Oil Prices Trading Directionless

The first thing SFOT saw in his list of commentary is this:

We expect the prices to trade in a wide range $45-$55 in the coming weeks. Weak demand keeps it from rising above $55, weak supply keeps it from falling below $45.

A very amateur sounding piece of advise from a typical research analyst whose only knowledge of oil is from the financial view point. Sadly speaking, SFOT agrees with his call, however and dare not go against the mighty strength of the financial flows.

If there is anymore doubt about the failure of commodity investments as a diversification in the portfolio, yesterday should provide as good an answer as there can be. And one need only to look at price action today (Tuesday) in equities, EUR/USD to pinpoint Crude oil trading up $1.

While demand is still weak in the very prompt, SFOT is more than happy to hold on to his putspread. He will also hold his short COM9 35/60 strangle, valued at around 1.50. However, he struggles to understand how middle distillate cracks are still holding up in the very prompt. Perhaps week on week demand is picking up due to a colder than normal temperature this time of the year in the US. Perhaps the weakening flat price in the past few days have induced end users to come out and hedge their exposure.

He is tempted to add one more and a last unit to his short in the front end crack but shall wait for further data in the form of API/DOE tomorrow.

Jet implied demand

Distillate implied demand: short term spike or real recovery?

As many readers will know, there will be a series of protest tomorrow in the city of london. SFOT feels like another innocent guy working in a bank being victimised for things he has not created and wealth he did not enjoy over the years. All the grunting is summarized nicely by Macroman. Well said.

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