Cushing predicting another crash in oil prices?

Discussion in 'Commodity Futures' started by Error Correction Funder, Apr 10, 2018.

  1. bone

    bone

    Might I suggest a more focused and likely a more productive research topic for you: refining spreads.
     
    #11     Apr 10, 2018
  2. Maverick74

    Maverick74

    You're welcome.

    [​IMG]
     
    #12     Apr 11, 2018
  3. I've looked at them before, and they look too seasonal. Which one did you have in mind?

    Although there may still be some juice left in the WTI Brent spread.
     
    #13     Apr 11, 2018
  4. Thanks, but no thanks. My positions are MFT, so one day means nothing to my position choice.

    But if I was in, my HFT rebalancing would dump more into the bear positions on oil.
     
    #14     Apr 11, 2018
  5. Maverick74

    Maverick74

    One day? Oil is up 60% since last July. LOL.
     
    #15     Apr 11, 2018
  6. The signal from Cushing only fired a few or so weeks ago.
     
    #16     Apr 11, 2018
  7. Maverick74

    Maverick74

    Look bud, I'm trying to help. I've been trading energy for awhile, Bone has as well. You really need to get your hands on some more data. This sector shows no mercy for the ignorant. For starters, Cushing is NOT the global price marker for oil, Brent is. Cushing is landlocked and therefore the locational spreads are VERY important to determine market prices since it's value is ultimately determined once it hits the Gulf, not while it's sitting at Cushing. Cushing has become largely irrelevant to global pricing.
     
    #17     Apr 11, 2018
    vanzandt likes this.
  8. Then what is your explanation for the crashes from April to May 2010 and from April to October 2011?
     
    #18     Apr 11, 2018
  9. Maverick74

    Maverick74

    World GDP was half then what it is now. That's a LOT!. We were drowning in supply. Both WTI and Brent were in super contango. You can google that. But super contango is where the cost of storage basically goes parabolic because you run out of storage capacity. The yields to storing oil (the convenience yield) are so high that you make more money on the yield than selling the oil. Firms like Vitol and Trafigura were buying tankers like candy and storing oil all over the world. The ocean was full of these tankers just sitting on product. Everyone misjudged the economic recovery. We should have been hitting 2.5% GDP growth in 2010 and 2011 but we were stuck at 1%.

    Then we had the crisis in Europe. Demand got killed there. Then throw in the fracking revolution which ironically came at the worst possible time and suddenly we tapped into oil we never thought we could reach. Then the Fed does a 180 and continues to printing money because they are afraid Europe takes us right back down into a recession. There were so many factors killing demand. Now you have all those things reversed going in the opposite direction. The world doesn't look anything like it did in 2010. How many people are talking about the Euro being torn apart? Nobody is, it's trading at 5 year highs. Now it's the dollar getting smoked. One thing you have to be careful of when looking at historical data is understanding context. It's the little subtleties that kill traders.
     
    #19     Apr 11, 2018
  10. bone

    bone

    Cushing Rack Space is fairly irrelevant these days - at the very least it's importance has greatly diminished. There are so many other global basis vectors today than existed even ten or fifteen years ago.
     
    #20     Apr 11, 2018