Since this #SaxoStrat was initiated on May 27
WTI crude oil has settled into a range of less than $2.50/barrel which is probably the tightest range seen since the Christmas break last year. Positive momentum has faded but negative price news, on the other hand, has been used as a buying opportunity.
It is also clear from the lack of price movements despite major events during these past couple of weeks that crude oil has hit a sweet spot where buyers are reluctant to take it much above $50 while the longer term outlook continue to attract buyers at lower levels.
Volatility is undoubtedly going to pick up again but in the short term the attention is firmly on whether oil can and will be able to move higher without triggering a supply response from high cost producers.
Based on entry levels, our buy stop is currently located at $50.75 and we are happy to keep it at this relative tight level.
Earlier today, Peter issued a relative long bet on Subsea 7 hedged against the OBX. Considering the holding period of a couple of quarters this relative trade and the WTI short can easily live together. Should we see a correction in oil a better buying opportunity may present itself with the expectations that the changed sentiment in oil markets would only trigger a relatively small correction in the region of 5-10%
— Edited by Michael McKenna
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