Showing posts with label Crude Oil. Show all posts
Showing posts with label Crude Oil. Show all posts

Sunday, 15 March 2015

KLSE: SKPETRO, another downtrend

Crude oil price has been plummeting in the past few months. It has made wide coverage in all kinds of media.  The reason?  All others reasons reported on the media, e.g. over supply, decrease in demand are excuses. Except manipulation, give me a reason how a commodity price can drop 50% in 3 months. The motive? Ask Wall Street.

I couldn't care less about crude oil prices, it has nothing to do with me at the moment. Anyway, I was planning to buy SKPETRO (a component stock in KLCI) in Jan. Back then, the crude oil price was trading at about USD 50/ barrel (I used Brent Crude Oil as reference). Looking back in Dec 2014, that was the most "scary" sentiment you could find in market at that time. Everybody was talking about oil price could go even lower, that the market will crash etc.

The most funny view regaring this that I have ever heard of, is a so-called "financial analyst" who was "sharing his opinion" on the TV during the business section of a news programme. He said that in 2008, there was a subprime mortgage crisis, maybe in 2015 we will have the "subprime crude oil crisis". I really LOL when I heard this, simply because of the fact that if a crash is really coming, would the media let you know earlier?

I do not buy any of these comments. So, I was queuing for SKPETRO, hoping for a rebound. My rationale is simple, I don't believe it can go further down to USD 45/ barrel; but if the oil price rebounds, SKPETRO will follow.

BrentCruideOil Price
(Picture print-screened from Nasdaq.com)

But my queue didn't match at that time. Soon after that, oil price has rebounded  (recover?)  to over USD 60 . And SKPETRO follows the trend, climbing nearly 50% in 2 months.

SKPETRO rebound


I don't like to chase high. So I thought OK, it is what it is, seeking for another opportunity. But then, on 4th Mar, an announcement was released, regarding the designation of a vice chairman. Had he been any other person, the impact would be minimal. But the person of interest in this case has a last name of Mahathir, so you know his influence. The next trading day, SKPETRO dropped 7.2% with volume. Last Friday, crude oil price plunged 4%. Does this imply another wave of oil drop is coming?

This may be a second chance for me to enter. My patience has really paid-off. This time my appetite has gone bigger. I am aiming at C12 (SKPETRO has good fundamental), a new call warrant by CIMB, with the nicest exercise price, lowest premium and 1 year maturity date. But the trend of SKPETRO is not looking good. So I am just looking at a short term rebound trade. If SKPETRO breaks RM 2.00 and going further down, what I will be aiming is a big drop with volume, and that may be a chance to catch for a rebound.