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The Market Tells Me All I Need to Know

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Posted on Thu, 10 January 2013 20:35 | 0

This is the mantra with which I will start my first entry for oilprice.com subscribers and will head everyone thereafter – it has been my guiding principle in my trading and has served me well.  Never be so smart that you can’t be swayed in your judgment by what the market is telling you. In the end, being right is nothing – making money is everything. 

So, what is the market telling me this week? 

There’s been a slackening in the WTI-Brent spread over the last 3 weeks of December, from over $25 premium to under $20, although in the last day or so we’ve seen a move just slightly over that round number again.  Now, we’ve seen moves back and forth in the WTI-Brent spread before, and to quote a monster commercial oil trading friend of mine “If I’m ever convinced to try and trade this spread again, promise to shoot me” – meaning that I’m not about to try to tell you precisely how more ‘normalized’ the spread might become or when it will make another run back to the highs.

All I will tell you is that the market in this spread is trending lower and has pressure on it, at least temporarily – and that will bias many of the trades I will look at over the next week and perhaps several, depending on where the spread goes from here.  Here are two of those trades:

First, a WTI/Brent spread with this kind of downwards pressure is going to put an UPWARDS…

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