Oil Price - June 20
Posted: Thu Jun 20, 2019 5:32 pm
The front month NYMEX contract for West Texas Intermediate (WTI), which is now the August contract, gained 6% on June 20 to close at $57.07/bbl. At the time of this post, WTI has moved another $0.60/bbl higher in after-hours trading.
> Confirmation that Iran shot down a U.S. drone that was flying in international air space is the first direct military action between the two countries.
> Trump: "Iran made a Big Mistake". A military response from the U.S. would (IMO) push WTI over $60/bbl.
> Brent was also up 4% to $65.14/bbl. My guess is that the larger percentage move in WTI was short covering. WTI futures contracts are used by most speculative traders.
> IMO oil was oversold and the other technical bullish signal is that there is a clear double bottom for WTI just below $52/bbl. Traders see this as a "floor" giving them more reason to go long. To get my valuations for most of our Sweet 16 I would need to assume WTI near $40/bbl for all future periods to get today's share prices.
> Plus, EIA reported a draw on crude oil inventories and more draws are expected as we move deeper into the summer strong demand period for transportation fuels.
> U.S. dollar moved lower, also supporting higher commodity prices. See: https://www.marketwatch.com/investing/index/dxy
Our Sweet 16 is up 6.26% since last Friday's close. Nice move, but the group is still grossly oversold. Investors need to see higher oil prices hold for several days before they gain more confidence in the upstream companies. Obviously, the companies like CLR and EOG that don't have much oil hedged have the most upside to oil prices.
> Confirmation that Iran shot down a U.S. drone that was flying in international air space is the first direct military action between the two countries.
> Trump: "Iran made a Big Mistake". A military response from the U.S. would (IMO) push WTI over $60/bbl.
> Brent was also up 4% to $65.14/bbl. My guess is that the larger percentage move in WTI was short covering. WTI futures contracts are used by most speculative traders.
> IMO oil was oversold and the other technical bullish signal is that there is a clear double bottom for WTI just below $52/bbl. Traders see this as a "floor" giving them more reason to go long. To get my valuations for most of our Sweet 16 I would need to assume WTI near $40/bbl for all future periods to get today's share prices.
> Plus, EIA reported a draw on crude oil inventories and more draws are expected as we move deeper into the summer strong demand period for transportation fuels.
> U.S. dollar moved lower, also supporting higher commodity prices. See: https://www.marketwatch.com/investing/index/dxy
Our Sweet 16 is up 6.26% since last Friday's close. Nice move, but the group is still grossly oversold. Investors need to see higher oil prices hold for several days before they gain more confidence in the upstream companies. Obviously, the companies like CLR and EOG that don't have much oil hedged have the most upside to oil prices.