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The Recovery In Oil Fails Miserably


  • Crude oil takes the stairs to just below $55 per barrel.
  • The elevator ride back down.
  • Risk-off conditions in all commodities.
  • I still expect a February or early March bottom.
  • UCO on dips with tight stops.
  • Looking for more stock ideas like this one? Get them exclusively at Hecht Commodity Report. Get started today »

This article was written by

Andrew Hecht profile picture
Andy Hecht is a sought-after commodity and futures trader, an options expert and analyst. He is the #2 ranked author on Seeking Alpha in both the commodities and precious metals categories. He is also the author of the weekly Hecht Commodity Report on Marketplace - the most comprehensive, deep-dive commodities report available on Seeking Alpha.

Andy spent nearly 35 years on Wall Street, including two decades on the trading desk of Phillip Brothers, which became Salomon Brothers and ultimately part of Citigroup.

Over the past two decades, he has researched, structured and executed some of the largest trades ever made, involving massive quantities of precious metals and bulk commodities.

Andy understands the market in a way many traders can’t imagine. He’s booked vessels, armored cars, and trains to transport and store a broad range of commodities. And he’s worked directly with The United Nations and the legendary trading group Phibro.

Today, Andy remains in close contact with sources around the world and his network of traders.

“I have a vast Rolodex of information in my head… so many bull and bear markets. When something happens, I don’t have to think. I just react. History does tend to repeat itself over and over.”

His friends and mentors include highly regarded energy and precious metals traders, supply line specialists and international shipping companies that give him vast insight into the market.

Andy’s writing and analysis are on many market-based websites including CQG. Andy lectures at colleges and Universities. He also contributes to Traders Magazine. He consults for companies involved in producing and consuming commodities. Andy’s first book How to Make Money with Commodities, published by McGraw-Hill was released in 2013 and has received excellent reviews. Andy held a Series 3 and Series 30 license from the National Futures Association and a collaborator and strategist with hedge funds. Andy is the commodity expert for the website about.com and blogs on his own site dynamiccommodities.com. He is a frequent contributor on Stock News- https://stocknews.com/authors/?author=andrew-hecht

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The author always has positions in commodities markets in futures, options, ETF/ETN products, and commodity equities. These long and short positions tend to change on an intraday basis.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (21)

your watching too much 'FOX' hole entertainment channel...I'm not even a Sanders supporter but the 'lets watch Sanders' comment is just plain stupid....in the midst of a worldwide supply/demand shock not seen since the great depression, one would THINK oil is going down....then add the treacherous dealings of trumps two buddies...the Saudis and the Russians....and you have a black swan of epic proportions...50 trillion dollars of hard earned taxpayer money spent on wasteful military industrial complex crap since WW2 and look where we are...Dwight Eisenhower warned us about the waste in his famous parting speech. We couldn't even defend ourselves against a Saudi led 9/11 attack and now a little microbe has brought us to our knees because of the sheer incompetence of NO PANDEMIC PLANNING
T-rump administration....and half the nation still believes the virus is a hoax....we truly are an idiocracy.
Active_Trader profile picture
Friends, fyi ...
How Russia dethroned OPEC as oil market's most dominant player — and wants to see oil lower for longer
Coronavirus, there is no cure.
Government stimulus, political elections mean jack. 
Liars figure. Figures lie.
A vaccine, which is years away if ever, is required. 
MRGA Make Recessions Great Again.
Carry on shorting oil and stock markets at large. 
Thank dog that I am here to help. 
Cheers, Active Trader,
$DWT $UWT $TVIX $USO and more. Feel free to share with others.
The decline in oil is nothing to do with Senator Bernie Sanders rise.
The price of oil moved down due to the virus and sell off in the stock market.
Another factor is that the production of oil is too high and will be reduced.Oil will move higher with a balanced ratio between supply and demand.
Excellent commentary,thanks.
almoni profile picture
The author looks a lot like a scout in interrogation-- he's willing to spend two hours talking nonsense just to hide the point.
"I am willing to stop out repeatedly in a quest to catch an updraft in the price of the energy commodity."

Andy, why not simply purchase OTM Calls and scale out/in accordingly if price continues to deteriorate rather than getting stopped-out repeatedly by those who have the back-end access to see where stops are placed (stop poaching)? I'm just curious as to your thoughts on this because I know you to be a knowledgeable (and I believe you to be a prudent) investor.
Very warm winter where I live. Average national temperatures being increased due to global warming. NY State has banned sales of plastic bags. Assuming this gradually
becomes a national ban, this will also impact oil demand. Add electric cars, wind farms and solar energy expansion to the brew and it is not hard to see that oil demand and price will decrease.
Most who wanted to sell have already done so. Yields 3x to 5x US Treasury bonds in XOM, RDS, CVX, TOT, BP, PSX, VLO will attract buyers.
pgace123 profile picture
Shale is getting clobbered. The longer oil stays depressed, the higher the probability for shale's growth to not only slow down but decline. That will cause sentiment and supply to chance drastically. You will be writing articles on a supply crunch in oil in a year and your thesis on oil services will turn out to be correct.
Lidya finds peace within and 1 million barrels of oil per day start flowing on to the world oil markets.

SandMac profile picture

It looks like domestic production is already flattening on the way to decreasing - the last EIA 914 showed a decrease in production from November to December.
lionrock profile picture
Ah yes - I knew there was a reson I rarely read your columns.
30s this week
Hi, Andrew : Good Day! 1) When Bern wins oil should rise not fall...2) Why GASL not mentioned ? It is due for bigger bounce ...Regards
I'm thinking oil would go higher if Bernie or Liz got the job, which i'm not betting on, although I think Bernie does have a shot if he can get the nomination. Ending shale would remove a huge supply from the market.
Carson7 profile picture
Buy NEE and NEP. The only growth in the energy space is renewables. NEE is the largest renewable company now the world. Larger mkt cap than Total. NEP for a more pure play.
Barring a massive emergency OPEC cut it’s all about the virus from here. I believe there is no limit to the downside depending on the level of panic and government response in the form of work/school closures, travel bans, etc.
Come on @vxmike , there should be a vigorous 2 day bounce in the stock market Monday and Tuesday before it continues down another 40%.
shaner1 profile picture
in the unlikely event of a Sanders victory, the irrational fear of a fracking ban, regulations etc. would push price higher.
Yes @shaner1 and @Sir V-i-val , If Bernie or Lizzy win oil is going much higher. Put on your Bernie and Warren badges oil bulls.

@PT Larry
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