- Saudi Arabia's fighting a war for global power by trying to ruin competing shale oil companies. They know they need to be forceful with this, a bit like ripping off a bandaid. It's cheaper in the long run to be really strong now rather than continually having to scare those companies.
- Storage is high.
- Production hasn't been cut, quite the opposite, the ceiling has been raised.
In light of this, I favour shorts and am looking for good re-entry points. I think the August low point around 38 might be good and it's also a POC that has held a couple of days now. I'm basically using recent POCs as possible re-entry points, so 36.80, 37.50, 38.00 and if it overshoots a bit 38.50. Anything above that would force me to reassess.
The possible Fed rate hike might of course through a wrench in my plans, but for now I simply don't see a ton of reasons to go long. People kind of expect a rate hike and I don't expect this to change anything in the long run for oil . I might be tempted to take a few short term longs around 35ish SHOULD I get a strong signal though. In that case, If that move has strength, I'd still look for shorts around 40 even if it's strong.