Weekly Update: June 3, 2015

| June 3, 2015

Weekly Update: June 3, 2015


Big Picture Outlook:

Despite another weekly inventory drawdown reported by the EIA this morning, the price of WTI crude is back on the defensive.  The commodity fell back below the $60 a barrel mark today after a strong upturn from the $57 area last week.

What’s pushed the price of oil lower today?

The Organization of Petroleum Exporting Countries (OPEC) is meeting to discuss their output policy later this week.  Analysts are expecting the Middle East oil cartel to keep output steady at 30 million barrels a day.

Since there’s still no sign of global oversupply issues evaporating, it’s clear investors are becoming more uncertain about the upside potential in crude.

Let’s see what that means for some of our open positions…


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. 

. . . . US Oil Fund $USO July 17, 2015 $20 calls

Our $USO call position made solid gains as WTI rallied over $61 a barrel earlier this week.  Our $20 calls rallied up to $1.26 a contract in yesterday’s session- a 28% gain from our entry.

Of course, today’s crude downturn isn’t helping at all…

While today’s selloff was unwelcome, it came on low volume.  In other words, there wasn’t a lot of juice behind the bearish move.  That leads me to believe we’ll see a bounce back to higher prices soon.

Let’s keep holding these calls through the Friday OPEC meeting and then reassess the situation.

Remember, our profit targets are at $21.50 and $23.00 while our risk control line is at $19.00.

. . . . Newfield Exploration $NFX July 17, 2015 $37 calls

A frustrating day for this oil producer…

$NFX was within a whisker of a strong technical breakout of $38 yesterday.  But today’s crude downturn sent the name careening back below $37.

Let’s not give this one too much wiggle room.  If $NFX trades below $35.90, conservative investors should close this trade to conserve capital.

. . . . iShares Silver Trust $SLV July 17, 2015 $16.50 puts

Silver took another steep downward turn today.  The precious metal dropped below $16.50 an ounce for the first time since early May.

Today’s selloff sent our July $SLV puts up to $0.96 a contract- a 43% gain from our entry at $0.67.

There’s likely still more downside coming for silver in the near future.  Keep holding these puts for additional gains.  Our profit targets are at $15.50 and $15.00.


Category: Commodity Trading