Ernesto

Discussion in 'Energy Futures' started by contango, Aug 25, 2006.

  1. contango

    contango

    The only potential hurricane we've seen so far and it's having a massive effect! Talk about an over-reaction. Ok, so I'm short Dec crude at 73.50. :) Thanks Ernesto, now go away.... Just as I morphed from a bull into a bear, then the hurricanes start arriving.....
     
  2. contango

    contango

    Looks like it might swing through Cuba and blow itself out... Holding thumbs we don't get it anywhere near the Gulf and that the $1 odd storm premium we saw on Friday evaporates on Monday's open.... :)

    Post Katrina last year we were just under $70 followed by a 50% retracement of the storm's move. Traders must be looking at today's prices and realising we're better supplied with long term Asian (and US) demand falling. If we don't get any storms this time around I think we're looking at $60 fairly soon...
     
  3. as long as there are huge concerns about middle east political instability crude price will at worse stay as it is. lebanon/hez conflict could kick start once again in a flash and iraq is gettin' messier and messier. contract is havin' a seriously hard time droppin' below 70 and for a bunch of good reasons.
     
  4. Wow! Shorting crude over the weekend with hurricane in sight. More power to u! Anyone who is willing to short crude overnights are heros. Shorting over the weekend? Hero within the hero.
     

  5. Long-term demand falling? That's a new one ...
     
  6. contango

    contango

    Yup, long term demand is starting to fall. Which is why the majors have quietly issued orders to get the price of crude down.... It doesn't really matter to them what the price of crude is, as long as the refining margin stays high. OK, it's my pet theory but it's based on chats with a few physical traders.

    We all know oil (and other energy commodities) have been bubbling over because of perceived Chinese demand... Well, last week China National Petroleum Corp reported that they found an oil reserve with 260 million tons of oil i.e. 260 million tons they won’t be buying on the market. Venezuela has also agreed to ship 150,000 barrels of oil to China a day in return for a few drilling rigs. And you can bet that petroleum geologists are crawling all over China and the former FSU as we speak looking for more finds.

    On the home front, Ethanol is becoming established and industry is shifting to renewable power gen. Fuels wise, synfuel from coal has received a major shot in the arm. Peabody (major US coal producer) is in bed with the US government about this already.... Crude has a ceiling price and it's getting lower i.e. the cost of alternative fuels is dropping by the day...

    Of course, OPEC's ace up their sleeve is the threat to stop supplies. But that could be the end of them... Positive thinking I know.... :)
     
  7. thats not such an incredible amount considering worldwide oil reserves are almost 1300 BILLION barrels

    my simple math calc. those tons if metric equal to 36 million barrels of oil
     
  8. Ok, now I get it. :p



    Chinese media calls everything 'reserves.' What they were referring to is 'oil in place.' Thus perhaps only 20-30% of that can be recovered, and even then only over a couple decades. Net-net, it barely puts a dent in PetroChina's need to replace the depletion occuring in its existing fields. (Yes, it is PetroChina.)



    Whatever ...
     
  9. contango

    contango

    Seriously, the physical guys are bearish right now.... It's the hedge funds who think like the crowd and who've pushed crude beyond "fair value"... Oil company CEO's want the price to come down and traders just want volatility, and to keep making money off the crack spread.

    Anyway, what do I care if China calls them proven reserves, plain old reserves or in-situ reserves.... My short trade at $73.50 is looking pretty good right now. Bringing in my trailing stop fairly tight now as it could be due for a bit of a bounce on New York's open.
     
  10. curious what your time frame is or risk - reward when trading oils

    I would not have let a trade go so far against me late last week
    per contract ... but maybe thats just me

    :p
     
    #10     Aug 28, 2006