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Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
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Amazing that since everybody started talking about backwardation the market has done nothing but go straight down and significantly deepen it's contango.
Since the podcast was published, Aug18 CL has dropped $6.07 from $48.60 to $42.53 while Dec25 crude has rallied $0.43 from $54.02 to $54.45 and in reality you couldn't even buy it there, as I think z22-z25 settle is probably 30c to low. So despite a market sell off, the chance of buying the back of the curve cheaply has gotten worse!
The small bounce last week on CT let me to sell CTZ7 DEC 06 C 85 calls.
Reasons:
- seasonality calls for a down move
- the chart is quite bearish
- the Commercial in the CoT are reducing their shorts, which would point to further down momentum
In the weekly chart CT seems to be right at support, so I probably should have waited a bit.
Lets hope the weather holds.
So if the producer(commercials) are less short, they must buy back their short position which could ultimatly push the price up. I am still trying to figure out how to utilize the CoT data.
I have no insight into the Ct market so I am just speculating:
When prices fall, the enduser of CT (manufacturers) are taking advantage of the low prices and are buying more, since it is fairly easy to store and they know what they will need in the next months.
When prices go up they can use their stored CT for a while an will buy less.
The commercials are both producers and endusers, and they not always have the same goals.
What I assume in the CoT data: they are the people with most knowledge of the CT market.