Peak bull crap – how oil futures curve have little predictive value the market oracle text editor windows 7

.

The oil market is the hot market right now from a news generation standpoint convert us dollars to pounds sterling. But there are a lot of people writing and even trading in the oil market that frankly don`t have any clue what they are talking about. I have read some real rubbish the last few months regarding the oil market, and with the recent fall in prices, the last few days have been characterized by peak bull crap. Maybe if anything else this is an indication of the bottoming process in oil usd today rate. Sort of like all those do it yourself Gold Mining shows hitting the reality television scene pretty much nailing the near term top in the gold market.

Remember we have been doing this a long time, just read some of our older stuff where we break down the huge drop in U.S. Imports of oil from a finance and numbers analysis with our conclusion that the oil market was long overdue for a major pullback just based upon the US Domestic Oil production pushing down External Imports of oil to such a degree that that there was no way a slowing China could possibly eat up this difference because the numbers were so huge.


That the oil had to go somewhere, and frankly we were surprised that it took the rest of the market so long to get it.

The oil futures curve used to be more relevant with Contango and Backwardation analysis and to some extent it becomes self-fulfilling and pretty useless as an indicator of market strength or weakness that is already known in the market venezuela money to us dollars. Thus anybody today who routinely starts referring to these two terms for their price predictions for the oil market, is only getting the derivative cause for the price movements in the market hex editor windows 10. Someone who knows what they are talking about will just stick to the primary cause.

Now onto something that really is completely false, this idea that the futures forward curve tells you anything about the future direction of the oil market. This is about as bad as you can get in any oil analysis. It basically screams to any trader who has long term experience in the oil market that this person is a novice hack, and basically has no clue, and doesn`t even know that they have no clue what they are talking about binary to english translator. The forward curve is completely bullshit as any indicator of anything other than a reflection of current market sentiment exchange rate mexican peso to us dollar. It has no predictive value in the market. In fact, it probably is more of a contra indicator than anything else.

Back to the example after covering some background issues, so when the front month oil contracts spiked on Middle East events they would bring all the other forward months on the curve up with them. Like this latest Middle East tension event would stop the flow of oil, so you would have the front month futures contract trading at $115, the next month at $114, then $113, $112, $112, $111.50….and so on gbp usd forecast. But all those forward prices on those futures contracts were just a reflection – and moving off the front month trading activity – and current market sentiment at that moment in time.

Yes the contract was in slight Backwardation, but that tells you nothing from a predictive value for what is going to happen in the future usd canadian exchange rate. As all it would take is an actual physical shortage issue event and that entire future curve could in a day go into major Contango if actual oil fields were taken offline. And if/when it did occur this fact would have no future predictive value regarding price or market direction because two weeks or two days or two hours later news could come out showing that there was no long term damage to the oil fields and they will come back online shortly.

Just because five months out on the curve come in as oil sentiment at the moment (in the midst of a January slow time in the market and oil is being slammed down) is poor has about as much long term predictive power or indication about where futures prices will be when that contract rolls over as a person holding a water finding stick trying to get water because they are thirsty. Just look at the trading volume and open interest out on the oil futures curve and this tells you all you need to know about the significance of the futures curve asian stock market futures. There are some bets placed around the December contracts at the end of years two years out, mainly 2016 and 2017. And in between there isn`t much of anything going on except computers trading against an occasional computer for an arb play.

(c) 2005-2017 MarketOracle.co.uk (Market Oracle Ltd) – Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions currency converter aud to usd. By using this site you agree to this sites Terms of Use.

From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.

All materials are found on open spaces of a network the Internet as freely extended and laid out exclusively in the fact-finding purposes. If you are what lawful legal owner or a product and against its placing on the given site, inform us and we will immediately remove the given material. The administration of a site does not bear responsibility for actions of the visitors breaking copyrights. abuzesite@bigmir.net

banner