Energy Sector

[ratiman]

This oil trade might be the greatest rug pull of all time. The oil bulls are absolutely out of their minds. Cushing has now reached tank bottoms and meanwhile oil sinks like a stone. It really is hilarious (as long as you have no position). I happen to think this is not over. Real oil inventory does matter at some point and a billion barrels can't be taken off the market / Iran given control of global oil supply without the price reflecting that sea change. But for right now the "lol nothing matters" crowd is winning. 

Edited 4 hours ago by ratiman

[kab60]

I don't understand why anyone would ever be an 'oil bull' or 'oil bear'. Unless you're trading the commodity, there are ways to be involved that aren't just beta. That seems to be overlooked by both sides.

[SharperDingaan]

44 minutes ago, kab60 said:

Unless you're trading the commodity, there are ways to be involved that aren't just beta. 

 

We do a bit of pair trading as well, with each 'pair' being a different asset class (BTC/Oil), (CPG/Oil), etc. Sell the expensive and buy the cheap.

 

Some of it is relative near term  prospects, but it adds time frame to the risk; the expected 3-4 months often doubling to 8-9 months. Two sets of stars need to align .... if/when they do, you do very well. Key, is comfort with open exposure .... not for everyone.

 

Some of it is seasonal. Sell the CAD drillers in May to buy CAD beer; reverse around Thanksgiving. Capture the busiest times of the year for each industry. Key is honest and accurate forecasting  ... not the what you hope might happen. Not for everyone.

 

Used to do pair trades within the different sectors of o/g itself, but it just wasn't worth tying up the portfolio. Were we to accept the restriction, we could do a lot better on the risk/return.

 

Differeng strokes.

 

SD

Edited 34 minutes ago by SharperDingaan