19 May – Comeback

I decided to stick to my positions and to add more positions as oil prices were falling ( table below shows 0 positions for oil as they expired on Friday 19 May . Actual futures positions at most was 60 (aprrox. 2.4mln$ exposure), more than I had since my last post (28).) I took a huge exposure to an oil, as prices were falling my conviction of rising oil prices were building up. There was an indication of OPEC and Russia deal for an extension deal which I was predicting to happen. It looks like they even want to extend the deal beyond 2017 to 2018. That is a good news for bulls. That is what many traders had not expected. It looks like Saudi Arabia and other nations are really keen on cutting supply to the market despite US production rise. There is no way they would have been able to stop US production even if they had taken another course of action which they did in 2014 and see where that brought oil nations at. Strategy Saudi Arabia implemented in 2014 was actually coming from their experiences that led to falling revenues in the Kingdom after implementing 2 strategies in 1980s which were backfired. 1. cutting production which was opposite to what they did in 2014, 2. flooding the market later which played against them once again.

US companies are getting better at cost cutting by improving the technology in upstream and lowering cost per barrel. In Permian basin cost per barrel has fallen to 20$ p.barrel for some wells.  Furthermore, as I mentioned earlier Saudi Aramco needs higher oil prices for IPO valuation, therefore, there is an interest in higher prices for the kingdom. That being said, however, I will be reducing my positions at this level of uncertainty as it becomes more speculative when price moves in a range.

I am still stuck to my gold positions. They rebounded as Dow fell more than 300 points investors were rushing for gold. That trend will continue. I do not see any major reason so far why gold prices must get hurt badly in the near future. I am riding on long term trend so far. If gold prices approach 1300 level I will reduce my position in gold to see where the trend is going after. So far stick to gold.

Trump fired FBI director Comey which was a major reason for the selloff in the financial markets. Trump further traveled to Saudi Arabia and made 110 bln$ arms deal. The man does not care about consequences of the deal at that scale. He acts as how he has been. Businessman..

So far, I have not been able to trade actively on the stock market and currencies cause due to personal reasons I can not follow the market closely and don’t make any trades. I will start writing on them soon.

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