Posted December 03, 2014 Matthew Vickers
I am happy to win the trader of the month prize for November, which has been a particularly interesting and challenging month. This month the majority of my trades have been in Brent and WTI, I have also begun to experiment with trading Euribor calendar spreads. This month has been especially interesting for oil trading. Oil has recently hit 5 year lows, following an OPEC meeting which resulted in no cuts in oil production.
No cut in production by OPEC means that the oil market continues to be oversupplied and it seems as if a price war is emerging between the US and Saudi Arabia. Low oil prices will hurt nations such as Russia and Venezuela, which have break even oil prices of around $101 and $121 respectively. The big drop in Oil prices is predicted to cost the Russian economy around $100 billion this year and has already resulted in the biggest one day drop in value of the Russian Rouble in 16 years. America will now begin to feel the pinch of low oil prices, as the break even oil price for them is around $60-$70. Middle Eastern nations will be the least worried at the moment as nations such as Qatar and Kuwait can extract oil the cheapest and break even at around $40 and $60 respectively. The question is, how much lower can oil go? All big banks seem to be lowering their forecasted prices for oil next year and OPEC will not be meeting for another few months. It certainly looks set to stay very interesting and volatile.
This is only my second month of live trading, but one thing that has become apparent to me is that in order to be successful as a trader you need to be continually evolving and be able to adapt to changing markets. One of the best ways I have been able to adapt is to organise the information the market is giving me in a clear way. One of the key reasons I believe that I have been successful this month is because I have been very focused on finding new ways of analysing and interpreting the movements of prices. By recording price movements every 30 mins, I am able to see what kind of ranges that spreads, flies and condors have been moving in. By mid day it builds up a very clear picture of which flies are ranging and gives me a good idea of what prices to buy and sell at.
The prize for winning this month was a red letter day to fly a microlight, which I am very much looking forward too. I will most likely be booking it up for Spring time, in case the microlight or I freeze in mid air, given the current weather!