Weekly Update: April 22, 2015

| April 22, 2015

Weekly Update: April 22, 2015


Big Picture Outlook:

Well folks, it was certainly an interesting week in the oil market!

As you may remember from last week’s update, I mentioned the distinct possibility of a technical breakout in WTI crude if the commodity surpassed $54 a barrel.

It did just that…

WTI jumped to just over $58 a barrel earlier this week as investors looked to the burgeoning Yemen war and the role Saudi Arabia is playing in it.

But there’s more…

Investors are also seeing signs that US production is nearing a peak.  In fact, the EIA is projecting shale production will decline by 57,000 barrels a day next month.

If this production downturn comes to fruition, we have very likely seen the lows for WTI for this year.

Let’s look at what the recent oil upturn is doing for our trades…


Portfolio Highlights:

Editor’s Note: I won’t update every open position in every update.  I focus on the positions with significant news or price movement.

. . . . Oasis Petroleum (OAS) May 15, 2015 $15 calls

OAS ran to just shy of $19 a share on April 15, which sent our $15 calls up to a $3.20 bid- a 146% gain from our entry.  Remember, shares of the Bakken producer tagged our $18 profit target early last week.  As a result, conservative investors should have already closed this trade for a very nice profit.

If you’re aggressive, keep holding for our second profit target at $22.

Congratulations on a very nice trade!

. . . . WPX Energy (WPX) May 15, 2015 $12.50 calls

WPX broke to new multi-month highs in recent trading.  In fact, the oil and gas producer rallied as high as $14.25 on April 15th.  We’re seeing a slight pullback in this week’s trading, but WPX has strong technical support at $13 a share.

With expiration approaching next month, we need WPX to build on this breakout fairly soon.

Keep holding your call contracts for higher prices!  Our profit targets are at $16 and $18.

. . . . Oneok Inc. (OKE) July 17, 2015 $50 calls

OKE put together a stunning rally on April 15th.  The pipeline provider surged over $51 a share as investors priced in growing enthusiasm for the US oil and gas industry.

However, OKE has slowly bled back to technical support near $48.50 this week. We still have plenty of time until expiration so let’s see if OKE can muster up another rally.

Remember, our profit targets are at $52 and $56.  What’s more, we have ample time until expiration.

. . . . Marathon Oil (MRO) July 17, 2015 $30 calls

What a rally for MRO!

The international oil and gas producer jumped to our first profit target at $30.50 on April 15th.  If you’re conservative, you should have been able to collect gains of at least 55% in our $30 calls that day.

We’re seeing a slight pullback the past few days, but MRO has strong support at $30 a share.  If you’re aggressive, keep holding these calls for higher prices.  Our second profit target is at $31.50.

. . . . Freeport McMoran (FCX) May 15, 2015 $19 calls

The international copper producer put in a shocking rally on April 15th.  FCX surged to $21 a share, which sent our May $19 calls rocketing to a bid price of $2.31- a 104% gain from our entry.

Remember, whenever a call or put trade gives us a 100% return, you should ALWAYS take at least a partial profit.

The best part is, from a technical standpoint, FCX looks poised for another run to higher prices.  Remember, our profit targets are at $22 and $23.50.

Congratulations on a great trade!

. . . . US Oil Fund (USO) May 15, 2015 $19.50 puts

Our most recent trade is starting off on the right foot.  USO is trading at $19.35 as I write, which has our $19.50 puts trading in-the-money.

Remember, we established this trade just in case oil WTI crude decided to pull a fast one and retest the low $50 a barrel range.  Given the uncertainty in the industry, that’s still a possibility.

However, we’re keeping a tight stop on this trade.  If oil rallies over last week’s high, we’ll want out of this trade.

Move the risk control line down from our original level at $21.00 to $20.50.

Keep holding these puts until further notice.  Our profit targets are at $18 and $17.


Category: Commodity Trading