This week we have been very focused on the energy sector, and with inventory numbers coming out this morning we have some nice trade set-ups.
As the writing of this post June crude is trading up 1.23 after bullish inventory numbers. Over the last couple weeks crude has pulled back to some very important key levels and we think crude could rally up to 102 over the next week or so. We hold a neutral to slightly bullish stance on crude over the short term.
Trade Idea: Crude Oil Short July/August This bear spread on crude oil has a strong 5 and 15 year pattern. Over the past 15 years this spread traded as high has 2.40 in 2000 at the beginning of July, but on average the high as been around 1.20. We like this spread around 1.10 for half position and 1.20 for the second half. One important pattern that we see is this spread tends to do well during the month of May and prices have typically bottomed out in the first week of June. Now the first week of June we could see a rally in this spread, so its important to cover this position before the seasonal pattern is no longer valid. We have an open order GTC on this bear spread at 1.10 with our first target at .80. (If we move our order, we will move it to 1.05)
We have been in and out of a couple different Gasoline spreads over the last few weeks, bear and bull spreads. Right now we are entering into a extremely strong bullish seasonal pattern. As of writing this June Gasoline is trading up .0274 at 2.9133. We are getting a nice move higher this morning, our short term target on June Gasoline is 2.95, support is at 2.8493.
Trade Idea: Gasoline Long June/July As I mentioned earlier, this spread as a very strong seasonal pattern. The spread typically puts in lows mid April to the first week of May and trades higher. Over the last 14 years this spread has traded as low as .005 as the bottom in the April and May time frame, the 2014 lows for this spread was .0177 and currently this spread is trading around .0215. We like this spread here and are buyers at .0215 for the first half, and our second half around .0180. Our first target is .0300 and we think we could trade up to .375.