Public trading strategy
Strait of Hormuz flooding the market with oil — short oil funds as prices drop
Thesis
The threat of disrupted oil shipments has passed now that the Strait of Hormuz is open and tankers are moving freely again. When 19 million barrels of oil suddenly hit the market in a single day, it creates a massive oversupply problem. Basic economics tells us that when there is too much supply, prices have to drop to clear the inventory. This sudden shift removes the fear premium that was holding oil prices up.
Strategy approach
Build a rule-based strategy that enters short USO on H4 when price crosses below the 20-day SMA and RSI(14) < 45, with a 21-day max hold, a 4% fixed stop loss, and a trailing take profit at a 2% trail.
Markets and timeframes
USOH4