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 yesterday at 08:07 AM 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 yesterday at 12:28 PM by SharperDingaan

[Pelagic]

A pyrrhic victory for oil bulls who were diligently counting storage levels. Based on everything I've seen and heard Trump and his team say over the last few days, there's basically zero appetite for any escalation with Iran if things don't work out during the 60 days.
 

 

[Sloanes Teddy]

42 minutes ago, Pelagic said:

A pyrrhic victory for oil bulls who were diligently counting storage levels. Based on everything I've seen and heard Trump and his team say over the last few days, there's basically zero appetite for any escalation with Iran if things don't work out during the 60 days.
 

 

He is a master negotiator. 

[Gregmal]

Well theres also this nonsense from oil bulls about how "Trump talked down oil prices"....ahhhh....thats not how it works. Trump talking, or your boner inducing 5-10% spikes on nothing but rumors....ultimately have ZERO to do with the actual supply and demand that oil is predicated on. So no, Trump didnt "talk down" prices, supply and demand when translated in the real world, proved you suckers just bid it up way too high speculating on your own conspiracy theories. 

[Spekulatius]

The odd lots podcast goes through the oil shock that mostly occurred in Asia. a few facts (from recollection) - China’s oil consumption went down by almost 10% and in addition, they have huge inventory which they draped down. This is the reason they could reduce their imports so much.

Poorer counties without much storage (Thailand, Indonesia, India) did run into shortages so demand destruction took place.

 

My guess is that oil prices are too low relative to where we are at because the storages need to be refilled and that’s  a lot of extra barrels. I also think some counties learned a lesson  and will build out. more storage infrastructure and fill it up, but that’s longer term.

Edited 14 hours ago by Spekulatius

[SharperDingaan]

Agreed Trump wants to go home, just not so sure that Israel/Hezbolah feel the agreement also applies to them. Hard to imagine they aren't going to be tossing grenades.

 

SD

[thowed]

I suspect Israel/Hezbollah might both be tired, and welcome of a break.  But it will inevitably start again at some point.

[Marco Van Basten]

8 hours ago, thowed said:

I suspect Israel/Hezbollah might both be tired, and welcome of a break.  But it will inevitably start again at some point.

Look, both Hezbollah and Hamas say that their goal is elimination of Israel.  Unless Hezbollah and Hamas disarm, there will plenty of wars sadly.  Also, I doubt that Hezbollah can afford a break unless Israel withdraws from Lebanese territory that it has captured in the recent war.  Hezbollah's base will justifiably ask - what was the point of the war, so Hezbollah will try to recover territory asap.  

Edited 1 hour ago by Marco Van Basten