitical soap opera.
It seems I remember once reading something you wrote about the analogy of the spider and how basically crude was on crack or something haha, compared to ES being more "predicatable". I agreed with that. To me crude seems pretty unpredictable, maybe I should say manipulated by the politics of oil.. That's just my experience. But I've never spent a lot of time studying it.
Two important factors that might indicate who is interested in high oil price: it is consumer tax supporting budget it is mechanism to transfer capital abroad Now thy are trying to figure out how to decouple price of gasoline from the price of oil because there is plenty of it. High oil price might support foreign countries that are not friends with the US but domestic tax inflows are important too.