Summer Oil Fear strategy

Discussion in 'Strategy Development' started by trend_guy, May 27, 2007.

  1. There has been a lot of chatter lately about a big oil/gas price increase this summer because of many factors... hurricanes(climate change), middle east conflicts(Iran), refiner manipulation etc etc.

    I have absolutely zero predicting power but I was doing a lot of thinking about the issue today. If this scenario were to happen (big IF), what would be the best ways to take advantage and profit.

    It seems to me, the best traders are always set up and ready to profit immensely... therefore I feel it's important have a strategy in place if this Oil ramp happens.

    My primary thought was... Alternative energy would rise huge.


    Uranium: USU, CCJ, FRG, U.TO, EMU

    Wind: AMSC, ZOLT, ELE, FPL

    Then refiners : WNR, ALJ, VLO, FTO, SUN

    <b>Is anyone else plotting a plan of attack in case this scenario unfolds?</b>
  2. TM1


    Depends on which way the oil trade goes; if the refineries get back to "normal" operating levels and can go more than 2 weeks without a failure, then rbob should fall a good bit, wti should also decline a little until the oversupply is drawn down.

    I'll play a refiner as long as the crack spread remains high, but if wti spikes and narrows the crack spread then I plan on switching to an integrated. I like MRO and XOM for those scenarios, solid performance with big cap safety for those unforseen market problems. I think either rbob or cl will work through late August, although a sleepy Hurricane season and quiet geo-politics could sour cl earlier than that. I just don't see our aging refineries getting any better, giving the edge to rbob, imo.