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Oil, time to load the truck?

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  • Registered Users Posts: 1,993 ✭✭✭ GooglePlus


    Oil had turned into negative territory, https://www.foxbusiness.com/markets/us-stocks-april-20-2020

    Time to go all in, it won't stay like that. ?

    How would one go about investing in oil when it's low like this?


  • Registered Users Posts: 10,928 ✭✭✭✭ phantom_lord


    Still a way to go.

    (it's just the expiring contract that's negative, the Jun contract is 20ish).


  • Moderators, Category Moderators, Computer Games Moderators Posts: 8,181 CMod ✭✭✭✭ Sierra Oscar


    Still a way to go.

    (it's just the expiring contract that's negative, the Jun contract is 20ish).

    Hard to see how the June contact will be much better. Global economy is going to remain seized up for the next few weeks and the inventories are nearing capacity as it is. US has no remaining storage space and Middle East is quickly getting to that point, even factoring in the OPEC production cuts.


  • Registered Users Posts: 13,577 ✭✭✭✭ Aidric


    Why did producers continue to build inventory in the face of a massive shortage of demand?


  • Registered Users Posts: 14,630 ✭✭✭✭ Donald Trump


    Sounds like a job for Arlene "Cash for Ash" Foster!!!!!


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  • Registered Users Posts: 1,180 ✭✭✭ Shanee.


    How does one buy shares?


  • Registered Users Posts: 2,872 ✭✭✭ BailMeOut


    Shanee. wrote: »
    How does one buy shares?

    Commodities you mean!


  • Moderators, Category Moderators, Computer Games Moderators Posts: 8,181 CMod ✭✭✭✭ Sierra Oscar


    Aidric wrote: »
    Why did producers continue to build inventory in the face of a massive shortage of demand?

    They have been lowering production but the collapse in demand is unprecedented. It can also be incredibly expensive to shutdown production entirely and the same goes for trying to restart production too. Plus, the wells can also be damaged in the process.


  • Registered Users Posts: 2,329 ✭✭✭ dartboardio


    Will be some buy over the next few weeks!! Or whenever the global lockdown eases..

    However thinking of selling UK oil tomorrow on forex market.

    Thats €26 a barrel at the moment, down - 9% today.


  • Registered Users Posts: 2,329 ✭✭✭ dartboardio


    Shanee. wrote: »
    How does one buy shares?

    You could do it on the likes of Metatrader4, deposit money to a broker such as BD Swiss or any you know of. Then when the right time comes, buy or sell.


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  • Registered Users Posts: 27,467 ✭✭✭✭ drunkmonkey


    Would a call option be worth a look for January...


  • Registered Users Posts: 7,494 ✭✭✭ BrokenArrows


    I just poped 1k into the LOIL 2x ETF (https://www.google.co.uk/search?q=LON:+LOIL) @ $1.75

    We shall see how it plays out. Hopefully a nice quick recovery :D


  • Registered Users Posts: 2,329 ✭✭✭ dartboardio


    Guys what do you think about Brent UK oil today?

    When I was going asleep last night it was 26. Now on 20.

    Down 8% also yesterday. May follow USOIL..


  • Registered Users Posts: 1,060 ✭✭✭ nigeldaniel


    I did spread trading a few years back and had my big toe burnt off me when trading com's. Even if oil looks cheap I would stop clear for now as the markets are making no sense at all at the moment. Even Jimmy Cramer thinks the indexes are daft.

    Dan.



  • Registered Users Posts: 10,928 ✭✭✭✭ phantom_lord


    Oil etfs are burning money. The rollover costs will kill you.

    I find these threads a bit mad, the professional oil traders are out there dumping it as much as they can. Why would anyone with no knowledge of the industry think they know better? And have an edge?

    Oil will go up at some point, but to make money you have to do a better job vs the pros at predicting when that will happen. how likely is that?


  • Registered Users Posts: 10,928 ✭✭✭✭ phantom_lord


    I did spread trading a few years back and had my big toe burnt off me when trading com's. Even if oil looks cheap I would stop clear for now as the markets are making no sense at all at the moment. Even Jimmy Cramer thinks the indexes are daft.

    Markets are making sense.

    Oil is over supplied and has no demand.

    Stock market is being buttressed and backstopped by the US gov.


  • Registered Users Posts: 63 ✭✭ bearaman


    I'd like to buy oil as well but like previous poster, not sure how to. As a commodity, it's not traded like shares so where can I go to understand how futures work? Also, any recommended online brokers for this kind of trade?


  • Registered Users Posts: 14,630 ✭✭✭✭ Donald Trump


    bearaman wrote: »
    I'd like to buy oil as well but like previous poster, not sure how to. As a commodity, it's not traded like shares so where can I go to understand how futures work? Also, any recommended online brokers for this kind of trade?




    Be aware that what crashed were the nearest contracts for delivery. They were for physical delivery. You either have to close out the contract with an offsetting position or you need to take delivery.


    If you buy shares in Facebook because you think the price will go up over time, that is fine. Pay your money and log into your account and see what they are currently trading at. Happy days.


    If you want to buy oil because it is cheap, you literally have to store it. It's likely that you don't have storage yourself for that oil. I doubt you own a massive tank close to a delivery point. And it's likely that the price for renting storage is also through the roof. Especially after a period of low prices.



    In general you can try to trade the forward curve and try to pick up a carry of course, plenty do that. If the roll yield flips then you can lose money though.


    It would be great to be closing out a short position on it now though!


  • Registered Users Posts: 2,206 ✭✭✭ sk8board


    I just poped 1k into the LOIL 2x ETF (https://www.google.co.uk/search?q=LON:+LOIL) @ $1.75

    We shall see how it plays out. Hopefully a nice quick recovery :D

    Be very careful with oil ETFs, they tend to be heavily weighted towards future months, (June/jul/Aug), where prices are still positive, and not May, which is negative - and prices for future months may see a repeat of May as the contract close dates arrive in 4 weeks time, meaning the ETF could (counter-intuitively) fall further


  • Registered Users Posts: 1,993 ✭✭✭ GooglePlus


    Would it be worth investing in oil production companies themselves instead so?


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  • Registered Users Posts: 7,494 ✭✭✭ BrokenArrows


    sk8board wrote: »
    Be very careful with oil ETFs, they tend to be heavily weighted towards future months, (June/jul/Aug), where prices are still positive, and not May, which is negative - and prices for future months may see a repeat of May as the contract close dates arrive in 4 weeks time, meaning the ETF could (counter-intuitively) fall further

    Is there any way to see what exactly the ETF is current holding?


  • Registered Users Posts: 27,467 ✭✭✭✭ drunkmonkey


    GooglePlus wrote: »
    Would it be worth investing in oil production companies themselves instead so?

    You mean shorting them?


  • Registered Users Posts: 2,206 ✭✭✭ sk8board


    GooglePlus wrote: »
    Would it be worth investing in oil production companies themselves instead so?

    Oil is bandit country this week if you’re looking for safe trades - but as an e.g. it may be a good time to be long on tanker storage, someone like STNG.
    I’m not in it personally, and the ship may have already sailed on value (pun intended) - but as a trade on what direction you think oil will go short term, it’s an option


  • Registered Users Posts: 43,746 ✭✭✭✭ 6


    You mean shorting them?

    Or just buying shares in the likes of BP, Exxon, Shell etc


  • Registered Users Posts: 10,928 ✭✭✭✭ phantom_lord




  • Registered Users Posts: 2,564 ✭✭✭ ligerdub


    I bought into Wisdom Tree Crude Oil ETF this afternoon. The price per WTI futures at that point was roughly $16.50, now $13. I was aware of the risks, and the postion, while significant enough in my own terms, wasn't colossal.

    ETF closed at about 4.30pm and was down about 4%.

    My concern here though is the impact on the commercial viability and operational ability of these ETF's should there be another couple of days like this (I was not anticipating the nervy stretch to $6-7 futures today).

    Does anyone have any thoughts on this? Just a personal view, not taking anything as advice as such.

    I know I'm probably going to end up taking a large bath on this one, but I remain hopeful that prices can recover from this as the global economy gradually starts to return to order.


  • Registered Users Posts: 10,928 ✭✭✭✭ phantom_lord


    ligerdub wrote: »

    I know I'm probably going to end up taking a large bath on this one, but I remain hopeful that prices can recover from this as the global economy gradually starts to return to order.

    That's priced in in the forward contacts. And the ETF is going to lose money rolling into those contracts. Oil could be $30 in Dec and the ETF will be still be down money.

    It's almost 100% lose situation. You need oil to go up in the next month or two, which looks highly unlikely.


  • Registered Users Posts: 2,564 ✭✭✭ ligerdub


    That's priced in in the forward contacts. And the ETF is going to lose money rolling into those contracts. Oil could be $30 in Dec and the ETF will be still be down money.

    It's almost 100% lose situation. You need oil to go up in the next month or two, which looks highly unlikely.

    Yes, I see what you mean, the dangers of contango. I figured it was worth a bit of a short-term punt to see how it would play out over the next couple of weeks. I'll keep an eye on it.

    Thanks for your post.


  • Registered Users Posts: 2,206 ✭✭✭ sk8board


    I just poped 1k into the LOIL 2x ETF (https://www.google.co.uk/search?q=LON:+LOIL) @ $1.75

    We shall see how it plays out. Hopefully a nice quick recovery :D

    Just pulled up the KIID on this etf - it’s a 2x leveraged ETF, so a 50% drop would cost you 100% of your equity and you’re out of the game.

    As commented above, and a few days ago, due to the make-up of oil ETFs, you need the forward contracts for Jun/Jul/Aug to increase over the coming weeks, which seems unlikely at the moment.


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  • Registered Users Posts: 7,494 ✭✭✭ BrokenArrows


    sk8board wrote: »
    Just pulled up the KIID on this etf - it’s a 2x leveraged ETF, so a 50% drop would cost you 100% of your equity and you’re out of the game.

    As commented above, and a few days ago, due to the make-up of oil ETFs, you need the forward contracts for Jun/Jul/Aug to increase over the coming weeks, which seems unlikely at the moment.

    Yes I understand, it's a gamble and happy to risk the 1k.


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