Buying More Oil At The Lower End Of Its Range
Simit Patel | Jan 04, 2016 12:39AM ET
I recently put an order for PowerShares DB Oil (N:DBO), an oil ETF that consists of underlying futures contracts of a variety of durations, to buy it at $8.75. The chart below shows its price, with the orange line representing where I'm buying.
Below is a monthly chart of WTI oil. I think the range that we are now in, between $33 and $37, is a range that will draw buyers in -- just as it did in 2009. If we clear support at around $33, though, I think a move to $26 is a reasonable expectation.
Ultimately, I expect WTI oil to go back to at least $90. If this is a valid expectation, the implication for traders is that there are setups with attractive reward/risk ratios.
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