There’s a reason crude oil [both Brent & WTI] has the highest volumes, open
interest, & largest VIX of any physical commodity in futures trading … it’s the
most valuable commodity in the modern world, and practically everything you use
in your life has crude oil of some derivative product or another in it, and without
crude your life would be a helluva lot different than it is today, and not for the
better … forget the eco “nutjob” Nazi’s parading around virtue signaling and
talking out their ass for their 15 minutes of CNN or MSNBC fame, trying to
desperately convince the world we simply need windmills and candles, and that
oil is “dirty” … fact is, crude gets more valuable every year that goes by, and
attempts at calling for “peak oil” get trumped with new technology at every turn
… there isn’t another molecule in nature that comes even close to packing an
“energy punch” like a drop of crude oil … “cracked” down into distillate products
at varying temps under pressure, and crude is nature’s most powerful energy
source … the world consumes on average about 90 - 100 million barrels of oil
PER DAY, and growing … most of this is under long term contract with OPEC &
other countries for supply, but supply / demand issues pop up constantly, so
there’s also a gigantic need for “spot” oil deliverable NOW … and it’s all made
possible by oil futures & options, with delivery months going out EVERY MONTH
FOR 10 YEARS [120 deliverable months!].
As longtime readers know, a couple of years ago I tried to host a sister
webpage devoted to crude oil … it came to the forefront cuz at that time
offshore brokerage houses were attempting to offer decent crude oil CFD’s for
client trading … this was way before the CME started its “micro” crude oil
futures contract [1 lot volume = 100 barrels] … for the longest time since internet
based trading began in earnest around 2003, crude oil has never had decent /
tradeable CFD’s that have been competitive with futures … bid / offer spreads
were then, and in most places even now, are a rip off joke, sometimes as high as
8 cents per barrel! … at various times in the past, houses tried to offer crude with
2 cent spreads, but the sad reality is they couldn’t or wouldn’t cuz of greed be
sustained, and after a couple of days or maybe a week, that 2 cent spread
disappeared faster than Biden cognitively explaining anything, and the “bait &
switch” saw spreads balloon back out to 4 - 5+ cent spreads “el quicko”.
Turnkey, for its part has tried numerous times to make oil CFD’s “work” … every
time, though, they trumpet new LP’s [HFT’s to be sure] and a 2 cent spread, the
countdown starts to seeing that blowup in their face, and it’s back to biz as usual
… however, this time around, and for months now, outside of the bat shit crazy
[BSC] days that see a range of $4 - $5+, either up or down, they’ve finally found
somebody willing to host a CFD with a pretty stable 3 cent spread … not fantastic,
as I pointed out the other day, but compared to other markets and their respective
spreads versus their 20 Day Range MA’s, they’re all within hundredths of
percentage points … and where crude sits now with its 20 Day Range MA and a
3 cent spread, it’s more advantageous than any FX pair when compared based
on this metric … and oil MOVES, something you can’t say about anything in FX,
except maybe one or two days per month … so, it appears [knock on wood] stable
oil CFD spreads “might” be here to stay … and what makes me optimistic about
this, is that other NO KYC houses [e.g., SimpleFX] offer crude oil at a 3 cent
spread … go to the traditional houses that want to know everything about you,
including a note from your mother to open an account, and the spreads jump on
average to 5 cents, which is the industry standard spread … screw that! … now,
there are some places like PLUS500 [no U.S. clients allowed], and IG that have oil
spreads below 3 cents, but not by much and then there is their commission
schedule … quite frankly, I’ve a got a very keen eye out for the first crypto house
to start trading crude oil based in either BTC or ETH, and that will be a complete
game changer!
Quite frankly, anybody that trades futures in the U.S. [regular or micro, makes
no difference], with a U.S. based broker is nuts … why? … 1) CFD’s are not
permitted by law, and 2) 1099’s are generated and sent to the IRS, where at some
point in the future you’re gonna be audited … absolutely guarantee this … in
other words, there are literally ZERO advantages to being with a U.S. broker, and
plenty of reasons not to, with the 2 named above just the tip of the iceberg
… wanna trade futures and not worry about 1099’s and all of the other shit
associated with the U.S.?? … check out “Investors Europe” one of my favorites,
but there are plenty of others if you do some simple internet research.
What I’ve always liked about Turnkey, especially now that they are NO KYC and
accept anybody, is their consistency in the products they offer, and I’ll give them
credit where credit is due, when it comes to both Brent & WTI oil, when it doesn’t
work they go out and find somebody to make it work … it might take longer than I
would like, sometimes months, but eventually they try and get it right … and with
the volatility we’ve seen in oil over the last several months, excluding the DOWN
$10 day on November 26 due to the Omicron hoax, and we’re all gonna die!, and
spreads blew out some to around 4 - 5 cents, other than that it’s been a stable &
consistent 3 cents every time I look at the quote throughout the day … so it
appears they’ve finally got it right … well goody, cuz now I can trade it [having
said this, I’ll open my screen on Monday and the spread will be 5 cents and my
head will explode] 😂!
As I have stated before, “risk on / risk off” [RORO] is most represented in
today’s markets by either moves in SP500 OR USDJPY … and while crude can
move on just about anything, including of course OPEC+ news or anything VLAD
says, WTI is very much a “MOMO” [momentum] market, and it’s dynamics play
out differently than anything you’ll see in crypto … to generalize, and this is not a
100% call cuz nothing ever is, but most often short term “day trade” or “scalp”
tops / bottoms come on definitive candlesticks easily identified by 1) “failed”
double tops / bottoms, where it can just miss, equal, or go slightly past, and then
reverses with a vengeance, or 2) bullish [bottoms] / bearish [tops] engulfing
candles after a decent move … remember, this is a generalization, and you always
need confirmation that the signal is legit, and even so, there are times when the
market traps traders … you very often do see large green / red spikes in price, and
if they come after a move has already been underway for a while, this often
represents the end of the move … in other words, mini capitulation of those on
the wrong side … you see this an awful lot in crypto pairs as well.
Like crypto, specifically BTC & ETH, everybody who trades crude knows it can
move and move fast … and therefore, the psychological makeup of crude is a lot
like crypto, and moves become self fulfilling prophecies as traders act like lab
rats ringing a bell for the next treat … in other words, those who panic first get to
panic again later, and it creates an environment for trading that is so foreign to FX,
at least since 2015, and more likely since right after the 2008 financial crisis,
where nobody panics cuz why? … well, do that in crude or crypto and get the
stretcher ready to carry you out “toes up” … you simply cannot say, “”gee this
never happens so I’ll triple up [or worse] and it just keeps going … until of course
every rat on the wrong trade ship has “jumped” … and now it reverses with a
vengeance!
In addition, the large players know all of this to, and if it’s to their advantage,
they’ll gut price, explode VIX, and be ready to take the other side in a
microsecond … in other words, the “whales” in oil are very much part of the
dynamic, so pay attention to the news flow … anything that affects either supply
issues, or as we’ve seen the last 2 years demand issues from declining
economies, can have a cascading effect that goes way past where you think it
might stop … you simply have to be on the “MOMO” side of the short term trend
if long, or reverse of that if short … if not, you’ll be pissing into a CAT 6 hurricane
wind and hoping not to get hit … good luck with that!
Today’s markets moving slightly, and how much LOL do I get from seeing the
“Spoos” drop on an Elon Musk tweet? … tells you a lot doesn’t it? … and like
clockwork, oil doesn’t like Musk’s prediction of a 2022 recession that might
stifle demand a little … volume & liquidity in both markets a joke, so moves are
extremely exaggerated … ETH walking down the hill today, very slowly to be sure,
and I’m wondering if this year December sees some tax loss selling in both BTC &
ETH? … if you need the loss to cut taxes, why not? … come Monday buy the
alternative to avoid “wash rules” and you save a bundle while still being in the
game for further price appreciation … this might explain “whale” selling these
past few weeks … dunno, but it makes sense.
No trades today in anything, as I have already stated yesterday I wasn’t gonna go
into this clusterfark of rotten volume & liquidity on the last day of the year … why,
what’s here that’s skyrocketing? … granted, oil is moving some today with a
decent range of $1.85, which considering it’s New Year’s Eve is better than I
anticipated … mirroring the “Spoos”, and taking their cue from “risk off”, outside
of the NYSE open that saw a good rally in crude, the bottom fell out from the top
and it’s been down ever since … and if volume was thin earlier [it was], it’s
downright non existent as we move into the New York afternoon … normal hours
of trading today and my guess is by the time we hit 4 PM EST, there won’t be 2
traders anywhere caring or watching the close … we’ll see, but I want no part of
this cuz the dangers here are amplified while the rewards stink.
Sunday’s update blog sees the first day of 2022 … I hope all of you reading this
have a safe New Year’s Eve, and a great 2022 … I’ll do my best to “make it
happen” starting Monday … best wishes everybody!
… outta here … “The future’s so bright I need sunglasses”!! 😎
… Onward & Upward!!
-vegas
