Sunday, May 8, 2011

USO - Crude Oil Update

This was my forecast for Oil made on March 13th, 2011: 

"Crude has been inversely correlated with the markets since Libya. I think that may be about to change. $WTIC may be very near a short term bottom (early this week). So I think crude may actually rise now with the markets. A possible next target is $119. The media will probably say this is evidence of economic recovery.

There is talk of crude jumping to $150 - $225. I don't see this happening. Crude probably tops in April, and I'm very bearish on crude from that point."

60min Chart


  1. Clive wasn't paying attention to the cycles. These moves can't be explained by fundamental research. Clive could have saved themselves $400 million and avoided an 8.9% loss on the week had they been following my work:

    "Clive Capital, the world’s largest commodity hedge fund, has been left nursing losses of more than $400m as a result of the dramatic collapse in the price of oil last week.

    London-based Clive – which manages an estimated $5 billion of client money – is the biggest of several big hedge funds believed to be reeling after the unexpected sell-off hit markets late last week.

    Others, including Astenbeck Capital, the Phibro-owned fund run by Andrew Hall, are thought to have taken double-digit percentage point losses to their portfolios, according to investors.

    The scale of the losses demonstrates that even the savviest investors in commodities were wrongfooted by the correction, one of the sharpest one-day falls on record.

    In a letter sent to investors on Friday and seen by the Financial Times, Clive said it was down 8.9 percent on the week after what it called “extraordinary” price movements on Thursday. Clive’s management said it was at a loss to explain what had caused crude oil markets to be “annihilated”.

    The move in Brent represented about a 5 standard deviation move, while WTI was a 4 standard deviation move,” Clive said in its letter. A five standard deviation daily move is a exceptionally rare event."

  2. Yas they are right... absolutely unpredictable :)

  3. Yes G, this is why I love working with cycles! The fundamentals are important of course, and ultimately, over time, price will reflect fundamentals. However, it is the cycles that indicate when these things happen, and how to be positioned.

    My oil forecast was good for $15 up and another $15 a barrel on the downside. $30 in a month and a half.

  4. Notice how the down trend accelerated on the breaking of the 200 MA. Does this foretell the same for equities?? I think so.

  5. Yes Thai, Oil fell into a "black hole" with no bids. Commodities leading up today though.

  6. The trading pattern today is following the May timing chart nicely. I will update that chart and make additions as well as price targets as things progress.

    One step at a time.