High frequency trading replaced vinyl records and pit trading. Then we figured out that we can increase the production of oil in America using hydraulic fracking techniques. Well, we knew about it, but when we saw an opportunity to really crank up the volume, we didn’t hesitate. Sure, we let OPEC go ahead try to readjust the market by never pulling back production for a few years and sending WTI prices under $30. But we’re Americans. We learn, adjust and adapt. By the time WTI prices went back up to $50 this year, we were ready with lower operating costs and more efficient technology to make more money on a lower cost barrel. See, we had it all figured out by dumbing it all down.
Now here we are. Another month going by where oil is not really going too far down, but we know it’s not going too far up. We have created a range that is more of a vacuum. Every few months we change the parameters, but it’s the same old range trading. No news about an extended production cut from OPEC will move the needle. Say there’s a possibility of higher demand in the US as we run our refineries at record levels. Nope, not even a Spock eyebrow raised. How about an impending doom and gloom scenario for higher rates and tighter credit to really stick it to producers far and wide. Nah, we’ll believe it when we see it. All that’s left now is for everyone to just keep walking down the cattle chute. Follow the herd in front of you and try not to move too far ahead or fall back too far. It’s a scary time when all we can do is follow along. Gone are the days when we had to think about everything and there were plenty of things to think about. Now we’re here and it’s not the happy place that we all thought it was going to be when we built the Emerald City. Trading without thinking. Thinking less about hedging and all the while all we want is to get a nice bonus for playing the game at the end of the year. Well, it’s never been easy and it’s also never been this hard. The hardest market to trade is always the one that only goes sideways. Yay.
Crude: And another month bites the dust. It’s hard to believe that we’re already moving along to the CLM7 contract. We now pivot past the last month of the year and that should be worth something to everyone trying to play the cash and financial markets. We kick off with resistance here at 4664, 4730 and 4850. We’ll look back lower to support at 4510, 4460 and 4350. We’ll also change the lead spread and the front spread moves up to CLM7/CLN7 and start with resistance at –32, -25 and –13. Support comes back to –44, -57 and –65. Let’s get this week done right and the new contract back in play. Don’t lose your way; follow the Dollar, follow the dream.
Gasoline: OK laziness has been set aside and I’m moving ahead the RBM17 contract. We can start with resistance here at 15052, 15270 and 15438. Support looks below to 14856, 14660 and 14475. The front spread moves to RBM7/RBN7. Resistance at +25, +110 and +200. Support to –55, -124 and –190. The RBM7/CLM7 gets resistance at 1676, 1770. Support falls to 1603, 1542.
Distillate: The calendar keeps us moving and we are focused on the HOM17 contract. We’ll get resistance here at 14585, 14775, and 14955. Support looks back to 14366, 14135, and 13988. The front spread bumps up to HOM7/HON7. Resistance here looks at –48, +35. Support holds down to –76, -88. The crack moves up to HOM7/CLM7 Resistance at 1511, 1576. Support back to 1439, 1366.
Macro Fundamentals: Oh where are all the Funds hiding these days? Oil certainly isn’t one of the smart picks these days. No-body can blame them for not wanting in ever again though. Who wants to put on a trade for months that only moves about 10% in one direction and then corrects 10% in the other direction. They have better luck trading Bonds with that sort of movement. Which of course is where they are all headed until the game gets too overcrowded there. So we wait. Again. Import/Export Prices (0.1; 0.1) at 8:30am ET if anyone cares. More Fed speak later in the day.