OIL in the Crosshairs for a Short Trade Idea
The iPath S&P GSCI Crude Oil Tr ETN, (OIL), gained 3.5% the week ending April 14. The gain was due in large part to the reports that OPEC compliance towards the November production cut agreement has exceeded expectations.
Weekly supply data was also bullish with both the API and DOE data showing drawdowns in inventory. According to reports, China imported a record amount of oil in March, despite oil output in the first two months of the year declining by 10%.
Stockpiling reserves, anyone?
Headlines aside, last week’s gain has put OIL in my crosshairs for a short trade idea. Speculators are long but people in the business of hedging the price of crude are net short.
Who do you trust to know what’s truly going on with global crude oil supply? Let’s use OIL’s 17% rally over the last two weeks to our advantage. We have a new short trade idea this week to capitalize on any further strength in OIL this week.
Trade Idea: New short trade ideas can be initiated on a rally to $6.00, or higher. Close all open trade ideas if OIL closes above $6.20.