Wednesday, November 30

Today in response to the mild success of the OPEC deal we’ve added USO to our trade roster. UWTI would be the preferred vehicle since we know the price is upward bound, but the impending delisting of that ETF means that volume is down to dangerously low levels. The price of UWTI climbed dramatically early in the day, but volume stayed pathetically low at around 40,000. USO on the other hand had premarket volumes over 100 million. Unfortunately most of USO’s growth was done pre-market in a big burst at exactly 8:05 am – just before the final results were announced.

Anyone who managed to hold on since yesterday make 9% in a moment, but consensus had turned hard against a favorable outcome by noon yesterday. Russia didn’t attend, and Iran vowed not to follow any deal they didn’t like.It’s looking like the final deal has Saudi Arabia agreeing to take most of the production cut, with Russia only going so far as to agree to a production freeze slightly above their current production levels.

Around 1pm today USO went into a clearly overbought condition, and the market responded by withdrawing almost 20 points until close. Fortunately we caught the signs before it occurred and managed to turn today’s trading session into a fairly profitable one.

One final note – this whole event has made it clear that my portfolio is not adequately exposed to energy in the long run, and a few LP’s that I hold (PEGI and GPP) are actually negatively correlated to oil. As we’re entering a new bullish oil market through at least next year I’ll have to correct that.

 

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