The assassination of Iran’s military overlord on Friday (he was the likely model for Danesh Akbari in season 3 of Homeland, for those who prefer fiction) led to a spike in energy prices and top extensions in a few contracts. Here are the two main crude oil futures, WTI and Brent:
Of these, Brent has rallied a bit more as it is the principal ‘international’ crude contract which would be more affected by any reduction in oil supply from the Persian/Arabian Gulf. Thanks to fracking, the US is largely self-sufficient in energy nowadays and so it is no surprise that WTI should lag a bit in going up. This represents a chance to sell WTI short and Heating oil and Rbob too, both of which represent mainly domestic US supplies and demand. Neither of these rallied enough to make such signals but this is our preferred tactic – if a few members of a group of associated markets generate top extension signals, pick the ones that have moved up least to sell short.
More later
