Crude is screwed, man.

Discussion in 'Commodity Futures' started by Overnight, Feb 26, 2017.

  1. Overnight


  2. Maverick74


    Volatility is at all time lows.
  3. Overnight


    Ahh, well, I do not know what record levels volatility is at, but I can smell something foul coming. This coiled-spring keeps winding up with no release.

    I do not know if I will survive the release of the spring over the next two years. But I am biasing short for the next mid-term (6 months-ish).

    I mean, look at it. We have reports coming in that OPEC is waffling on the agreements from Nov 30th, we have US rig counts going up along with increasingly more efficient rigs, expanding shale supplies being discovered, we have decreased demand, we have inventory levels at near record highs, we have a "drill baby drill" president now in the White House, we have a record number of long positions in crude (and many of them are going to sell to capture profits)...

    It feels like there is so little to offset the supply glut. "Balance" is going to mean that in May, at OPEC's next decision meeting, they extend the cuts past end of June of this year. If they do not, how can crude expect to keep climbing barring any extreme factors such as some scientist suddenly coming out with the news that all crude has been sucked out of the earth, and there is no more left?
    Last edited: Feb 26, 2017
    vanzandt likes this.
  4. Maverick74


    Do you even watch the forward spreads? Do you even know where they are at? You might want to put a little more effort into this. Are you watching what's going on with Brent right now?
    i960 likes this.
  5. Overnight


    Yes, and I noticed a backwardation blip that seems to be creeping into the next 18-24 months of forwards. But that does not account for the feeling I have, but rather a reinforcement of it.
  6. Maverick74


    Brent is going into backwardation late summer. There is no blip dude. The curves are ripping across all strips. You really need to watch this shit. There is no "blip" to it.
  7. Overnight


    What I meant by "blip" is that this only started happening in WTI over the past month or so. Before then it has always been in contango. I do not follow Brent because I do not wish to pay ICE $115 per month to be able to trade it, but I am sure the spreads tend to follow the same general pattern between Brent and WTI.
  8. Gotcha


    Here is what I don't understand.

    Saudi Arabia ----> Shit... we are running out of money because oil is so cheap these days. Let's sell a piece of our company in an IPO and get suckers to give us lots of money for it.

    IPO Sucker -----> Lets buy a piece of this Oil Company that needs to raise money since the product they sell isn't doing so well.

    Its almost like Kodak wanting to do an IPO when their film business was failing. What am I missing here? Why does anyone want to buy a piece of this company?

    Listen.. the Saudi's aren't stupid. They let in foreign workers to work for cheap wages to build their infrastructure, but they sure as hell don't let them stay and apply for permanent residency (unlike other countries). They sure as hell also aren't taking in any refugees that also happen to follow the same religion. So given this, why on earth sell a piece of a business that is doing well? Clearly they aren't.... since it isn't doing well. They are selling a piece of a business that is going down the drain. So why is anyone going to be eager to buy?
    water7 and PistolPete like this.
  9. algofy


    I'd love for vol to go back up in CL.
  10. SkyChef