USO
We are now below our starting point of $81.70 in our trade which is a $10 drop, reflecting the over $15 drop in oil. This could be described as a peace dividend as low level peace talks have begun in Turkey. Excuse me if I’m not buying this. PR ditties to the side, the reality is Russia has bombed the Ukraine to the dark ages. Systematically, they’ve been cut off from the Black Sea. Their infrastructure is in tatters. 5 million people have left the country. There is no way this can be described as a win. We believe these “peace talks” will break down and no matter what scenario you look at, Russian oil production has dropped. Exports have dropped and nothing changes the fact that there is an oil crisis.
With this view in mind, it’s now time to BUY another 475 shares of the USO which is trading around $72.00. Adjust the number of shares you buy by the size of your account and according to your risk tolerance.
In closing, even if peace comes no one is about to remove the sanctions on Russia. So nothing really changes in the oil equation.