Chandemonium Posted April 20, 2020 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?
Foxx Posted April 21, 2020 Posted April 21, 2020 thread https://twitter.com/RogerDiwan/status/1252324705291374592 1 1
TPS Posted April 21, 2020 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
SoCal Deek Posted April 21, 2020 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? ?
Foxx Posted April 21, 2020 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.
Buffalo_Gal Posted April 21, 2020 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
jrober38 Posted April 21, 2020 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.
TPS Posted April 21, 2020 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.
RochesterRob Posted April 21, 2020 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.
Foxx Posted April 21, 2020 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
TPS Posted April 21, 2020 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.
RochesterRob Posted April 21, 2020 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
TPS Posted April 21, 2020 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
jrober38 Posted April 21, 2020 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.
TPS Posted April 21, 2020 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...
jrober38 Posted April 21, 2020 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.
Magox Posted April 21, 2020 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
keepthefaith Posted April 21, 2020 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
bbb Posted April 21, 2020 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
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