Posted by angrybeagle on 10th of Mar 2009 at 10:13 am
Thanks to all of you for your input. I decided to answer
the question in one post before I take off for work. Sorry I
don't have answers to some of your question, but I did not want
to ignore people who have offered information.
grantorino72 -
After putting trend lines on the chart and the way things with DXO
opened, I'm happy I did not sell yet. It looks like it’s
halfway in between the support/resistance lines.
jhsimon -
Sorry, I've only traded USO and DXO so I don't have a
comparison with UCO
Michael
- Sorry, I don't know why DXO is not up as much as USO and
OIL. If you have a theory, I would be interested in hearing
it.
geotex -
I agree with you that Oil will gain over 2009. One of my
primary motivators to buy DXO is that I feel OPEC will cut
production to increase prices this weekend, but I don't want to be
the one left holding the stock if everything sells off before
the meeting this Sunday so I'm trying to learn to read
the charts.
Link to a daily chart of light crude oil. I believe this
is what DXO would track against. To me this looks good as
well as DXO at the bottom of the channel. My concern is that
I'm trying to convince myself that they look good. I'm pretty
new at this and have "convinced myself" out of a cash in the past,
so comment welcome.
Sichuan
Province, China, above, is one of many places where demand for oil
has fallen, causing turmoil in markets. Some experts predict
further drops. (Reuters)
[Enlarge this image]
But the concern about lower oil prices crimping new investment
is shared by experts at the International Energy Agency, a leading
forecaster, which has repeatedly warned that a "supply crunch"
within the next five years could push prices to
new records.
Among the community of analysts who track the oil markets
closely, the view that prices could keep falling in the near term
is not widely held. The Organization of the Petroleum Exporting
Countries, they point out, is propping up the market by cutting
production. OPEC has announced three production cuts
since September.
Indeed, prices have been rising in the last three weeks as
traders calculate that the cartel will announce another cut at a
meeting this weekend in Vienna. Oil closed in New York trading on
Monday at $47.07 a barrel, up $1.55 and well above the recent low
of $33 a barrel in December.
But as the global economic outlook worsens, the view that prices
have farther to fall seems to be gaining adherents.
The debate is not just a proxy for varying predictions about the
economy. It also reflects divergent opinions about the future of
the oil business, which has been rocked by an unprecedented
boom-and-bust cycle in recent months.
Predicting oil prices is a tricky business. As prices rose to
$147 a barrel last year, some analysts suggested that oil would
reach $200 a barrel. Instead, prices plummeted after their July
peak, dropping by more than $100 since the summer. The recent rise
has not altered the view of the camp that believes the fall in oil
prices is not over.
One of the biggest uncertainties is whether today's market will
mirror the early 1980s, when prices collapsed and stayed low for
much of the next two decades, or whether it will prove more like
1998, when prices fell to $10 a barrel after the Asian financial
crisis but rebounded within a few years as growth
picked up.
With the global economy worsening and demand slowing, some
economists, including Kenneth Rogoff of Harvard and Nouriel Roubini
of New York University, say oil prices could keep declining in the
short term.
"The twin engines of growth were the U.S. and China; the U.S.
has fallen off and China has stalled, to put it mildly," Roubini
said. "In my scenario, oil will fall lower. I would not be
surprised if oil even went to $20, if the recession is
more severe."
While many analysts expect oil demand to rebound sharply once
the economy recovers, not everyone agrees that prices are
necessarily going to soar at that point.
Edward Morse, the chief economist at the New York broker LCM
Commodities, says that each energy shock in the last 60 years
resulted in lower growth for oil demand in
succeeding years.
This time, he said, should be no different. "The case is
overpowering," Morse said.
Before the energy crisis of 1973, he said, global oil demand was
growing at 8 percent a year. But by the late 1970s, as many
countries found ways to use less oil, that rate of growth had
slowed to 4 percent a year. Similarly, after the oil shock caused
by the Iranian revolution, demand growth slowed to 2 percent a
year. And in the decade after Iraq's invasion of Kuwait,
consumption increased 1.5 percent to 1.8 percent a year.
Morse estimates that in the next recovery, global oil demand
will grow perhaps 1 percent a year, because of lower demand growth
in the United States, China and the Middle East.
In the longer term, another factor may keep prices down. As OPEC
trims its output in the face of falling demand, it automatically
raises the amount of spare production capacity.
After years with a thin cushion — a factor in pushing prices up
— the market now has at least five million barrels a day of
untapped output potential. That level could rise to as high as
eight million barrels a day by the end of the year, according to
estimates by cartel officials, a level unseen in more than a
decade. The last time that happened, prices stayed low
for years.
"By any economic measure, we still have much more downside for
oil prices," said Adam Robinson, director of commodities at Armored
Wolf, a California hedge fund.
For the moment, the market's focus is on consumption rather than
supplies. In China, for example, oil consumption, which had been
growing at more than 10 percent a year, fell by 4 percent in
December, according to the International Energy Agency. This year,
the agency expects "paltry" growth of 0.7 percent in Chinese
oil demand.
In the United States last year, demand plummeted 6 percent, the
steepest decline in nearly three decades. With Americans traveling
less because of the bad economy, the demand for jet fuel fell 11
percent in January, compared with a year earlier.
A period of lower oil prices could also slow investments in
alternative energy, a sector that is already suffering from the
credit crisis and the economic slowdown. Without government
subsidies, many technologies cannot compete with oil at
today's prices.
Some oil executives, however, have sought to remain optimistic,
saying that costs for oil companies are beginning to fall.
"I remember a time when I thought $40 was a fantastic price,"
said Tony Hayward, chief executive of BP. "Not much has changed,
but we allowed our cost base to get ahead of us. The industry
worked very well at $40 a barrel four years ago."
Posted by angrybeagle on 12th of Mar 2009 at 02:18 pm
clj9 an clm9 are up nicely. DXO looks good,
it hugged support and then bounced up off it this
AM. I would like to see it get through 2.50, but I'm not
complaining if it doesn't do it today.
Updated charts for DXO and WTIC. I sold 1/3 at 3:40 today
at 2.50. Rode it up and down in the channel last time and
will now listen to the voice of Matt and Steve in my head and take
profits and move up stops. I don't see any reason this won't
go to the top of the channel, but opinions and comments
welcome.
Posted by angrybeagle on 13th of Mar 2009 at 04:03 pm
Stopped out of my remaining shares of DXO today. Might
have set the stop to close, but I'm not going to worry about
it. Will look to re enter if it drops to the bottom of the
channel. Have a good weekend and we'll see what OPEC does
this weekend. I may have missed a good opportunity, but I'm
sure I'll sleep better this weekend since I'm out.
Posted by angrybeagle on 15th of Mar 2009 at 09:36 pm
Looking to see how DXO opens tomorrow. I'm looking to buy
around 2.20 - 2.24 if the support trendline holds, if it breaks
then I'll re-evaluate my entry point. We'll see, but I think
a good buying opportunity is coming since OPEC did not cut
production.
Posted by angrybeagle on 13th of Mar 2009 at 04:46 pm
The name is kind of a joke. As a Beagle owner you know
they are pretty happy go lucky breed, but the last Beagle I had was
ornery when she did not get her way. She had a habit of
going into a corner and making loud sighs to let us know her
displeasure. It was a real trip to see, hence The AngryBeagle
name was born. Whiley (the beagle's name) is no longer with
us, but the name lives on.
DXO Trendline?
DXO opinions
Posted by grantorino72 on 9th of Mar 2009 at 11:52 pm
Could you post some intra-day trendlines on your 30-minute DXO chart?
Thanks to all of you for
Posted by angrybeagle on 10th of Mar 2009 at 10:13 am
Thanks to all of you for your input. I decided to answer the question in one post before I take off for work. Sorry I don't have answers to some of your question, but I did not want to ignore people who have offered information.
grantorino72 - After putting trend lines on the chart and the way things with DXO opened, I'm happy I did not sell yet. It looks like it’s halfway in between the support/resistance lines.
http://stockcharts.com/h-sc/ui?s=DXO&p=30&yr=0&mn=0&dy=6&id=p45387084731&a=162637480&listNum=2
jhsimon - Sorry, I've only traded USO and DXO so I don't have a comparison with UCO
Michael - Sorry, I don't know why DXO is not up as much as USO and OIL. If you have a theory, I would be interested in hearing it.
geotex - I agree with you that Oil will gain over 2009. One of my primary motivators to buy DXO is that I feel OPEC will cut production to increase prices this weekend, but I don't want to be the one left holding the stock if everything sells off before the meeting this Sunday so I'm trying to learn to read the charts.
Thanks again for all of the input.
Looking for input on DXO
Posted by angrybeagle on 11th of Mar 2009 at 09:09 pm
Looks like DXO is at the bottom of a channel on this chart. Comments?
Light Crude Oil
Posted by angrybeagle on 11th of Mar 2009 at 10:34 pm
Link to a daily chart of light crude oil. I believe this is what DXO would track against. To me this looks good as well as DXO at the bottom of the channel. My concern is that I'm trying to convince myself that they look good. I'm pretty new at this and have "convinced myself" out of a cash in the past, so comment welcome.
Watch CLJ9 @ $41.00
Posted by grantorino72 on 12th of Mar 2009 at 12:00 am
April crude sees the 20 sma = 50 sma at 4100 on the CLJ9 futures contract tomorrow. This is a necktie support.
Once you see 4100 holding, go long DXO. You will at least get a bounce into Friday's close as traders will anticipate an OPEC cut.
But, i think they will hold off cutting and the Vienna conference will just be another opportunity to argue between Doves vs. Hawks.
Thanks for the input grantorino72.
Posted by angrybeagle on 12th of Mar 2009 at 12:17 am
Crude oil article in international herald tribune
Posted by steve101 on 12th of Mar 2009 at 08:25 am
Wondering if crude could fall even more
In recent weeks, as oil traded around $40 a barrel, the conventional wisdom among specialists was that the price decline that began last summer was largely over. Amid production cuts by the OPEC cartel, oil had apparently found a floor that would last until the global economy rebounded.
But a growing chorus of analysts and economists is questioning that notion. While theirs is a minority view, they see troubling conditions in the oil market that could still push prices down sharply — and a global economy that is getting worse, not better. Some are predicting that oil could fall to $20 a barrel and stay low for years.
Petroleum executives generally do not regard this prospect as likely. But in a year when dire predictions about the economy keep coming true, they fear it is a possibility. Another big drop could lead to a sustained period of low investments, and many executives say that would set the stage for prices to soar once the global economy finally starts to recover.
"The industry needs reasonable prices," Zhou Jiping, the vice president of the China National Petroleum Corp., said at a conference last month in Houston held by Cambridge Energy Research Associates. "If prices stay below $40 a barrel, a large number of wells have to be shut down."
Lower oil prices have provided a welcome break in a tough economy. Gasoline, which peaked above $4 a gallon last summer, or 84 euro cents per liter, now sells for $1.94 on average. The drop has saved consumers billions of dollars.
Related Articles
Today in Business with Reuters
But the concern about lower oil prices crimping new investment is shared by experts at the International Energy Agency, a leading forecaster, which has repeatedly warned that a "supply crunch" within the next five years could push prices to new records.
Among the community of analysts who track the oil markets closely, the view that prices could keep falling in the near term is not widely held. The Organization of the Petroleum Exporting Countries, they point out, is propping up the market by cutting production. OPEC has announced three production cuts since September.
Indeed, prices have been rising in the last three weeks as traders calculate that the cartel will announce another cut at a meeting this weekend in Vienna. Oil closed in New York trading on Monday at $47.07 a barrel, up $1.55 and well above the recent low of $33 a barrel in December.
But as the global economic outlook worsens, the view that prices have farther to fall seems to be gaining adherents.
The debate is not just a proxy for varying predictions about the economy. It also reflects divergent opinions about the future of the oil business, which has been rocked by an unprecedented boom-and-bust cycle in recent months.
Predicting oil prices is a tricky business. As prices rose to $147 a barrel last year, some analysts suggested that oil would reach $200 a barrel. Instead, prices plummeted after their July peak, dropping by more than $100 since the summer. The recent rise has not altered the view of the camp that believes the fall in oil prices is not over.
One of the biggest uncertainties is whether today's market will mirror the early 1980s, when prices collapsed and stayed low for much of the next two decades, or whether it will prove more like 1998, when prices fell to $10 a barrel after the Asian financial crisis but rebounded within a few years as growth picked up.
With the global economy worsening and demand slowing, some economists, including Kenneth Rogoff of Harvard and Nouriel Roubini of New York University, say oil prices could keep declining in the short term.
"The twin engines of growth were the U.S. and China; the U.S. has fallen off and China has stalled, to put it mildly," Roubini said. "In my scenario, oil will fall lower. I would not be surprised if oil even went to $20, if the recession is more severe."
While many analysts expect oil demand to rebound sharply once the economy recovers, not everyone agrees that prices are necessarily going to soar at that point.
Edward Morse, the chief economist at the New York broker LCM Commodities, says that each energy shock in the last 60 years resulted in lower growth for oil demand in succeeding years.
This time, he said, should be no different. "The case is overpowering," Morse said.
Before the energy crisis of 1973, he said, global oil demand was growing at 8 percent a year. But by the late 1970s, as many countries found ways to use less oil, that rate of growth had slowed to 4 percent a year. Similarly, after the oil shock caused by the Iranian revolution, demand growth slowed to 2 percent a year. And in the decade after Iraq's invasion of Kuwait, consumption increased 1.5 percent to 1.8 percent a year.
Morse estimates that in the next recovery, global oil demand will grow perhaps 1 percent a year, because of lower demand growth in the United States, China and the Middle East.
In the longer term, another factor may keep prices down. As OPEC trims its output in the face of falling demand, it automatically raises the amount of spare production capacity.
After years with a thin cushion — a factor in pushing prices up — the market now has at least five million barrels a day of untapped output potential. That level could rise to as high as eight million barrels a day by the end of the year, according to estimates by cartel officials, a level unseen in more than a decade. The last time that happened, prices stayed low for years.
"By any economic measure, we still have much more downside for oil prices," said Adam Robinson, director of commodities at Armored Wolf, a California hedge fund.
For the moment, the market's focus is on consumption rather than supplies. In China, for example, oil consumption, which had been growing at more than 10 percent a year, fell by 4 percent in December, according to the International Energy Agency. This year, the agency expects "paltry" growth of 0.7 percent in Chinese oil demand.
In the United States last year, demand plummeted 6 percent, the steepest decline in nearly three decades. With Americans traveling less because of the bad economy, the demand for jet fuel fell 11 percent in January, compared with a year earlier.
A period of lower oil prices could also slow investments in alternative energy, a sector that is already suffering from the credit crisis and the economic slowdown. Without government subsidies, many technologies cannot compete with oil at today's prices.
Some oil executives, however, have sought to remain optimistic, saying that costs for oil companies are beginning to fall.
"I remember a time when I thought $40 was a fantastic price," said Tony Hayward, chief executive of BP. "Not much has changed, but we allowed our cost base to get ahead of us. The industry worked very well at $40 a barrel four years ago."
clj9 at 4100 : necktie support
Posted by grantorino72 on 12th of Mar 2009 at 12:55 am
Start with a light position on the DXO. I have a stinker bid at $1.99 for 3000 shares.
UGA around $20.70 - look at BPT dynamic chart and that trendline comes in around that area. Again, go light.
There are mixed signals on the set-up, not like back in February when Oil had a washout and the DXO plunged to new lows - that was an easy trade!
This trade is a little bit trickier because OPEC may not cut on the weekend.
Watch USO gap fill around $25.50 I think it gets taken out and we see $25.00 intraday before a bounce. USO rollover is completed.
CLJ9 gotta hold 4100 on the settlement close.
clj9 an clm9 are up
Posted by angrybeagle on 12th of Mar 2009 at 02:18 pm
clj9 an clm9 are up nicely. DXO looks good, it hugged support and then bounced up off it this AM. I would like to see it get through 2.50, but I'm not complaining if it doesn't do it today.
DXO 60min-031209.png WTIC-Daily-031209.png Updated charts for DXO and
Posted by angrybeagle on 12th of Mar 2009 at 04:32 pm
Updated charts for DXO and WTIC. I sold 1/3 at 3:40 today at 2.50. Rode it up and down in the channel last time and will now listen to the voice of Matt and Steve in my head and take profits and move up stops. I don't see any reason this won't go to the top of the channel, but opinions and comments welcome.
Stopped out of my remaining
Posted by angrybeagle on 13th of Mar 2009 at 04:03 pm
Stopped out of my remaining shares of DXO today. Might have set the stop to close, but I'm not going to worry about it. Will look to re enter if it drops to the bottom of the channel. Have a good weekend and we'll see what OPEC does this weekend. I may have missed a good opportunity, but I'm sure I'll sleep better this weekend since I'm out.
Looking to see how DXO
Posted by angrybeagle on 15th of Mar 2009 at 09:36 pm
Looking to see how DXO opens tomorrow. I'm looking to buy around 2.20 - 2.24 if the support trendline holds, if it breaks then I'll re-evaluate my entry point. We'll see, but I think a good buying opportunity is coming since OPEC did not cut production.
Comments or opinions?
Beagle?
Posted by jroger on 13th of Mar 2009 at 04:04 pm
As a beagle owner I have to ask about the name.
The name is kind of
Posted by angrybeagle on 13th of Mar 2009 at 04:46 pm
The name is kind of a joke. As a Beagle owner you know they are pretty happy go lucky breed, but the last Beagle I had was ornery when she did not get her way. She had a habit of going into a corner and making loud sighs to let us know her displeasure. It was a real trip to see, hence The AngryBeagle name was born. Whiley (the beagle's name) is no longer with us, but the name lives on.
Our beagle does those sighs
Posted by bkout3 on 13th of Mar 2009 at 08:11 pm
Our beagle does those sighs too! In her case we read it more as despair than anger -- generally about how long it will be till the next meal