OIL

[caprock]

Would you short Aug CL?

[PDA-Wiz]

Yes I made a little bit last week, I'm currently long 2 overall

[caprock]

PDA you trading CL this week?

[PDA-Wiz]

Yes I am longer in the near months, so the rise over the last couple of days has helped me :)

[caprock]

PDA hope you bot yday.. rally not over

[PDA-Wiz]

Some guy was bidding $68.00 to buy 250 contracts of the CLZ5 (Dec 2015) today, and left it there as the price crashed right down! That's a $17m bid in a very thinly traded contract. It didn't all get taken even as the prices crashed around 12pm. Just before it went through the price I picked up some nice deals... two contracts... bought the CLZ5/CLZ0 spread for -0.70 and sold back 15 min later for 0.01. I think the guy on the other end of that trade panicked as it moved against him; 0.01 is a bad price for him to get out at. I think fair value is probably about -0.50. I think about 100 of the 250 got taken eventually. There may be some upward pressure on the later dates as that gets moved through the curve. Probably won't affect the near months that much. I think the Aug/Jul spread is looking a little on the cheap side right now at 0.95. We're coming up to the Goldman Roll in about a week and last month the equivalent spread hit 2.00

[caprock]

I know several crude analysts, all saying we have hit bottom for now. All predicted a drop to $62. Should see a nice bounce now.

[PDA-Wiz]

Yes I think the demand is there and refining is tight. Inventories are rising but from what I read the question is whether the build up will be sufficient this summer to prevent sky high prices. If gas rises, it will probably drag CL up with it. It might only take one or two refiners outages or one mean hurricane to push us through $70.

Plus we see all this buildup in the Gulf which they are saying is just a warning to Iran, but I think it could lead to an attack on their nuke sites at some point. I think this would be a stupid move politically but it would push up CL hugely, albeit probably only short term.

[caprock]

I ask bc i trade CL only. Typically trade 2 and 3 months out. Front month too volatile for me. Seems we are at a fork on the road.. Crude and gasoline inventories continue to rise per DOE weekly report. However, you cant discount geopolitical issues.

[PDA-Wiz]

Just CL at the moment

[caprock]

CL contracts only. RB as well?

[PDA-Wiz]

Both

[caprock]

PDA -

are you trading oil futures? Spreads or flat price?

[PDA-Wiz]

Thanks for the charts. I think on balance barring some kind of dramatic demand destruction (trying saying that quickly).... like pandemic, you're probably right - oil is going up long term. I think the dollar might have some medium term stability before resuming the slide.

I'd like to get into some of the 2015 crude futures but beyond about 2010 the spread is typically quite wide. I've been watching the near futures spread also. Jul-Jun contango increased to $2 premium just ahead of the Goldman Roll last month. If it reaches that level again with Aug-Jul this time I think I'm a seller. Some kind of activity might happen in the Gulf which could even push us into backwardation. That would be a big win.

[Waverider110]

PDA: oil looks like this:

Technically it has been in a trading range, but broke out of a triangle:

But the US Dollar is LT cycling up and so oil "prices" will fall:

But we will never have "nickel beer" again and oil is never going to go to $40 and below. Peak oil is here. I say UP! UP! And AWAY!

[PDA-Wiz]

Does anyone have a view on the likely future course of crude oil prices? It seems to me that there are two major risks on the downside, recession and pandemic, and two major risks on the upside - war/supply disruption or a realisation that "peak oil" has passed.