Hey bone, that's news to me. Thanks for sharing. Curve took quite a hit today. Every z/z spread beyond the front z4/z5 is negative.
Any opinion of the CL Jan - March. The spread has settled settled down to an extreme low of -0.14. Doesn't this contango seem too exteme considering the seasonal weakness at the end of the 1st Qtr? Seems like a good risk.
What seems too low can often go lower. F/H Brent spread is trading -1.20 / -1.17. If you wanted to get into a bull spread here, I wouldn't risk more than a nickle.
Time to weigh in. I think we are witnessing an incredible event in the energy complex. What does everyone think about price action, geopolitics, term structure, volatility, predictions? <Go>
Armchair economist here: It is very hard to make a bullish case. We are late in the business cycle. Cheap oil is now a subsidy to a late stage US economy. Europe has been slowing down. The US Army is refocusing on African deployments because there is no forsable action in the Middle East. Arabs are complacent about oil prices. I think we are looking to see the previous lows made in the 40s. How long will it stay there? I couldn't even guess.
The market is expecting a supply surplus of ~1.25-1.5mm bpd by the end of 1H15 and 1.75-2.0mm bpd by the end of 2H15. Russia will lower their export tax on crude and product beginning in Jan. This should build more Urals and product supply in the Baltic and Black Sea depressing ARA and Med cracks. China is the current bid in the Dubai/Oman and Brent markets as they quadruple their SPR. Huge refineries coming online in the Middle East should depress Asian products and cracks further. Buyers are renegging or cancelling LNG contracts as the oil-linked spot prices plunge. All the US supply is putting pressure on the US export ban which won't survive a GOP administration. There really is no bullish fundamental argument in this environment: strong dollar, huge supply, weakening demand.
Russia, Arab oil producers in no-cut chorus as price dive deepens Russia to boost Q1 daily oil exports by 6.6 pct, q/q - sources The race to zero.