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United States Crude Oil Inventories March 31 2021


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What does the data mean to the market?

 

The data indicates the number of crude oil barrels held by commercial firms in the US; this inventory is taken weekly and indicates increases or decreases needed in supply which then affects the price. A Positive number is bad for the oil price. There is other oil data released the night before this report, API Weekly Crude Oil Stock, which the market looks for as an indicator of today's report, which can gauge how it will respond.

 

There are two mainline of data to focus on. DOE Gasoline Inventories and DOE Crude Oil Inventories, the two lines must not conflict to make this data tradeable; Oil is the driving force behind this report.


 

Historic Deviations and Their Outcome

 

March 24 2021 - Not much of a deviation, but Gasoline seems to have driven price action, and maybe API wasn't considered so much by the market this time?


 

See Chart here:

https://calendar.galaxysoftwareinc.com/#/chart;i=34656;t=2021-03-24%2014:30:00.0;s=USDOIL;r=M1 

 

March 17 2021 - Mildly positive overall from both lines, and OIL went down in a bumpy way. So as expected!

 

See Chart here:

https://calendar.galaxysoftwareinc.com/#/chart;i=34164;t=2021-03-17%2014:30:00.0;s=USDOIL;r=M1 

 

March 10 2021 - This is an excellent example of why I wouldn't trade when gasoline conflicts with oil.

 

See Chart here:

https://calendar.galaxysoftwareinc.com/#/chart;i=33711;t=2021-03-10%2015:30:00.0;s=USDOIL;r=M1
 

My Forecasts For Today

 

DOE Crude Oil Inventories - 2000.00

DOE Gasoline Inventories - -3000.00



 

Today's Trade Plan

 

If we get +-4000 from OIL and no conflicts from Gasoline, we can expect a sustained move from OIl or Brent.

 

Note that I have used hybrid forecasts to accommodate the following.

 

1) Official DOE Crude Forecast = +0107

 

2) API Actual Crude = +3900

 

3) Official DOE Gasoline Forecast = +0730

 

4) API Actual Gasoline = -6000

 

Tradeable Pairs

USDBNT

USDOIL

 

Hope this helps but please do your own analysis!

 

Good luck!

 

James Thatcher

 

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Past performance is not indicative of future results. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

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What does the data mean to the market?

The headline data of Non-Farm Payrolls (NFP) reflects the change in the number of people employed during the previous month. A higher number of people employed is good for the USD and would create a buy on USDJPY. Vice versa, a lower number would be bad for the USD and would generate a sell on USDJPY. NFP comes out with six lines of data which makes this report far more complex. The other two significant lines of data I watch are the Unemployment Rate and Average Earnings. The Unemployment Rate, a lower number, is good for the USD and would create a buy on USDJPY. A higher number would be bad and create a sell. I am looking for these two numbers not to conflict with the headline NFP number. Average Earnings a higher number is good a lower number is bad, again this must be onside and not conflict with the headline NFP.


Historic Deviations and Their Outcome

March 5 2021  +197k positive deviation with no conflicts. The move was great on USDPYJ! I don't trade stocks, but for those that do, look how they reacted, which was the opposite of the USD value. Better employment numbers suggest a tightening of monetary policy, which is not good for the stock market!

See Chart here:
https://calendar.galaxysoftwareinc.com/#/chart;i=33099;t=2021-3-5 13:30:00.0;s=USDJPY;r=M1

February 5 2021 -56k negative deviation on headline number but conflicting Unemployment and Average Earnings, However, USDJPY went in the direction of the headline number on this occasion. It wasn't a trade for me!

See Chart here:
https://calendar.galaxysoftwareinc.com/#/chart;i=28009;t=2021-2-5 13:30:00.0;s=USDJPY;r=M1

January 8 2021 -211 negative deviation on the headline, with a big conflict from Average Earnings. The conflict was extreme, causing USDJPY to go the wrong way. This proves the power of a significant conflict! It wasn't a trade for me, thankfully.

See Chart here:
https://calendar.galaxysoftwareinc.com/#/chart;i=26090;t=2021-1-8 13:30:00.0;s=USDJPY;r=M1

 


My Forecasts For Today

Average Hourly Earnings (M/M)  0.1
Change in NonFarm Payrolls  650
Unemployment Rate  6
US Average Hourly Earnings (Y/Y)  4.5

 

Today's Trade Plan


Today If we see a 150k deviations in either direction from Non-Farm Payrolls without any conflicts from Unemployment and no significant conflict from Average Earnings, we can expect an excellent move. This one can get volatile immediately after the data is released while the market digests the numbers. Hold onto your hats. This one is not for the fainthearted.


Tradeable Pairs

USDJPY


Hope this helps but please do your own analysis!!

Good luck!!

James Thatcher

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Past performance is not indicative of future results. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

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This time we saw a massive +266 deviation on the headline, and we saw the USDJPY give a good spike up. However, it retraced hard, as we saw a conflict from Average Earnings of -0.2. So the US economy added many more jobs, but those jobs paid less, which is not good for inflation. In my initial plan, I highlighted a conflict of this nature can create a dangerous trading environment, which played out perfectly today. I did the right thing by standing by and not placing any trades. I made no profit from this today, but my capital is intact, ready for next month.

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