I will share a few thoughts I know I am not alone.....what's the trade right? It looks to me that oil price will not bottom til sometime in 2015 based on current data. I have been looking at refiners, the worst drawdown year to date is hfc -18.23%. (refiners over 2 B mkt cap) The price action of refiners is strong. I like MPC which is up quite a bit in the last few weeks. Will RIG cut its dividend? where will it trade at if it has to cut. RIGP-RIG pair? SDRL cut its dividend went from $20 to $12 in a few weeks. http://seekingalpha.com/article/2737115-transocean-is-a-dividend-cut-candidate UGA is a gasoline etf, small volume but tradeable in small size. USO is pretty active has options going out 752 days, good volume fairly liquid options. CVRR is a very small refiner market cap 2.5 B, forward pe of 5.40
USO options are rather commission intensive until they do a 5-1 reverse stock split. Does anyone know a simpler and liquid way to trade oil volatility other than CL options? An OVX ETF?
Have you looked for a different brokerage? I sold 50 out of the money naked calls on USO (was going to go with a bear call spread, but don't see a need to buy protective calls yet) for a total of $21.07 in commissions. There are brokerages out there that offer low commissions on options; you have to shop around a bit. There are tradeoffs though. Which country do you live in and what's your account size? USO options are very liquid; a better way to play oil is through futures but only if you have enough capital to withstand the trade temporarily moving against you if your timing's off. I'm short a few futures contracts of June WTI (CLM5), which I prefer because it's tradable 24 hrs a day, 5 days a week.
I was also going to recommend reconsidering your broker. I use IB and have been very pleased over the last few years.
Ogarbitrage, rumors floating out there that Saudi King Abdullah's on his deathbed and Crown Prince Salman will be taking an oath within a few hours. Opinion on what that means for oil prices?
I haven't heard the king's condition is that dire, however I imagine it will mean more of the same should a transition occur. The Russians need revenue, the Saudis want a bigger piece of the global market, other Arab states are fighting to maintain what they currently have, and the US is on the brink of exporting. West African production is competing for buyers in Asia and has been a drag on the market since they lost their primary buyers in North America. The Saudis are tired of WAF cargoes competing for their own in Asia, they aren't fond of Russia or Iran, and they certainly don't want a thriving US export industry to also compete against. This is shaping up to be a glut among gluts. It's hard to see an end in sight for crude, but I expect we're not there yet. When the 'buy the bottom' crowd gets flushed out from these levels, we could see another 20-25% downside before another, perhaps temporary, reprieve.
I'm in synch with your thinking on the oil glut. I've spent the weekend researching both the supply/demand imbalance and the internal dynamics of the House of Saud. I've been monitoring King Abdullah's health since he was admitted to the hospital with pneumonia. Here's an Arab journalist's tweet on the subject: https://twitter.com/EjmAlrai/status/551712015312769024 I don't like any change to the status quo, but oil fell when news broke of King Abdullah being hospitalized last week.
Regarding the price of oil and international relations, has anyone else read the book "The Oil Card"? Here's the Amazon link: http://www.amazon.com/The-Oil-Card-Economic-Warfare/dp/097779539X
I ran a check on him. His twitter account says he's Elijah J. Magnier. He's the Chief International Correspondent for Al Rai, a daily newspaper in Kuwait. His tweet, in English, was based on a tweet in Arabic. Looks like he jumped the gun. I think the only proper thing to do at this point is to post a Monty Python clip on the subject: