Trading Trump: Part 2 - Oil

3:50 AM

Trading Trump: Part 2 - Oil 



Investments in the Eagle Ford shale of south Texas on average need a Brent crude price of $48 a barrel to break even, on Wood Mackenzie’s calculations, while projects in the Wolfcamp formation in the Permian Basin in west Texas need $39.

“There are more opportunities to invest in the US, and that’s where the investment will take place,” said Mr Flowers.

“If your investment options are in deep water, you’ve got quite a task on your hands. You might be asking: ‘Should we be getting into tight [shale] oil?’”

-          Taken from the FT.com (https://www.ft.com/content/0a7a817a-4863-11e6-8d68-72e9211e86ab)
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In the book i mentioned in my Vlog, Great Again: How to Fix Our Crippled America, Trump has laid out plans to depend on the onshore production of oil, if need be. 

His personal view on the oil producing countries is that some of them are funding terrorists. 

With Oil production cost so low in the middle eastern country, it was always speculated that OPEC wanted to suffocate the growing Shale oil market. 

However, with Trump at the helm of one of the largest oil consuming economies and wanting to keep profits in America (keeping terrorist broke?) it is not likely that he will allow American oil companies to suffer at the hands of OPEC much longer. 

It is a long shot, but an increase in the tariffs for oil produced outside the US could possibly achieve this objective, although the increase prices will upset citizens.

This could explain the sudden cooperation between the various countries as they realize that Trump is not to be trifled with and the time that they have as an oligopoly power has likely come to an end. The bigger bully steps into the ring!

If the number for the Financial Times is correct, the breakeven point of the oil producers for US producers plus a little margin should represent an upper limit to how high prices can go. So approximately $55-60 would be the absolute upper limit of oil.

Lower limit stands at the previous lows at $39+ level.

With a positive risk reward, it might be interesting to explore on a longer term trade, in the meantime we have about $10 to go and we have some exploiting to do especially if OPEC is unable to reach a deal at the coming meeting.


I am going to test a few technical systems to see if  i can exploit this going forward, however, I have strict criteria for what qualifies to meet the monthly income requirements. Do not want another JPM experiment gone wrong.

More updates on my Blog coming soon!

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