The energy market is heating up, but we see it 'not too hot, not too cool'.
Crude oil is behaving much better than Dr Copper. We are parking our Copper trade until the ‘base metal with a Phd in economics’ starts trending properly.
Crude looks like it is breaking out of the range that has trapped it all year. We are long-term energy bulls but believe that that a violent price spike in crude prices could possibly be met with supply from Saudi (reversal of production cuts) and China (release of strategic stockpiles accumulated over past 2 years).
As such we are taking an ‘Old Bull’ approach in structuring our new (not too hot, not too cool) ‘Crude-ilocks’ Acorn, a 2-leg call butterfly strategy over the Brent crude oil ETF BNO 0.00%↑. Link to video walk-through below.
I had hoped to be publishing our copper Acorn this week, however uncertainty around China’s stimulus plans caused Dr. Copper to misbehave just as we were about to signal the ‘all clear’. We shall pick a better moment for publishing our “Come in Number 29, it's Cu-time!” Acorn report.