Sunday, April 19, 2020 7:01:27 AM
The world demand for crude oil used to be 100 million barrels per day.
That obviously is no longer the case and we are building up a surplus and our tanks are literally overflowing. Crude oil is literally cheaper than water at the moment oh, and what I don't think anyone understands is that Saudi Arabia is profitable pumping crude out of the ground and selling it for anywhere over $4.50 a barrel. So they don't really give a shit. I believe they produced 36% of OPEC oil. We produce around 12 million - 13 million barrels per day here in the United States. Our shale refineries need to shut down, as there simply is no where else to store the oil. Many refineries will have no choice but to file bankruptcy and of course consolidation will occur.
USO/UCO are they trade or swing trade vehicles exclusively. If one were to be inclined to buy and hold either one of these, it would be my opinion to wait for the June contract (/CLM20) to sell down to $20/barrell. It is presently $25/barrell and it is my opinion that crude oil may have another 10% - 15% Spike if the economy begins to reopen but it would be considered a bounce in a bear Market trend for crude oil. I do not understand nor comprehend at all how anybody on this forum or anywhere else thinks that crude oil it's a certain number and then a v-shaped recovery occurs. There's simply too much inventory here in the United States and we are suffering from a catastrophic midterm decline in demand that started many many months ago before the Coronavirus.
UCO is reverse splitting 1:25 on tuesday, and it is my firm belief that no one will be interested and it because it will be Trading in the $35 - $40 area. People like the cheapy price, not $35-$40 even though it's just a mathematical equation. Unlike a common stock, the reverse split here should actually maintain it's stated design by tracking the percentage gain of crude oil by a factor of 2.
The only time I would consider purchasing UCO is if crude is down 10% and UCO is down say 25% , for a short term bounce/realignment with the front month price.
The only other time I would consider purchasing either USO or UCO is when the bottom in oil falls out and heads toward $15/barrell. I'm not sure if we will get that low but U.S. shale producers would have to shut down completely at that point.
Again, the less seasoned crude oil investor or shall I say most people that are used to trading stocks and don't know much about crude Futures, are assuming you can purchase these ETFs and simply hold on to them. That is the furthest thing from the truth. By Design, these things literally can go to zero. Think about something for a moment. If crude oil goes from $20 to $10 , that is a 50% decline for the USO but a 100% decline on the UCO.
This means the UCO goes to zero and would need to reverse split again or be dissolved like so many of the other ETFs recently.
I will TRADE the UCO only because USO is too slow and can't get out of its own way.
I will GO LONG the UCO for a mid term hold weather is physical and convincing evidence that the global economy and the Nationwide economy is about to recover and we will begin to utilize our SPR ( strategic petroleum reserves).
Again, a month or so ago, I was not this knowledgeable about this particular ETF but through research and spending a great deal of time understanding the Dynamics of how this exchange traded fund loses money over the course of time come by due to contango and the forward role of an expired contract into the next front-month oh, it remains patently clear that it is a day trading or swing trading vehicle only until the price of crude oil stabilizes, makes a new base and then begins to reverse Trend to the upside. That is when you go long this for the mid to longer-term.
I know that you have sent me a lot of other messages and I will try to read those, time permitting. Let's create a nice list of ETFs as well as index funds exclusively designed to take advantage of the lower prices of crude oil with limited exposure to the effects of contango and forward roll.
Recent USO News
- Form 8-K - Current report • Edgar (US Regulatory) • 05/28/2024 01:21:55 PM
- Form 10-Q - Quarterly report [Sections 13 or 15(d)] • Edgar (US Regulatory) • 05/09/2024 07:31:39 PM
- Form 10-K - Annual report [Section 13 and 15(d), not S-K Item 405] • Edgar (US Regulatory) • 02/29/2024 10:22:18 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 02/28/2024 02:25:15 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 01/30/2024 03:54:45 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 12/28/2023 04:23:21 PM
- Form 424B3 - Prospectus [Rule 424(b)(3)] • Edgar (US Regulatory) • 12/04/2023 10:02:52 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 11/28/2023 03:11:29 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 11/16/2023 10:04:21 PM
- Form 10-Q - Quarterly report [Sections 13 or 15(d)] • Edgar (US Regulatory) • 11/07/2023 04:25:33 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 10/27/2023 11:38:08 AM
- Form 8-K - Current report • Edgar (US Regulatory) • 09/29/2023 01:16:59 PM
- Form EFFECT - Notice of Effectiveness • Edgar (US Regulatory) • 08/30/2023 04:15:19 AM
- Form 8-K - Current report • Edgar (US Regulatory) • 08/29/2023 09:00:47 PM
- Form 424B3 - Prospectus [Rule 424(b)(3)] • Edgar (US Regulatory) • 08/29/2023 08:23:41 PM
- Form AW - Amendment Withdrawal Request • Edgar (US Regulatory) • 08/29/2023 04:35:08 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 08/28/2023 11:41:40 AM
- Form S-3/A - Registration statement under Securities Act of 1933: [Amend] • Edgar (US Regulatory) • 08/25/2023 05:29:49 PM
- Form S-4/A - Registration of securities, business combinations: [Amend] • Edgar (US Regulatory) • 08/25/2023 05:03:05 PM
- Form S-3/A - Registration statement under Securities Act of 1933: [Amend] • Edgar (US Regulatory) • 08/14/2023 09:01:00 PM
- Form 424B3 - Prospectus [Rule 424(b)(3)] • Edgar (US Regulatory) • 08/08/2023 08:35:20 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 08/08/2023 08:33:36 PM
- Form 10-Q - Quarterly report [Sections 13 or 15(d)] • Edgar (US Regulatory) • 08/04/2023 01:02:55 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 07/31/2023 02:01:09 PM
- Form S-3/A - Registration statement under Securities Act of 1933: [Amend] • Edgar (US Regulatory) • 07/14/2023 08:31:00 PM
VAYK Exited Caribbean Investments for $320,000 Profit • VAYK • Jun 27, 2024 9:00 AM
North Bay Resources Announces Successful Flotation Cell Test at Bishop Gold Mill, Inyo County, California • NBRI • Jun 27, 2024 9:00 AM
Branded Legacy, Inc. and Hemp Emu Announce Strategic Partnership to Enhance CBD Product Manufacturing • BLEG • Jun 27, 2024 8:30 AM
POET Wins "Best Optical AI Solution" in 2024 AI Breakthrough Awards Program • POET • Jun 26, 2024 10:09 AM
HealthLynked Promotes Bill Crupi to Chief Operating Officer • HLYK • Jun 26, 2024 8:00 AM
Bantec's Howco Short Term Department of Defense Contract Wins Will Exceed $1,100,000 for the current Quarter • BANT • Jun 25, 2024 10:00 AM