Crude Oil: Playing the Surprising Data
By Bryan Bottarelli
Taipan Financial News
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In This Article:
- The bulls are still in the game, both in the market and in oil.
- The drop in crude oil supplies shocked analysts, and are now 5.1% less than a year ago.
- Playing long-dated calls on oil is almost always a sure bet each time crude prices fall.
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Let’s be honest. Today’s market rise -- however small -- was a strong follow-up to yesterday’s 160-point jump. This shows that the bulls are certainly not out of the game -- and it only takes one good week to get the markets back on track.
Today’s biggest sector move came in oil -- as crude futures engaged in an impressive rally sparked by U.S. inventory data that showed crude supplies declining for the first time in three weeks.
Data released this morning showed that crude supplies dropped 4.8 million barrels for the week ended March 2. This came as a surprise to most analysts -- who were fully expecting the data to show a third-straight weekly increase.
But as it stands, the Energy Department notes that crude inventories are now down 5.1% from a year ago. At the same time, motor gasoline supplies fell 3.8 million barrels -- which are also down 3.9% from a year ago. Even distillate inventories (which include heating oil) fell 1.3 million barrels, making a total supply loss of 19 million barrels over the past six weeks.
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Crude Oil: A Surefire Long-Dated Options Strategy
On this surprising news, crude for an April delivery jumped up $1.18 to reach $61.85 a barrel on the New York Mercantile Exchange. Also, April reformulated gasoline futures were up 2.57 cents at $1.879 a gallon and April heating oil rose 1.27 cents to $1.76 a gallon.
All this upside momentum pushed oil stocks higher across the board -- which helped the upside call play that Adam and I are holding in WOW.
Like we’ve been saying, it doesn’t take much for oil prices to make a quick upside jump -- and that’s why it’s smart to carefully buy longer-dated call positions whenever the prices get too cheap.
This trading strategy has proved to be a winner time and time again -- and with the summer driving season squarely in our sights -- the time to act is now.
Bryan
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