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Dodging Bullets, Matrix-Style
The oil industry has yet again dodged a bullet. Felix was the second Category 5 hurricane to enter the Gulf of Mexico, and the second to miss U.S. major oil infrastructure. Hurricane Dean missed, and a lot of traders are still stinging from the swift drop in oil prices from that non-event.
This time, traders were smarter; they didn’t jump the gun, and now they’re not holding onto a bunch of long contracts over an open chasm of falling oil prices.
This time, you should follow the traders.
Oil futures traders cashed in over 13,000 long contracts and are now left with fewer than 26,000 lots. That’s the smallest long position traders have held in six months. That means quite a few are expecting a drop in oil prices.
I think so, too. Over the next few days, watch for a $3 hair cut for oil prices. Cover your long positions or consider a hedge.
Of course, this is all contingent on Henriette being another non-event in the Gulf. More on where oil prices are headed in today’s TFN E-New Alert.
S.R. Nunnally
Editor, Material Profits
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