USO Update

This is more of a partial update as I have a 60 min blackout in the feed from earlier, at least on my main 3C template.

So once again, the MOST leaked report I think we have ever seen was leaked again.

Inventories came in as follows:

Released on 11/23/2011 10:30:00 AM For wk11/18, 2011

Prior Actual Crude oil inventories (weekly change) -1.1 M barrels -6.2 M barrels Gasoline (weekly change) 1.0 M barrels 4.5 M barrels Distillates (weekly change) -2.1 M barrels -0.8 M barrels

I'm not sure what consensus was, but there was a draw on crude of 6.2 mm barrels and it's not unexpected as restocking at these prices just doesn't make sense, thus this is probably the reason 3C showed a VERY weak bounce in USO yesterday, they knew since USO was reversing, there would be a draw as the oil can be replace at lower prices in a few weeks.

I know at least a few of you followed one of my suggestions from yesterday re: USO,


"I don't think it is too early to start phasing in to a short position, via whatever vehicle you choose (short USO, buy SCO/DTO), my choice would be to buy SCO. However,  would phase in to the trade, decide what you risk management will allow for as far as position sizing and I would maybe enter 25% of that today, if we get a little more upside add another 25% (50% of the total) and then on a confirmation of the break lower add the remaining 50%."


Here are the TC 3C charts I have for now until SF reloads the data shortly.

 The original USO bounce target, pretty close, but a very weak bounce.


 Here's the  1 min chart, accumulation can be seen right in to the release of the report, this is VERY short term 1 min accumulation for an intraday bounce, we'll watch it for a move down, right now it still suggests there could be more upside, there's a "BUT" in there that I will get to.

The 10 min chart has tracked the top as well as the bounce perfectly and it even showed the weakness I spoke of yesterday and that being the reason I thought yesterday WAS NOT too early to start shorting USO if you haven't already.


If you did, then today you made over 4% for 1.5 hours of trade.


I'll update again as soon as the data loads or as soon as I see something on 3C TC system.


The "BUT" is this, USO is in a bearish position, the inventories were mildly bullish for USO short term , but if I can figure out that restocking will not happen at these prices, then institutions are way ahead of that so the report of a draw on supplies is nothing more then a short term event, in which case,  stay short USO via being long SCO/DTO. 


I really can't believe how often this report is leaked, the SEC sure is on top of the market and regulations about insider info.