jrober38 Posted April 20, 2020 Share Posted April 20, 2020 Texas just went out business. So much for the deal Trump touted a week ago between Saudi Arabia and Russia. What a colossal disaster. 1 Link to comment Share on other sites More sharing options...
Deranged Rhino Posted April 20, 2020 Share Posted April 20, 2020 Just now, jrober38 said: Texas just went out business. So much for the deal Trump touted a week ago between Saudi Arabia and Russia. What a colossal disaster. Your analysis is -- once again -- incorrect and based solely on FEELz in the moment. Link to comment Share on other sites More sharing options...
TPS Posted April 20, 2020 Share Posted April 20, 2020 1 minute ago, Buffalo_Gal said: Crazy. Negative $8!? I hope the Feds are "buying" whatever is out there. They can take the full trains, any tanker, etc. I know the strategic reserve is nearly full, but ... I hope gas prices reflect this in the next few days.... hmmm.... negative $0.25 per gallon...? ? 1 2 Link to comment Share on other sites More sharing options...
Buffalo_Gal Posted April 20, 2020 Share Posted April 20, 2020 1 minute ago, jrober38 said: Texas just went out business. So much for the deal Trump touted a week ago between Saudi Arabia and Russia. What a colossal disaster. You might want to sit this one out, sport. 2 Link to comment Share on other sites More sharing options...
jrober38 Posted April 20, 2020 Share Posted April 20, 2020 Just now, Buffalo_Gal said: You might want to sit this one out, sport. Why? The world has hit its capacity in terms of how much oil they can store. Unless everyone turns off the taps, this is just going to continue getting worse. They are literally paying people to take oil off their hands. Link to comment Share on other sites More sharing options...
TPS Posted April 20, 2020 Share Posted April 20, 2020 negative $38 Link to comment Share on other sites More sharing options...
Deranged Rhino Posted April 20, 2020 Share Posted April 20, 2020 1 minute ago, jrober38 said: Why? 1 Link to comment Share on other sites More sharing options...
jrober38 Posted April 20, 2020 Share Posted April 20, 2020 Just now, TPS said: negative $38 Some hedge funds will be going out of business tonight. Some people's savings will have just been wiped out. Link to comment Share on other sites More sharing options...
Buffalo_Gal Posted April 20, 2020 Share Posted April 20, 2020 2 minutes ago, TPS said: negative $38 !!!!!! Ok, I am scraping the sofa for pocket change and calling my buddy Boris to see if he still has that old Russian tanker... 1 Link to comment Share on other sites More sharing options...
keepthefaith Posted April 20, 2020 Share Posted April 20, 2020 4 minutes ago, TPS said: I hope gas prices reflect this in the next few days.... hmmm.... negative $0.25 per gallon...? ? I just got the summer car out last week which guzzles 93 octane (but meets fed emissions standards). Looking forward to cheap gas and longer rides home. 1 Link to comment Share on other sites More sharing options...
/dev/null Posted April 20, 2020 Share Posted April 20, 2020 i know we're only supposed to focus on negative stuff lately, but to be contrarian i'm going to look on the bright side. most people equate oil with gasoline. while they're not wrong, oil (petroleum) is used in a large number of manufactured products, such as plastics, polymer, and fabric. now is a great time for manufacturers to stock up on oil. when this corona virus crises passes (as all crises do) they will be set up for a manufacturing boom and we as consumers will benefit from lower prices 1 Link to comment Share on other sites More sharing options...
jrober38 Posted April 20, 2020 Share Posted April 20, 2020 2 minutes ago, /dev/null said: i know we're only supposed to focus on negative stuff lately, but to be contrarian i'm going to look on the bright side. most people equate oil with gasoline. while they're not wrong, oil (petroleum) is used in a large number of manufactured products, such as plastics, polymer, and fabric. now is a great time for manufacturers to stock up on oil. when this corona virus crises passes (as all crises do) they will be set up for a manufacturing boom and we as consumers will benefit from lower prices A few things. 1. Companies aren't ready to store oil. It's trading in negative territory because the world storage capacity has been reached. 2. The manufacturing industry is going to be hit hard when all the people who work in oil and gas are laid off. Link to comment Share on other sites More sharing options...
Deranged Rhino Posted April 20, 2020 Share Posted April 20, 2020 Just now, jrober38 said: A few things. 1. Companies aren't ready to store oil. It's trading in negative territory because the world storage capacity has been reached. 2. The manufacturing industry is going to be hit hard when all the people who work in oil and gas are laid off. I look forward to this being proven wrong, as is fated with all @jrober38 declarations. Link to comment Share on other sites More sharing options...
keepthefaith Posted April 20, 2020 Share Posted April 20, 2020 23 minutes ago, TPS said: negative $38 So how can the airlines benefit from this? I know they buy fuel contracts way in advance, years. I suppose those agreements can only be cancelled with some termination cost and their consumption is way down meaning even greater obligations remaining? That industry will certainly need some help. Link to comment Share on other sites More sharing options...
jrober38 Posted April 20, 2020 Share Posted April 20, 2020 (edited) 5 minutes ago, keepthefaith said: So how can the airlines benefit from this? I know they buy fuel contracts way in advance, years. I suppose those agreements can only be cancelled with some termination cost and their consumption is way down meaning even greater obligations remaining? That industry will certainly need some help. Most airlines hedge their fuel costs so there's likely no benefit short term. Until they start filling planes with passengers again they're screwed. Edited April 20, 2020 by jrober38 Link to comment Share on other sites More sharing options...
Nanker Posted April 20, 2020 Share Posted April 20, 2020 2 hours ago, Buffalo_Gal said: Crazy. Negative $8!? I hope the Feds are "buying" whatever is out there. They can take the full trains, any tanker, etc. I know the strategic reserve is nearly full, but ... Pelosi cut the funds out of the recovery bill because she refused to bail out “Big Oil.” Of course our strategic reserves are purchased from small domestic suppliers. Interestingly enough, those reserves are sold from time to time to fund federal legislative projects. 1 Link to comment Share on other sites More sharing options...
Foxx Posted April 20, 2020 Share Posted April 20, 2020 (edited) 3 hours ago, TPS said: Hope you didn't buy any ETFs after that last discussion. Btw, @Foxx you nailed it. USO and other oil ETFs will dissolve this week, unless they have a friend in the WH.... They are now paying investors to accept bids on their May contracts so they can close their positions without having to take delivery--which they are incapable of. If they want to continue as an ETF, they'd have to buy the June at $21. Negative $8.50 and falling... 3 hours ago, TPS said: negative $38 On 3/29/2020 at 7:19 PM, Foxx said: won't be long before we won't be able to store it. so much so that, will we see negative prices on a barrel? The oil glut is filling up the world’s supertankers fast The world’s oil tankers are being filled with crude at a record pace as the options to store a glut on land rapidly diminish, one of the industry’s largest owners said. A combination of surging production from key producers worldwide and capitulating demand in the face of the coronavirus outbreak means that land storage is being overwhelmed, said Robert Hvide Macleod, Chief Executive Officer of Frontline Management AS. The world is likely overproducing by about 20 million barrels a day, or 20% of normal consumption, he said, echoing wider industry views. ... thanks for the shout out, TPS. at market close, the price was, -$32.14. it has rebounded in after hours trading to where it stands right now at, -$15.60. this is the last day of May trading, not exactly sure when the time is but come tomorrow we will be trading June delivery. if you have a May contract, your most definitely in the hole. how many bankruptcies are we going to see because of this? shorts are making a killing. of course the DOW was down for the day most likely because of the precipitous oil drop. it is going to be interesting to see where oil goes from here because there is literally nowhere to store it. you just can't plow under raw crude without having massive fines, lawsuits and environmental cleanup costs. the contracts out through to Jan '21 are all in positive territory right now, from $21.25 for June delivery to $33.11 for Jan '21 delivery. the coming week is going to be an interesting watch, not only for oil but the DOW and S&P. back below 20K and 2500 respectfully? Edited April 20, 2020 by Foxx 1 Link to comment Share on other sites More sharing options...
TPS Posted April 20, 2020 Share Posted April 20, 2020 4 minutes ago, Foxx said: thanks for the shout out, TPS. at market close, the price was, -$32.14. it has rebounded in after hours trading to where it stands right now at, -$15.60. this is the last day of May trading, not exactly sure when the time is but come tomorrow we will be trading June delivery. if you have a May contract, your most definitely in the hole. how many bankruptcies are we going to see because of this? shorts are making a killing. of course the DOW was down for the day most likely because of the precipitous oil drop. it is going to be interesting to see where oil goes from here because there is literally nowhere to store it. you just can't plow under raw crude without having massive fines, lawsuits and environmental cleanup costs. the contracts out through to Jan '21 are all in negative territory right now, from -$3.78 for June delivery to -$1.16 for Jan '21 delivery. the coming week is going to be an interesting watch, not only for oil but the DOW and S&P. back below 20K and 2500 respectfully? Are you sure about those prices? Those look like the changes not the contract values? I mentioned oil ETFs up thread, but they can't be the reason because they "roll" out of their contracts the week before the expiring date, so it's going to be interesting to see who the long speculators are who got caught in the long squeeze. Maybe some inexperienced Hedgies? At any rate, those ETFs and Index Funds are still going to lose big time since they are "selling low and buying high," the negative roll yield in contango markets. If anyone comes across any articles on who the losers are, I'd appreciate a notification. I did read one thing that argued it was USO, but I looked at their roll dates (when they start selling the expiring May contract and buying the June contract), and they were April 7 through the 13th. They weren't sellers today (All of the institutional funds roll out at least the week before the contract expires). Interesting times... 1 Link to comment Share on other sites More sharing options...
Foxx Posted April 20, 2020 Share Posted April 20, 2020 17 minutes ago, TPS said: Are you sure about those prices? Those look like the changes not the contract values? I mentioned oil ETFs up thread, but they can't be the reason because they "roll" out of their contracts the week before the expiring date, so it's going to be interesting to see who the long speculators are who got caught in the long squeeze. Maybe some inexperienced Hedgies? At any rate, those ETFs and Index Funds are still going to lose big time since they are "selling low and buying high," the negative roll yield in contango markets. If anyone comes across any articles on who the losers are, I'd appreciate a notification. I did read one thing that argued it was USO, but I looked at their roll dates (when they start selling the expiring May contract and buying the June contract), and they were April 7 through the 13th. They weren't sellers today (All of the institutional funds roll out at least the week before the contract expires). Interesting times... you are correct. long day here and though i know better, i just saw the red. let me edit my post. thanks. if i come across articles regarding this, which i'm sure there will be plenty, i will post. 1 Link to comment Share on other sites More sharing options...
Foxx Posted April 20, 2020 Share Posted April 20, 2020 (edited) there is a small possibility here is that it is a long squeeze. if it is indeed, the shorts may be waiting for the bankruptcy courts to settle. however more than likely it is because the players are paying them to not take delivery because they have nowhere to put it. interesting times to be sure. Edited April 21, 2020 by Foxx Link to comment Share on other sites More sharing options...
Chandemonium Posted April 20, 2020 Share Posted April 20, 2020 Let’s say you’re an average Joe who converted home heat from heating oil to natural gas a few years ago, but you still have a couple 500 gallon oil tanks in your basement. With oil prices at negative $38, is there any way you can call up the oil company and tell them to come drop off 1000 gallons of crude and $900? Link to comment Share on other sites More sharing options...
Foxx Posted April 21, 2020 Share Posted April 21, 2020 thread https://twitter.com/RogerDiwan/status/1252324705291374592 1 1 Link to comment Share on other sites More sharing options...
TPS Posted April 21, 2020 Share Posted April 21, 2020 41 minutes ago, Foxx said: thread https://twitter.com/RogerDiwan/status/1252324705291374592 Yeah, that's the easy part. I'm interested in who those speculators are that got caught holding long positions the day before the May contract expires. As we transition into the June contract, it's down below $16 and falling. This WILL wipe out oil ETFs, so get your money out while you can.... 1 Link to comment Share on other sites More sharing options...
SoCal Deek Posted April 21, 2020 Share Posted April 21, 2020 13 hours ago, Chandemonium said: Let’s say you’re an average Joe who converted home heat from heating oil to natural gas a few years ago, but you still have a couple 500 gallon oil tanks in your basement. With oil prices at negative $38, is there any way you can call up the oil company and tell them to come drop off 1000 gallons of crude and $900? I live in Southern California...what’s this home hearing concept you‘re referring to? ? Link to comment Share on other sites More sharing options...
Foxx Posted April 21, 2020 Share Posted April 21, 2020 51 minutes ago, TPS said: Yeah, that's the easy part. I'm interested in who those speculators are that got caught holding long positions the day before the May contract expires. As we transition into the June contract, it's down below $16 and falling. This WILL wipe out oil ETFs, so get your money out while you can.... i see speculation that a lot of mom and pop day traders are the ones left holding the bag. of course there will be a number of professionals too, the ones who thought they were smarter than everyone else. regardless, we should know some of who the major players that got caught were in the next few days or so. Link to comment Share on other sites More sharing options...
Buffalo_Gal Posted April 21, 2020 Share Posted April 21, 2020 1 hour ago, TPS said: Yeah, that's the easy part. I'm interested in who those speculators are that got caught holding long positions the day before the May contract expires. As we transition into the June contract, it's down below $16 and falling. This WILL wipe out oil ETFs, so get your money out while you can.... Big boys. An Indonesian company blew up yesterday, but that was part fraud. Some speculation on what is to come. Today, it looks like small and big players have figured out that holding until the end when the world's economy is shutdown may not be a great strategy. Now, the economy is starting to reopen, so use will go up a bit (not back to normal levels for a while though), but when every oil tanker, train tanker, Cushing (and all the other oil tank storage farms) are full to the brim... yeah, if I were holding I wouldn't want to experience a repeat of yesterday either. And yesterday, those were the big-boys. The smaller players have to be panicking as they are far less able to sustain any losses. 1 Link to comment Share on other sites More sharing options...
jrober38 Posted April 21, 2020 Share Posted April 21, 2020 1 hour ago, TPS said: Yeah, that's the easy part. I'm interested in who those speculators are that got caught holding long positions the day before the May contract expires. As we transition into the June contract, it's down below $16 and falling. This WILL wipe out oil ETFs, so get your money out while you can.... Yeah, it seems extremely likely that some hedge funds and ETFs are going to go bust because of the collapse in oil. A week ago when production was cut, I imagine there were a lot of people on wall street who took big long positions in oil futures, and they were likely wiped out yesterday. Oil companies hold a ton of debt, and without a recovery in oil prices, those companies will likely go bust by the end of the year and it could create a type of contagion in the banking industry as the people who get caught holding that debt receive pennies on the dollar. Link to comment Share on other sites More sharing options...
TPS Posted April 21, 2020 Share Posted April 21, 2020 1 hour ago, Foxx said: i see speculation that a lot of mom and pop day traders are the ones left holding the bag. of course there will be a number of professionals too, the ones who thought they were smarter than everyone else. regardless, we should know some of who the major players that got caught were in the next few days or so. I don't think so. Based on the last trading report, the open long positions were dominated by "managed money traders" and "other reportables" the latter consists of big players. The so-called mom and pop traders would be in non-reportables and there weren't a lot of contracts held compared to the other two. Definitely some big players got caught holding the bag... 24 minutes ago, jrober38 said: Yeah, it seems extremely likely that some hedge funds and ETFs are going to go bust because of the collapse in oil. A week ago when production was cut, I imagine there were a lot of people on wall street who took big long positions in oil futures, and they were likely wiped out yesterday. Oil companies hold a ton of debt, and without a recovery in oil prices, those companies will likely go bust by the end of the year and it could create a type of contagion in the banking industry as the people who get caught holding that debt receive pennies on the dollar. On the other hand, the banks can take the assets, then sell them when/if prices recover. Link to comment Share on other sites More sharing options...
RochesterRob Posted April 21, 2020 Share Posted April 21, 2020 10 minutes ago, TPS said: I don't think so. Based on the last trading report, the open long positions were dominated by "managed money traders" and "other reportables" the latter consists of big players. The so-called mom and pop traders would be in non-reportables and there weren't a lot of contracts held compared to the other two. Definitely some big players got caught holding the bag... On the other hand, the banks can take the assets, then sell them when/if prices recover. Banks are not allowed to hold foreclosed/repossessed assets indefinitely. Link to comment Share on other sites More sharing options...
Foxx Posted April 21, 2020 Share Posted April 21, 2020 11 minutes ago, TPS said: I don't think so. Based on the last trading report, the open long positions were dominated by "managed money traders" and "other reportables" the latter consists of big players. The so-called mom and pop traders would be in non-reportables and there weren't a lot of contracts held compared to the other two. Definitely some big players got caught holding the bag... this was posted Friday the 17th at forexlive: There are some strange things going on in oil as ETF flows skew the market additionally, Goldman sacs said the following: Given the difficulty and costs of storing oil (even in normal times), investors typically never keep positions into expiration. The size of the long positions in May WTI had therefore already shrunk significantly as all the major commodity indices and ETFs rolled earlier this month into the June contract. Illustrating that point, the unprecedented collapse in May WTI prices occurred with only 100k contracts trading today, a tenth of the June contract volumes. In terms of holders, the surge in retail interest in recent weeks -- as illustrated by the USO ETF which now represents 30% of the June WTI contract open interest -- suggests that retail positions (in outright WTI contracts rather than systematically rolling products) were likely still long May WTI contracts into this week and now forced sellers (consistent with the sell-off accelerating in the 30 minutes ahead of the close and the sharp rebound that followed). regardless, we shall see in the days ahead. 1 Link to comment Share on other sites More sharing options...
Deranged Rhino Posted April 21, 2020 Share Posted April 21, 2020 2 4 Link to comment Share on other sites More sharing options...
TPS Posted April 21, 2020 Share Posted April 21, 2020 1 hour ago, RochesterRob said: Banks are not allowed to hold foreclosed/repossessed assets indefinitely. They only have to hold until oil prices recover in a few months from this bottom. Link to comment Share on other sites More sharing options...
RochesterRob Posted April 21, 2020 Share Posted April 21, 2020 2 minutes ago, TPS said: They only have to hold until oil prices recover in a few months from this bottom. There are a lot of moving parts to oil pricing. We have never had a major economic shutdown in modern times to build a model to predict where usage and pricing may fall in a few months. Will "work from home" be a wide spread thing when all restrictions are lifted? Will incomes be impacted in terms of reduced pay which would reduce spending? Will social distancing still be enforced in terms of restaurant, theater, and shopping venues affecting customer traffic? I predict one outcome of this shutdown will be that society will pushed several decades into the future from a work and activity standpoint. More people will work from homes, people will be displaced from jobs as businesses seek to reduce the impact from future pandemics from a labor standpoint, and school activity will be reduced where buildings may be used only once or twice per week. All these issues will impact oil consumption. 1 Link to comment Share on other sites More sharing options...
TPS Posted April 21, 2020 Share Posted April 21, 2020 1 hour ago, Foxx said: this was posted Friday the 17th at forexlive: There are some strange things going on in oil as ETF flows skew the market additionally, Goldman sacs said the following: Given the difficulty and costs of storing oil (even in normal times), investors typically never keep positions into expiration. The size of the long positions in May WTI had therefore already shrunk significantly as all the major commodity indices and ETFs rolled earlier this month into the June contract. Illustrating that point, the unprecedented collapse in May WTI prices occurred with only 100k contracts trading today, a tenth of the June contract volumes. In terms of holders, the surge in retail interest in recent weeks -- as illustrated by the USO ETF which now represents 30% of the June WTI contract open interest -- suggests that retail positions (in outright WTI contracts rather than systematically rolling products) were likely still long May WTI contracts into this week and now forced sellers (consistent with the sell-off accelerating in the 30 minutes ahead of the close and the sharp rebound that followed). regardless, we shall see in the days ahead. There are no mom and pop traders in futures. They are betting on oil using ETFs like USO, who is doing the underlying buying. As I mentioned, USO rolled their position from May into the June contract April 7 - 13th. The piece you linked to said they moved 20% of their holdings from the June to July contract, but they were already out of the May contract. My guess is it was some hedge funds who thought they knew the oil market, but didn't. Mom and pop traders bet on oil using ETFs like USO. They will lose, but not because of negative prices yesterday--that impacted other traders. They will lose because USO will be forced to dissolve soon. Based on the June price decline today from $20 to $13, it's NAV has fallen by $1 billion, which is 25% of its NAV. It's currently selling for $2.66 per share, which will probably entice some retail investors into buying it, thinking it has to go up eventually. However, it will be liquidated, maybe even this week. 12 minutes ago, RochesterRob said: There are a lot of moving parts to oil pricing. We have never had a major economic shutdown in modern times to build a model to predict where usage and pricing may fall in a few months. Will "work from home" be a wide spread thing when all restrictions are lifted? Will incomes be impacted in terms of reduced pay which would reduce spending? Will social distancing still be enforced in terms of restaurant, theater, and shopping venues affecting customer traffic? I predict one outcome of this shutdown will be that society will pushed several decades into the future from a work and activity standpoint. More people will work from homes, people will be displaced from jobs as businesses seek to reduce the impact from future pandemics from a labor standpoint, and school activity will be reduced where buildings may be used only once or twice per week. All these issues will impact oil consumption. I agree. 1 1 Link to comment Share on other sites More sharing options...
jrober38 Posted April 21, 2020 Share Posted April 21, 2020 2 hours ago, TPS said: On the other hand, the banks can take the assets, then sell them when/if prices recover. True, but the banks are levered up as well. If they have to start writing off massive loans to oil producers it'll be really bad for them. Link to comment Share on other sites More sharing options...
TPS Posted April 21, 2020 Share Posted April 21, 2020 6 minutes ago, jrober38 said: True, but the banks are levered up as well. If they have to start writing off massive loans to oil producers it'll be really bad for them. They have the FED. No biggie... Link to comment Share on other sites More sharing options...
jrober38 Posted April 21, 2020 Share Posted April 21, 2020 47 minutes ago, TPS said: They only have to hold until oil prices recover in a few months from this bottom. I don't think this is necessarily true. The issue is there's no where left to store oil, and no one has turned off the taps yet. That's just going to keep getting worse. Oil stockpiles are skyrocketing right now, and this is going to last a lot longer than a few months because there's too much oil being drilled right now. Link to comment Share on other sites More sharing options...
Magox Posted April 21, 2020 Share Posted April 21, 2020 I wouldn't touch oil until it stabilizes. The old adage applies, "Never try to catch a falling knife". With that said, Oil will recover. That is a certainty. The only question is to what level and how long that will take to happen. No one is driving, flying or burning that much fuel. As economies begin to phase back in their workforce, demand will increase and so will the prices. 1 2 Link to comment Share on other sites More sharing options...
keepthefaith Posted April 21, 2020 Share Posted April 21, 2020 32 minutes ago, TPS said: There are no mom and pop traders in futures. They are betting on oil using ETFs like USO, who is doing the underlying buying. As I mentioned, USO rolled their position from May into the June contract April 7 - 13th. The piece you linked to said they moved 20% of their holdings from the June to July contract, but they were already out of the May contract. My guess is it was some hedge funds who thought they knew the oil market, but didn't. Mom and pop traders bet on oil using ETFs like USO. They will lose, but not because of negative prices yesterday--that impacted other traders. They will lose because USO will be forced to dissolve soon. Based on the June price decline today from $20 to $13, it's NAV has fallen by $1 billion, which is 25% of its NAV. It's currently selling for $2.66 per share, which will probably entice some retail investors into buying it, thinking it has to go up eventually. However, it will be liquidated, maybe even this week. I agree. I sold my USO yesterday, thank you very much. Appreciate your expertise. I didn't own much and had bought it cheap so minimal pain. ? 2 Link to comment Share on other sites More sharing options...
bbb Posted April 21, 2020 Share Posted April 21, 2020 16 minutes ago, Magox said: The old adage applies, "Never try to catch a falling knife". What about the old adage of "being greedy when others are fearful" I don't know which old adage to use! 1 Link to comment Share on other sites More sharing options...
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