I think we need to get used to it at $100 plus for the time being. I agree OPEC not making any output increase will be a factor, but also, $100 a barrel is a major trading spot for oil traders.
I think that past 6 months to a year $100 calls were big, but traders kept the ceiling at $100 as well probably because of short positions or puts in the $90 range. You can see this type of trading activity if you watch the charts before options experation dates each month. It is interesting because you will see a run up in oil right before the close of the options, trying to get more of them "in the money", but once it doesn't happen you will see oil pull back for a while as traders reprice the $100 calls and take another run at it later.
NOW, I think you will see $110 be the new ceiling and calls be in the 110-115 range, so traders will push those ceilings to get options in the money, but the new floor on puts and such will be $100. I think the game has changed and once we got past $100 for real (we have touched it or just passed it for dumb trader reasons before) but now I think $100 is our new floor until something major happens.
I know OPEC, production, output, demand, and all these types of numbers move the market just as much week to week and month to month as the data comes out, but the profit driver behind alot of it is interesting to watch and see how much it can impact where the prices go.
For the other trading gurus on here, I know this is a spotchy way to explain things, and I am sure some of you will correct me in areas!
Tim
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