RE:Jerry Maguire in reverseOK, I'll try to add more context to the information.
I have always been known to overcomplicate things and ramble on so I have been trying to be more concise in communication.
I'll ramble a bit now.
The oil market is very complex, with many variables in constant flux. One must try to be aware of as many factors as possible, and learn to understand how each one influences prices in a positive or negative way.
There is a lot that I do not understand yet either, but am always learning.
One must be humble, and always know your place when stepping into the ring and putting your money down.
We must realize that of all those involved, retail investors like us are the least informed and connected to news and things driving markets. In comparison to most in the market, we are flying blind. This is why the big trading houses like Trafigura or Vitol or oil company trading desks consistently make billions every year as the markets go up and make money when they go down. They are connected, international, taking positions well before news is released, and moving it in unison.
Technical analysis works more often than not because hundreds of thousands of traders and algos use it and act on it, so it is a self fulfilling prophecy.
Meanwhile, we regularly get knocked down, or are left to pick up the crumbs. To succeed in oil trading, and by extension the related producers, one must be on the same side of the trade as the big guys are as they move the market up and down, and be prepared to exit quickly with a small loss if you are on the wrong side.
Otherwise, one can watch the overall news and trends including the supply/demand/inventory charts, and if you see that it supports bullish oil fundamentals in the future, you can take a longer term core position holding it until it matures. In the meantime, collect the dividends and ride out the swings.
I do both, with only slightly better than 50% success rate on short term trades with stop loss points, but much greater success rate on long term hold trades. As the big boys manipulate and swing the market to a technical low, I stage in slowly to enter leveraged call option positions with enough time for the beaten down stock to recover and play out. This has been very profitable over the last couple years, so I welcome the volatility on our way up.
As Experienced has pointed out, there are strong negative issues like inflation, debt, interest rates, and global recession to deal with and further general market pain to come, which willl influence the oil market and oil stocks in a negative way. The question is by how much.
All the data I see is indicating that future oil supply will not meet global demand, and we are not increasing supply. The renewable transition and the move to EVs are not proceeding nearly fast enough, not even displacing the additonal energy demand increase from the rest of the world as a whole.
Governments around the world are doing nothing to stimulate supply. All the news we hear of their grand schemes will do the opposite, and reduce supply while stimulating demand and make the deficit worse in the future. We hear of windfall taxes on energy companies that will curtail supply, subsidized fuel costs and energy rebates will promote demand, SPR releases promote demand, export restrictions reduce supply, and oil lease development rule changes also reduce supply. The ESG and anti fossil fuel narrative that has infiltrated government policy has paralyzed and stranded development, reducinng supply. The industry has been told that it will be stamped out so no company wants to invest in a multi decade ROI refinery or oil project. All these actions will cause less supply, and demand increases, while alternative or renewables are very far from being able to replace them.
The charts I have posted along with continued weekly US net draws show that we have a structural supply deficit. This is not sustainable. Demand must therefore fall and come down into balance with supply. Either we will have much higher oil prices with demand destruction, or a recession, or a combination of both. I'm betting we will see both, higher oil prices and a recession.
In the meantime, the market is placid, and we continue to churn until certain catalysts are breached. With global spare capacity continuing to erode into a razor thin margin, the potential grows for a massive move up in a quick knee jerk reaction if stuff hits the fan.
Obscure1 wrote: Migraine:
I'm grateful for your input and I'm pretty confident that I'm not alone.
I'm a numbers guy from way back.
The numbers in financial statements tell stories if you know how to read and interpret them. The numbers without context (the Notes to the financial statements) are often meaningless as they are impossible to interpret. Millions and even billions of dollars are posted as one line entries with descriptions that don't really tell you anything.
The reason that I bring this up is because I'm trying to do a Jerry Maguire in reverse. In the movie, Tom Cruise pleads "Help me Help you? This post is about me trying to Help you so that you can Help me (and the rest of us that are grateful for your posts)
As I have posted a number of times, I'm not an oil guy.
The primary reason that I post on the SU forum is to learn about the oil industry in general and hopefully glean the occassional nugget about SU. In return, my quid pro quo is to offer up the odd insight that I might have in regards to market behaviors or interpretations of SU financials beyond the obvious.
The charts and graphs that you present, along with the weekly EIA numbers are nice as it saves us from searching for them if we even knew where to look.
However, the real value to me is your interpretation of the information that you present. Numbers and charts and graphs without context are pretty much lost on somebody like me who doesn't have a clue about the oil industry.
So what I'm really asking, in my Help you Help me version, is for you to provide your insight whenever you post stuff. While the meaning of the charts and numbers may be easy peasy to you and second nature, the message sometimes eludes me.
My hope is that you will take the above constructive criticism as a sign of my respect. My goal is that you will embrace the message and attempt to dumb things down so that people like myself can gain even greater value from your experience and insights.