Trading Crude Oil: Counting Barrels

A new all time high for crude oil ($112.20) was hit today. All time high is quite a statement if you think about it. Crude oil has never cost this much in the history of the world. So that annoying question, how high will it go, is still out there. Pundits base their predictions on past history. This is all new history (is there such a thing as new history?) for this bull market in crude oil.

All traders can do is trade the direction that's in front of them. All consumers can do is stop driving or pay up.

We have another investment thesis that we may discuss in detail later, but the premise is to own companies that you pay hundreds of dollars to each and every month. That way when you "filler up" you are paying yourself, as you own the company. :)

At least today we have a reason for the large move in crude.

Every Wednesday the U.S. Department of Energy publishes their Petroleum Status Report. This is usually a good day for trading as we have the two requirements we need to trade, liquidity and range.

Today the the street was expecting a 2 million barrel increase in crude inventory, and instead got a 3 million barrel decrease. Thus we see action like this. That 3 minute bar after the report came out is a $2030.00 price move. In case you didn't quite get it, that's $2030 in 3 minutes.

Needless to say it's a report you need to be aware of if you trade crude oil. Price action like this will blast through limit orders and market orders will see just a tad of slippage.

It is fun to trade though.