By James Farro, Signalinea, an independent trader, trading since 1995.
I had been building a long WTI position over the past couple of days on the basis of technicals and the geopolitical mess in several regions. Long term, the case could be made that any tightening of world trade due to sanctions against Russia would find increased pressure on liberalizing US oil export laws to take up the slack left by the lack of Russian Brent hitting the market in the West. Very bullish for WTI.
All was well in my thinking here... until yesterday.
Yesterday, 15 minutes before the weekly crude oil inventory numbers hit the wire, we get the announcement that 5 million barrels would be released from the Strategic Petroleum Reserve (SPR), the first release since June 2011.
Oil had been tanking a few days beforehand, breaking all levels of support. Meanwhile, geopolitical tensions only increased the bullish case. But now we know that the news was leaked to the chosen few, well in advance, so that by the time the news was announced, the price already fully reflected the 5mm barrel release.
SPR releases are rare and normally reserved only for times of turmoil in the oil market. This was a surprise release and purely a message to Putin that the financial end of this coming war has already begun. Commodity markets will be used as a weapon against the Putin regime, starting now.
I liquidated my long CL position and don’t intend to play there while price will be the plaything between to empires. There are just much better positions to be had elsewhere. By James Farro, Signalinea
It took a while. But it had to come, the public warning shot – after some ferocious lobbying behind closed doors. Read.... German Exporters Fire Warning Shot About Russia “Sanction-Spiral,” Banks At Risk
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