Crude Oil Prices, Stock Market, Currencies

Summary: In a short note, we will share the influence of the recent crude oil price deterioration on the stock market: Energy sector and the currency markets.

As a day or swing trader, Crude Oil Futures offer a fantastic instrument to trade with the up- and down moves of the market.

Crude Oil Futures on the NeverLossTrading Top-Line Chart

The chart shows how our indicators catch the beginning of each price move; since July 2014 they all pointed downwards, asking you for selling Crude Oil Futures.

A price drop from $105 to $65 relates to a price change in Crude Oil Futures of $40,000 per contract, with an average maintenance margin of $3,500/contract, had you gotten the direction right, it would have produced you $120,000 of profits, in four months, on a $10,000 investment.

Check out how you can spot and follow such price moves: NeverLossTrading Top-Line.

A $40 price drop per barrel of oil means that all oil producers lost $40 of margin and thus their profitability perspective drastically changed.

On a short note: What are estimated costs to produce a barrel of light sweet Crude Oil?

• In Canada, where a more complicated extraction method is used: $65/barrel
• In the middle east, where you have the lowest production price point: $35/barrel
• Offshore drilling as you find it at the coast of Mexico: $45 - $50/barrel 

With the current market price for crude oil, Canada production has an issue: Profit margins are gone and all other producers realize a big cut in profitability, which will put their stocks and the entire primary energy production sector under pressure.

Crude Oil Prices and Energy Sector Stocks Compared

The above chart shows how the latest price move of energy stocks started to close the gap that had opened between crude oil prices and primary energy related stocks; however, there is still a gap that remains to be there and we can expect that one side has to give to close it.

What does this mean for currencies?

Crude Oil can only be purchased in US-Dollars on a worldwide basis; thus the demand for US-Dollars will drop, lifting the Euro (minor crude oil production) and the Yen (no crude oil production); while the British Pound (heavily related to crude oil through BP) and Canadian Dollar should rather see downside pressure.

Crude Oil Prices and Canadian Dollar Compared

Even so the Canadian Dollar had a slight value decrease in the resent days, the gap opened by the crude oil price deterioration will lead to further price pressure on the Canadian Dollar.

When you want to learn how to trade various financial markets to the up- and downside with different financial instruments or if you are in a business and you want to learn how to hedge against strong price fluctuations: Call +1 866 455 4520 or contact@NeverLossTrading.com and you will learn how to spot and follow those market moves.

We are looking forward to hearing back from you.

Good hedging and trading!

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Thomas 

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FFIV Trading Opportunity Summary

On October 18, we published a trading opportunity for FFIV, which derived from our NLT Stock Alerts and reference the NLT Dark HF Dark Green Indicator, which is part of the NeverLossTrading HF Stock Tradingpackage. 

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How did the trade realize?

In general, we prefer directional price confirmation of the spelled out price threshold in the next bar; hence, the next bar had to trigger our buy-stop at $114.61; however it did not.

Another opportunity to trade the dark green signal is a second bar entry: If the second bar after the trade initiation candle reaches to the price threshold. This was the case and a trade was initiated.

The goal for the trade was specified at: $118.84, while in any case, we wanted to leave the trade on October 29, the day prior to earnings announcements.

FFIV on the NeverLossTrading HF Stock Trading Chart

Indeed, on October 29, the trade target was reached, even surpassed and the trade was closed.

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Good trading,

Thomas