The last time I wrote about oil was over one month ago,
I mentioned in the late-stages of the economic cycle, energy and stocks of material companies do well because economic demand is still high and inflationary pressures support prices for hard assets like oil and commodities.
I went long in my IRA buying LEAP options on USO during the pull back.
In November of 2016, OPEC cut oil production by 1.2 MMbpd (million barrels per day) and non-OPEC producers cut oil production by 0.6 MMbpd from January 2017 to June 2017. WTI and Brent crude oil prices rose more than 8% on shortly afterwards. In May of 2017, OPEC and non-OPEC producers agreed to cut the production by 1.8 MMbpd from July 2017 to March 2018.
Last month, Saudi Arabia and Russia’s energy ministers said that the ongoing supply cuts could be eased. Price on USO and Oil went as high as $14.72 and $72.82, respectively before pulling back approximately 10%.
OPEC meets on Friday in Vienna, Austria to definitively decide if they will cut oil production or not. I anticipate a lot of volatility on Friday, price will shoot up or down. However, price is nearing a daily demand zone at $63. The fundamentals in the Market haven’t changed in one month. Thus, until the zone at $63 is broken, I will remain bullish…target still remains $82, first test, price needs to take out the recent pivot high at $72 first.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.