RE:With All due RespectI agree that short term fluctuations are not as critical if you are taking a longer term approach.
Like you said, the way I trade/invest, for me news like this is critical. It sometimes brings changes of 7 figures either way, so I need to know the news that drives these changes, and identify opportunities to buy or sell or hold, or move exposure from one company over to another.
Anyone that has been around for a while knows that the oil market is tough. Too many variables to predict. The market is very manipulated and moved often the opposite way. It trades technically more often than not, but will blow your account to bits if given the chance. This is made worse if you have a directional confimation bias, like I do being bullish.
That said, in terms of account diversification, I prefer to stay with the things I know, rather than many companies and industries I know little about. I have a reasonably good grasp of the Canadian oil business, and how it relates to the rest of the world. As I think the long term for it is upward, if I make an error and a trade goes the wrong way, I can usually wait a while till it goes green. The penalty is the interest I pay to hold it for that time on margin. Sometimes I have 15 trades a day, sometimes none for days. I have about 80% as investments, and 20% to trade.
I like the inventory reports, and digging deeper into the details, they are full of more useful information than one would think.
For example, inventories and SPR releases are affecting not only the price of WTI, but play a role in the amount of the Canadian crude discounts.
The SPR is either light or sour. As the SPR sour crude release amounts in the US south has displaced gulf coast refinery demand for our crude, it is blowing out our diff, now around $20USD. When the sour crude releases abate, reduce, or stop, there are price changes, and once stopped completely, there will be a pivot back to Canadian crude. That moment may mark the start of a quick $10 pop in Canadian oil price diff, and to the stocks of those exposed to gulf demand like MEG, which will get all the new attention, and are magnified by algos.
I do not focus as much on gasoline storage and the gas crack spread, but am watching the low diesel and heating oil inventory levels in NA and globally. The US will ship product to support Europe as they run out of fuels, making the inventory situation worse, especialy in PADD 1.
Note that part of the big build in crude inventories was our doing. We shippped amost 500,000 bpd more into PADD2 last week than normal. Thats a good thing.
Once SPR sour stops heading to gulf refineries, the attempt to produce more come winter will soon place extra demand for our heavy oil as it nets more diesel when cracked. I watch inventories to find the pivot point that may boost our heavy oil company stocks.
As the price of oil is less than it was at before the Ukraine invasion, and as pump prices are back to where they were too, I do not see the case being made to support additional SPR releases. We have OPEC+ not happy at $80, and ready to cut if oil drops further, neutralizing the effect of any additional SPR move.
It is interesting to learn that the real cost of these SPR barrels was around $270 per bbl ! Here's a good thread on it for those that are interested:
https://twitter.com/anasalhajji/status/1567748721261035522 As what Charlie Munger said regarding holding cash, even with the scary outlook he described, Berkshire is still 80% invested. They are holding what they think are the best companies of a universe of poorer ones, and they are holding cash because price they are willing to pay for others is lower than what they are trading for at the moment.
I feel the same as he does, but with Canadian oil stocks.
Experienced wrote: This focus on weekly inventory builds or lack thereof may help people who are nimble and wise like Migraine but for most of the regular folks, myself included in this category, it is meaningless and of no particular value.
I look at basic economics and finance and take a longer term view.
Many months ago I said when the oil price was around 110 a barrel that it would go to the marginal cost of Saudi production including their social costs to stay in power which is in and around 85 a barrel. Many people thought I was nuts.
Well...with all due respect...where are we now?
I also said that if the price went below that figure that the pressure over time will be for the price to go back up to that figure and if it it did I would buy more oil stocks which I have done last couple of trading days. I didn't buy at 120 a barrel.
I posted Charlie Munger's view yesterday partly because while he has a slightly different investment approach than me, we are on the same wavelength about where the market is going. If you want to to make money in the stock market over time you need to recognize a few things and do a few things...
1....don't fight the tape and get into the the same rythmn as the market - don't fight it
2....recognize that in the short term the market can get things wrong...so while over the long run oil is a good investment as Migraine says - there are times when the market thinks it isn't and that is a time to stay out. Smart money will wait till things are on sale (talk to your wives.... they are good at that when they shop!!).
3...as I mentioned before - when the market seems to be celebrating something that doesn't make sense then it doesn't make sense and get out. Interest rates are going up and will go up more than they have already. This will provide an incentive for people to take money out of the stock market and buy fixed income. Less money in the market = lower stock prices. It is simple supply and demand - nothing new!!
4....learn to figure out which markets are subject to extreme manipulation. Oil is one of them. As Migraine has pointed out repeatly, the oil paper market is 10X the physical market. Lots of manipulation there. Don't get sucked in.
OK enough of rant for now but I hope you get the message!!