The context for this entry is based on the suspended use of our Strategic Petroleum Reserve by the US Government. In April of 2022, our leadership chose to tap the SPR in an attempt to hold off inflation at the pump. While this worked for much of 2022, and early 2023, the SPR can no longer be used or it may compromise our national security (e.g. cut off from external supplies of oil to create fuels in the development of electric and sustainable energy sources).
Since the price of OIL should started to breakout to the upside, we do need to watch inflationary control measures. If they start to dampen inflation, then OIL could remain at the current level for some time. Conversely, if as the Federal Reserve Expects, when inflation only tempers but does not drop into Q3CY23, we should see an increase in the value of OIL.
That's the subjective analysis. The objective analysis based on a decreasing wedge formation on XOP starting April of 2022. XOP continues to bump against a lower low of $110, and most support comes at around $116. Currently it's at $121/123.
The idea is enter put credit spreads 116/117, unless XOP hits $117, then strongly consider 90 day+ call swings. If XOP is at $117, then buy $117 calls for September or October, something 90 days out. The idea between these is that the put spreads limit losses if we retrace to 116, while the call swing is purchased at confirmation of the lower low. Do watch for a breakdown to $110 daily candle wick as seen in other prior days.