Look (at your charts) before you jump
An illustration why knee jerk trading response to headlines is wrong with this example.
News headlines should not be basis for trading
Traders should not be trading based on headlines only. Even when there is accurate reporting the fact is going through the content the horizon is totally wrong. The first piece is looking at a time frame years down the road. There might or might not be a knee jerk but should not be the basis for a rational trading approach.
Three years of drastic cuts to upstream spending because of the meltdown in oil prices could result in a shortage of oil supply in a few years, according to a new report from the International Energy Agency.
When oil prices collapsed in 2014, oil producers quickly took an ax to their spending. Global oil and gas investment dropped by a quarter in 2015 and by an additional 26 percent last year, the IEA estimates. A long list of projects, particularly very large ones, were put on ice.
Because many of these projects take years to develop, the sharp slowdown between 2014 and 2016 could result in very few sources of new supply hitting the market towards the end of the decade.
A less dramatic but more accurate headline should read like ‘IEA: Huge Oil Price Spike Inevitable In A Few Years‘. If you are a scalper or day trader, then this piece has absolutely nothing to do with you.
Maybe a better way to put it: Traders should not be trading based on headlines
only at all.
American crude oil exports are poised to exceed four members of the Organization of Petroleum Exporting Countries (OPEC) this year, according to analysts polled by Bloomberg.
The United States, the world’s biggest oil consumer, could export at least 800,000 barrels per day (bpd), the analysts said. This exceeds oil exports of OPEC members Libya, Qatar, Ecuador, and Gabon. In 11 months of 2016, the US exported 527,000 bpd, according to the Energy Information Administration data.