Oil, time to load the truck?

drunkmonkey · 20-04-2020 7:31pm #1

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. ?

GooglePlus · 20-04-2020 8:03pm

drunkmonkey wrote: »

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?

phantom_lord · 20-04-2020 8:05pm

Still a way to go.

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

Sierra Oscar · 20-04-2020 8:32pm

phantom_lord wrote: »

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.

Aidric · 20-04-2020 8:38pm

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

Donald Trump · 20-04-2020 9:10pm

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

Shanee. · 20-04-2020 9:39pm

How does one buy shares?

BailMeOut · 20-04-2020 9:46pm

Shanee. wrote: »

How does one buy shares?

Commodities you mean!

Sierra Oscar · 20-04-2020 9:48pm

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.

dartboardio · 21-04-2020 12:07am

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.

dartboardio · 21-04-2020 12:08am

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.

drunkmonkey · 21-04-2020 12:16am

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

BrokenArrows · 21-04-2020 11:57am

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

dartboardio · 21-04-2020 1:03pm

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..

nigeldaniel · 21-04-2020 1:08pm

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.

phantom_lord · 21-04-2020 1:08pm

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?

phantom_lord · 21-04-2020 1:10pm

nigeldaniel wrote: »

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.

bearaman · 21-04-2020 1:11pm

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?

Donald Trump · 21-04-2020 2:06pm

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!

sk8board · 21-04-2020 3:48pm

BrokenArrows wrote: »

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

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

GooglePlus · 21-04-2020 3:58pm

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

BrokenArrows · 21-04-2020 4:15pm

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?

drunkmonkey · 21-04-2020 4:17pm

GooglePlus wrote: »

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

You mean shorting them?

sk8board · 21-04-2020 4:33pm

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

Bobeagleburger · 21-04-2020 4:36pm

drunkmonkey wrote: »

You mean shorting them?

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

phantom_lord · 21-04-2020 9:48pm

Interactive Brokers facing 88m loss due to customers holding oil

https://www.forexlive.com/news/!/interactive-brokers-statement-on-oil-margin-losses-circa-88m-20200421

ligerdub · 21-04-2020 10:22pm

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.

phantom_lord · 21-04-2020 11:15pm

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.

ligerdub · 21-04-2020 11:30pm

phantom_lord wrote: »

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.

sk8board · 22-04-2020 2:03pm

BrokenArrows wrote: »

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

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.

BrokenArrows · 22-04-2020 3:08pm

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.

Jim2007 · 22-04-2020 5:56pm

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.

Not alone do you need to look at the gearing, you also need to understand if and how they are allowed to use synthetics...

BrokenArrows · 22-04-2020 8:35pm

BrokenArrows wrote: »

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

I closed out the position at the end of today for a minor 22% loss offset somewhat by the currency change.

I'll keep an eye on it over the next few days and see if I'll re-enter.

Limestone1 · 23-04-2020 12:22am

BrokenArrows wrote: »

I closed out the position at the end of today for a minor 22% loss offset somewhat by the currency change.

I'll keep an eye on it over the next few days and see if I'll re-enter.

Be interesting to follow the position over a 3, 6, 9, 12 month timescale after everyone here knocking you even though everyone agrees the price is at an all time low - all comments worry about the future prospects and agree oil is in the toilet. Demand is below the floor , knock on from Saudi and Russian war was never solved and Trump's successful efforts to drive up the price have petered out .As an example of buy low, this looks outstanding !!

dartboardio · 23-04-2020 12:25am

Don't buy oil.

Invest in the tanker storage companies whos stocks will probably skyrocket over the coming weeks

Tnk
Stng
Eurn

phantom_lord · 23-04-2020 2:03am

BrokenArrows wrote: »

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

It's a gamble you're losing heavily 95%+ of the time. And if somehow you win, you'd only finish up small after all the costs of holding the position.

At least gamble in a spot where you've a chance of wining.

As an example of buy low, this looks outstanding !!

It's not a penny stock. It's a commodity where the carry costs are exorbitant. It's akin to buying BOI and AIB during crash, but with a payday loan.

afatbollix · 23-04-2020 9:52am

Ya know when it's a bad investment when people go onto the internet and ask how you buy oil/shares/bitcoin. Ya know its a bad investment.

If only we were using taxis I'm sure all of them at the moment would be saying how much oil they have bought.

They are giving away oil at the moment, Oil company's are pumping out oil costing a fortune but paying people to store it. How is that good value at the moment? The next step is to turn off pumping out of wells without knowing how quickly they can come back online when needed.

Here's a way to make a quick buck, Buy a oil tanker and send it to Texas.

https://www.vice.com/en_uk/article/5dm7mn/buy-tanker-during-coronavirus-oil-prices

sk8board · 23-04-2020 12:01pm

True, but oil, and instruments like oil ETFs, are not constructed/priced like normal stocks.
‘Cheap’ is a very relative term in the oil market.

It’s different to the taxi driver telling you he’s buying bank of Ireland because they’re ‘cheap’

dartboardio · 26-04-2020 9:14pm

I think usoil (crude) will rise further over the next couple of days possibly upto 25 a barrel.

There has been a huge immediate cut of production from Nigeria and a few other countries, this made it rise quite a bit on Friday.

Anyone else considering buying tomorrow?

(on forex market, mt4 platform)

stayback · 27-04-2020 8:03am

dartboardio wrote: »

I think usoil (crude) will rise further over the next couple of days possibly upto 25 a barrel.

There has been a huge immediate cut of production from Nigeria and a few other countries, this made it rise quite a bit on Friday.

Anyone else considering buying tomorrow?

(on forex market, mt4 platform)

Oil will drop further in value before it increases. Demand is virtually at zero .

Hardly any planes running (look at flight radar) and listening to airlines there won’t be much activity this year.

no traffic on the roads (listen to traffic reports). With remote working going to be on the increase after this the likelihood demand in that area will drop over time.

By now all the heating oil tanks will be full of cheap oil.. and won’t need to be filled till the end of the year.

Container ships are still going strong. But overall demand is very low. When supply is cut it might help the price but demand is the major factor. Another factor unemployment will soar this year with a lot them not getting work till next year.

So my view is that oil will drop further this year.

phantom_lord · 27-04-2020 5:45pm

USO down 15% today.

canonball5 · 27-04-2020 7:09pm

I have been buying more and more crude oil the last couple of weeks. There is no way these prices can continue to stay this low for too long. I see this as a massive buying opportunity and will be buying more this week.

august12 · 27-04-2020 7:20pm

canonball5 wrote: »

I have been buying more and more crude oil the last couple of weeks. There is no way these prices can continue to stay this low for too long. I see this as a massive buying opportunity and will be buying more this week.

Where, how and why do you buy crude oil and where do you store it??? And what do you do with it.

PhilOssophy · 27-04-2020 7:24pm

I might put a tenners worth in the car, its all it'll hold at the moment.

beggars_bush · 27-04-2020 9:24pm

filled it today. Had been running it down to zero

dartboardio · 27-04-2020 10:27pm

Ended up shorting oil again today and made around €150.

Easy money for sitting around doing nothing only pressing a few buttons :V.

Stuck at the same price between €12-€13 since about 2pm though..

phantom_lord · 28-04-2020 1:33am

canonball5 wrote: »

I have been buying more and more crude oil the last couple of weeks. There is no way these prices can continue to stay this low for too long. I see this as a massive buying opportunity and will be buying more this week.

What way are you long oil?

PhilOssophy · 28-04-2020 9:21pm

beggars_bush wrote: »

filled it today. Had been running it down to zero

Where have you been driving? I would say mine wouldn't hold a tenner and haven't filled it in about 6 weeks!

Oil, time to load the truck?

Comments