If you follow market news, or even political news, you will know what happened in Saudi Arabia this weekend – a drone strike on a Saudi Aramco oil refinery. This will cause oil futures to gap at open this evening, when the futures market opens at 6 p.m. eastern time.
What does this mean? Simply put, it means a supply reduction. What happens when supply is reduced? The price of oil goes up … it’s supply and demand. Oil trades higher when supply is low, and it trades lower when supply is high. By some estimates, this strike cut out half of Saudi Arabia’s oil production; that’s significant.
I’m guessing this will be a ‘gap n go’ and there won’t be much of a pull back. However, I will be watching it closely, as this will be a great opportunity to make a few bucks on the big move up. My plan is to simply buy into whatever little pullback happens after the initial jump. But, if it doesn’t look like it will pull back at all, I will enter on some sort of higher-high higher-close strategy.
As I always say: ALWAYS DO OUR OWN RESEARCH. IF YOU ARE UNSURE, SEEK PROFESSIONAL GUIDANCE.