Search my handle and find my 4 part post in the thread "where is oil and uwti really headed" to learn how UWTI actually works. This should open everyone's eyes and set reasonable expectations.
Unfortunately it will never be that high. it wasn't that high last summer when oil was north of $100. Search my handle and find my 4 part post in the thread "where is oil and uwti really headed" to learn how UWTI actually works. If oil goes to $80 I think we be lucky to see $6 on uwti, but I would have to see what the ratio between oil and uwti looks like at that point.
I suppose it could. But i project that if oil hits 35 UWTI will be around 1.00-1.25 at that point as the loss ratio will shrink as will the gains on any turn around (see my post "where is oil and uwti really headed" for a complete 4 part explanation of how UWTI works). A reverse split would keep it from going to zero, but i hope there is not a reverse split, as a don't see it helping only increasing the share price thus reducing the number of shares you can buy. One way to play the oil move back up is with options (which carry their own risk). SCO goes up as oil goes down and would make a nice play with put options once you believe the turn around has begun, but not while you wait for it to turn. If you not familiar with options then don't even go there. Good luck.
If we should hit storage capacity without a production decrease or a demand increase, then your supply and demand theory would hold true. It will be interesting to see how this plays out. However, I feel that as we get closer to max capacity some spigots get turned off. I have always maintained that the threat to lower oil is present, and have listed previously some scenarios that would take oil lower. But to go way way lower there will have to be multiple factors in play: production, demand, storage, economy, stock market. It is possible for a perfect storm to take oil way down, but my hunch is we stay in a range until the factors become more favorable for higher oil prices and then will move higher to a new trading range above.
Good question, i am not worried about decay so much from here. But it would be hard for me to ride down oil from here if it tested the lows for some reason. Thats is why i am only buying 1000-2000 at a time at certain levels. I am still hesitant despite my new confidence. I still want to buy but i will not do it blindly! I will admit that i am hesitant on the stock market more than oil. I don't expect a crash, but i wouldn't be surprised to see a pullback. I don't think we are out of the woods yet with oil which makes it vulnerable if something should happen with the stock market. I mention the stock market because a pullback might come with some negative economic news which could also be deemed negative with regards to oil demand. I would actually feel better if we went ahead and got a stock market pullback in the next two weeks so i could take that off the table. As i type this the stock market is turning lower. We need a big drop in rig count numbers tomorrow to help offset the big build in inventories this week. How it trades off that news tomorrow will be interesting.
Well it pulled back to the 51 area, got some UWTI but not enough. I am beginning to think that tomorrows rig count may provide more support than it did the last two weeks. The last two weeks saw drops in the count but not enough for the market to care. I am beginning to anticipate that oil will hold firm into that report and maybe go higher from there going into the weekend if the drop is 60+. May have to start accumulating at a higher point than i was hoping for. I will still restate that the wildcard in my newfound confidence is the overall stock market. A sharp correction of any kind will pull oil down with it. If that happens it should be the final pullback we all are hoping for to get long and stay long.
At 9:30 we got the most bearish news possible on oil: 10mm+ build in inventories. Yes most anticipated a build, but not 10mm. Oil traded down on the news, but less than a dollar and didn't break yesterdays low. It held and basically stayed btwn 49.75 and 50 for the next 1.5 hrs. This gave me something i had been lacking: confidence in the short term. I have had long term confidence in oil but not in the short term. Now everyone likes to post their winning trades and not their losing trades so i won't waste your time patting myself on the back, but I bought UWTI during this time based on this price action and sold close to the highs. I may regret getting out too soon because this was bullish action: going up on down news. I don't know if oil will take out 52.00, i am hoping for a pull back to 51 and will start accumulating UWTI there. If it looks bullish tomorrow i will just buy it. Things can change on moments notice, but for now, pullbacks are a buying opportunity. Because as todays action showed us, that just a whisper from the Saudis (they commented today that they see demand ticking up - this was credited for the run up btw) and this thing ready to uncoil. Good luck.
Agreed, on one condition, that oil doesn't go to 40 or lower first. Everyone has an opinion, but I think at best it is a double this year at 6 bucks. But hey, whats wrong with double your money??
I don't think anything is wrong with that.... but if you read my 4 part series you will see that all i am saying is this: if oil goes to 80, UWTI will NOT be at the same price it was when oil was there the last time.
Based on the illustration I provided, although I still plan on trading and owning UWTI, I am beginning to wonder if we will see DWTI anywhere near $10 per share anytime soon???? Don't get me wrong, I would be happy to see 6. But there is another way capture the move up in oil and that would be to buy puts on SCO. As oil has gone down the short position that SCO carries has grown as well. Just an additional thought.
Mike while we were concentrating on oil and wondering when it would turn higher, we should have been betting on the one thing we knew would go up in the spring.... Gasoline!
Hey I too believe oil will go back up eventually. BUT... look at a long term chart and you will see that we lived in world with oil below $40 until 2004. So apparently somebody can make money down there. Take a peek at a chart 1970 - 2015 you might change your mind that oil HAS TO go right back up. You might even begin to think that the norm is down here and the abnormal was the few years it spent up high. You can google the chart, it won't let me post a link.
I have updated my post “Where are OIL & UWTI really headed" with a detailed 4 part explanation of how UWTI works along with an explanation of price correalation between oil and uwti. Good luck.
Thanks. Good question. I assume it is priced by traders & speculators who are watching oil and betting on the direction of oil. Which would mean at times it may not completely be in step with oil. It would be difficult to determine if UWTI was being priced correctly throughout the day. I personally have tried to watch the ratio between oil and UWTI (currently about 50 cents in oil = 10 cents in UWTI) and then tried to trade UWTI based what i perceive to be the ranges oil is trading in. Thanks again and good luck.
Brett, i have updated my post (Where is Oil and UWTI really headed) with a detail 4 part explanation of how UWTI works along with an explanation of the price correlation. Please take a look.