Morning Update – April 21, 2020

I’m out of USO. I personally will not be trading anything oil related until some normalcy is resumed by the market and the world. If living with the virus is the new norm, that is fine. Right now I”m out. With that said, I have sold USO and bought USL in my example account. I’ve sold my 20 shares of USO and taken a 3.3% loss on my account to get out.

I bought 10 shares of USL at 11.75. The required roughly 13% of funds.

I am still holding UNG. I think UNG will make up for the loss in USO. This is one of the most historic moments in time for Oil. There will be a moment when oil bounces, and hard, but I don’t wish to suffer until that moment. Some level of intervention was already sought out by global leadership (OPEC++++++ meeting) and prices for May contract are still negative. June is next and it is already spilling over to June. USO will be in June contract for roughly two more weeks. My assumption is that if June contract goes negative, USO will go to 0 and be shut off like a light switch.

My current positions:

UNG – 31% of funds from $13.28

USL – 13% of funds from $11.75

I do expect USL will tumble further amidst this crisis, and I wouldn’t recommend this to anyone right now. Don’t be in a rush to lose money.

I will be holding UNG to see if it will approach $15 and get out there. It is difficult to have much confidence in anything right now, but my highest level of confidence is that Natgas will continue a bit higher from this wave of Oil chaos. I will ride this USL position to see where it goes. I will not add to or reduce USL today. Keep in mind, this is a blog. I am just giving an example and not advising anyone to follow my actions. Good Luck

Oldinvestor

I just saw this, https://finance.yahoo.com/news/barclays-announces-redemption-ipath-series-001100135.html

The ETN trading under the symbol “OIL” is “suspending issuance” of shares. This is very “finance talk” type of article. My interpretation is that they are cashing out positions and essentially shutting down. Further down in the article they make the statement “may decrease or may cease to exist in light of the upcoming issuer redemption.” This, to me, sounds like it will still continue, but is a risk of closing. Either way, it sounds like something to stay far away from and it doesn’t give me any confidence in USO or ETF/ETNs as a whole.