Bulls Profitably Ride Oil’s Downtrend

| Tuesday, 8 May 2012 10:33
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(eToro Blog) In the wake of a governmental shake up in several Eurozone countries escalating uncertainty continued the several days long downtrend and pushed oil prices lower still. Brent crude, at least, managed to recovery slightly and was holding above $113 per barrel. However, the price of Nymex-traded WTI oil fell for the fifth consecutive day and analysts say that rising levels of inventory, as reported by the EIA, is not currently supportive and analysts say that the stocks will continue to rise over the next few weeks ahead of the pipeline reversal at Seaway.

Oil analysts say that for the most part it is bargain hunters who are keeping prices steady in today’s trading session, but the general consensus is that oil prices were in oversold territory anyway. OpenBook trader bomax2000 was one of those traders who took advantage of the price dip and brought along his 30 copiers for the bull ride; his long position closed with a 16.82% gain. Over the past several months this trader has a very small 0.7% allocation in oil which has provided him with a 10.8% gain, the highest among all commodities this trader holds in his portfolio. While this trader’s many open positions are working against him statistically in the shorter term (i.e., at the 1-week and 1-month level), at 3-, 6- and 12-month levels the trader has posted profits of 81.4%, 153.6% and 13.9%.

Trader nityonaidu from Singapore was well positioned to capture the downtrend in oil prices; in the past 24 hours this trader has closed several long positions including three with gains of 21.82%, 41.82% and more recently 23.18%. This trader’s 4.8% allocation in oil over the past three months returned a profit of 3.4%, but the trader increased the allocation to 5.7% over the past month which has provided a correspondingly higher gain of 7.2%. For the entire portfolio, the trader has posted a 25.6% profit for the week and 129.1% profit for the month and 29.2% for the quarter.

In the longer term, there is some rising hope that the U.S. Federal Reserve and the European Central Bank might now consider additional easing and markets are already beginning to price in that possibility. Last Friday’s U.S. labor report, which showed significantly fewer new jobs than had been expected, supports the general supposition that the U.S. labor sector is far from fixed, while the outlook in the Eurozone is now clearing deteriorating and likely to need another stimulating jolt.

Copyright 2012 eToro Blog

Note: Past performance is not an indication of future results. This post is not investment advice. CFD trading bears risk to your capital.
| Tuesday, 8 May 2012 10:33
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257
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