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The CL Crude-analysis Thread


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The CL Crude-analysis Thread

  #2351 (permalink)
 
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 phantomtrader 
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Saudi Arabia Sends Wave Of Supertankers To U.S. Ahead Of Oil Meeting

The world’s top oil exporter, Saudi Arabia, is making good on its promise to flood the world with oil even as demand collapses, with a surge in tankers carrying Saudi crude to the United States, tanker-tracking data compiled by Bloomberg showed on Wednesday.

Last month, when Saudi Arabia pledged to flood the markets with oil, the Kingdom’s crude oil exports to the U.S. hit a one-year-high of 516,000 barrels per day (bpd), according to the data compiled by Bloomberg.

So far this month, at least seven supertankers carrying a total of 14 million barrels of oil are currently traveling to the U.S. Gulf Coast. This compares to just 2 million barrels of Saudi oil en route to America in the same period in March. Almost all tankers are chartered by the Saudi state-run shipping firm Bahri, according to the data compiled by Bloomberg.

Just after the collapse of the OPEC+ production cut deal in early March, Saudi Arabia’s Bahri was understood to have hired multiple very large crude carriers to carry all the extra oil that the Kingdom planned on exporting in April—a rare move indeed for the shipping company that sports its own fleet of 41 tankers.

https://oilprice.com:443/Energy/Crude-Oil/Saudi-Arabia-Sends-Wave-Of-Supertankers-To-US-Ahead-Of-Oil-Meeting.html?utm_source=browser&utm_medium=push_notification&utm_campaign=vwo_notification_1586373365&_p_c=1


Just what we need - more oil!

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  #2352 (permalink)
 
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jokertrader View Post
Update: USO rolling from April 7 to 13th, has 3.5B in assets and account for about 20% I guess of front month volume

And with May at 2450 and May/Jun at 500, that roll will reduce their purchasing power by 17%*! Oh the beauty of roll yield!

* For those that don't understand. If USO has $3.5B in assets invested in May CL then they have about 143M barrels of Oil. When they sell May and buy June they will only have 119M barrels of Oil because June is so much more expensive. So if the market goes back up to where it was a month ago, USO will only regain 83% of what it lost, because of the lost purchasing power from the roll

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  #2353 (permalink)
 
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phantomtrader View Post
Just what we need - more oil!

Another 15mm build in the EIA report today (vs expectations in the 9-11 range). Storage filling up quickly (29M in 2 weeks!) although the market didn't react at all!

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  #2354 (permalink)
 
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SMCJB View Post
Another 15mm build in the EIA report today (vs expectations in the 9-11 range). Storage filling up quickly (29M in 2 weeks!) although the market didn't react at all!

Yeah it was strange - ramp up at 6 AM PST. Then practically nothing at 7:30 at inventory announcement. That's the CL - always expect the unexpected!

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  #2355 (permalink)
 
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Negative Crude Oil Prices????

ADVISORY #: 20-152
SUBJECT: CME Clearing Plan to Address the Potential of a Negative Underlying in Certain Energy Options Contracts

https://www.cmegroup.com/content/dam/cmegroup/notices/clearing/2020/04/Chadv20-152.pdf

If WTI Crude Oil futures prices settle, in any month, to a price between $8.00/bbl and
$11.00/bbl, CME Clearing MAY switch its pricing and margining options models from the
existing models to the Bachelier model, currently utilized in numerous spread options
products where negative underlying prices and strike levels are a regular occurrence. If
any WTI Crude Oil futures prices settle, in any month, to a level below $8.00/bbl, CME
Clearing WILL move to the Bachelier model for all WTI Crude oil options contracts as
well as all related crude oil options contracts effective the following trade date. CME
Clearing will send out an advisory notice with one day notice before any implementation
occurs with all appropriate details.


I looked for a layman's definition of the Bachelier model but couldn't find anything easy to understand.

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phantomtrader View Post
Saudi Arabia Sends Wave Of Supertankers To U.S. Ahead Of Oil Meeting
Snipe-
Just after the collapse of the OPEC+ production cut deal in early March, Saudi Arabia’s Bahri was understood to have hired multiple very large crude carriers to carry all the extra oil that the Kingdom planned on exporting in April—a rare move indeed for the shipping company that sports its own fleet of 41 tankers.

https://oilprice.com:443/Energy/Crude-Oil/Saudi-Arabia-Sends-Wave-Of-Supertankers-To-US-Ahead-Of-Oil-Meeting.html?utm_source=browser&utm_medium=push_notification&utm_campaign=vwo_notification_1586373365&_p_c=1


Just what we need - more oil!

So do you have an opinion on the tanker stocks as big winners theory being pushed on the internet?

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  #2357 (permalink)
 
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Trailer Guy View Post
So do you have an opinion on the tanker stocks as big winners theory being pushed on the internet?


I don't follow any stocks, sorry.

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Trailer Guy View Post
So do you have an opinion on the tanker stocks as big winners theory being pushed on the internet?

Did some work on this a few weeks ago. For the oil storage play your only interested in ULCCs/VLCCs, so your looking for companies that have the highest concentration of VLCCs in the their fleets that were not already booked out on time charters. DHT and EURN are good candidates followed by FRO and STNG. They all had big run ups when CL went to $20 but in the last week have given up all their gains and are surprisingly trading near long term lows again. I know crude has rallied but May/Jul is still trading $8. If your bold they all have options as well which all have implied volatilities over 100%

Disclosure: I have long delta positions in all 4 names mentioned.

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Worth reading especially the chartbook

Reuters/John Kemp :- Oil industry crisis starkly revealed in U.S. weekly data
Story here and Chartbook here

Petroleum products supplied to the domestic market, a proxy for total consumption, fell by 7 million barrels per day (bpd) or one-third over just three weeks between March 13 and April 3

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Baker Hughes Rig Count (day early because of Good Friday) Down 58.
That's 179 in 4 weeks!!! (19, 40, 62 & 58)

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