SMCJB 

Completely unrelated to today's activity... Singapore oil trader hid US$800 million of losses before collapse that stuns lenders including HSBC, DBS https://www.scmp.com/business/companies/article/3080622/singapore-oil-trader-hid-us800-million-losses-collapse-stuns the company faces a significant shortfall between the oil stocks it held and the inventories pledged to its banks. ... But Hin Leong told its creditors this month that total liabilities reached US$4.05 billion as of early April, while assets were just US$714 million, leaving a hole of at least US$3.34 billion,

I will remember this when I'm having a rough trading day.

Hulk 

Airlines probably dont get any impact from this. I dont know about Jet but prompt HO is down only 5c. Jet should be close.

So then how do I read something like this @Hulk? Or are they just bluntly rolling forward? I guess they all hedged around 50-60

Edit: hmm, i thought I had this link in there: https://www.forbes.com/sites/willhorton1/2020/03/08/air-france-klm-faces-1-billion-fuel-hedging-loss-as-oil-price-falls-due-to-coronavirus/

CL 06-20 traded all the way down to 11.79 in the EU session. WTF is going on here?

Fear of what happened to May contact happening again.

Scalpingtrader 

CL 06-20 traded all the way down to 11.79 in the EU session. WTF is going on here?

Sent using the nexusfi.com mobile app

If you want to store your oil which you just bought for $11.00 (June contract) here's a resource:

https://transcourt.com/crude-oil-tanker-trailer/

Like COVID 19, this whole thing is unprecedented. I've read through blogs, "experts" on Twitter (this lady is quite good: https://twitter.com/chigrl) - no one has a clue.
Saudis are loading up tankers again headed for the U.S.
Trump is going to have to step in to rescue the U.S. industry at least. Texas is pulling back on their commitment to decrease production.

Also interesting is that gold hasn't skyrocketed during this whole thing - KITCO interviews are all suggesting $2000 gold or higher but the futures sure don't reflect that possibility.

In the meantime, wouldn't touch CL futures with a 10 foot pole.

May contract expires today. There's a lot of gnashing of teeth - wonder how many liquidity providers, hedge funds were caught holding the bag - and out of business.
Someone mentioned yesterday that there were only 3 computers on the planet trading the May contract - and no one was buying.

Pa Dax 

So then how do I read something like this @Hulk? Or are they just bluntly rolling forward? I guess they all hedged around 50-60 Edit: hmm, i thought I had this link in there: https://www.forbes.com/sites/willhorton1/2020/03/08/air-france-klm-faces-1-billion-fuel-hedging-loss-as-oil-price-falls-due-to-coronavirus/

I cannot be sure how airlines are hedged. My guess is that everyone with storage capacity (not just airlines) have accumulated hedging losses since this demand destruction started. But I dont think everyone is using the same number, product/instrument or strategy for hedging. Some may hedge against Dec, others may do it against next Jun or even next Dec using different products/instruments depending upon how strong their balance sheet is. Again, this is all just a guess.

My point was only that yesterdays losses in WTI probably did not translate to Jet since Jet is well off the lows so unless airlines are storing WTI, they were not as impacted due to yesterday's print in May WTI.

Hi all,

Was wondering about the exposure in USO - since I understand it is based 25% on future contracts ? - could price reach ZERO - or NEGATIVE numbers like yesterday’s futures contract (5-20) ?

I thought USO was based on the actual underlying aggregated assets of actual oil companies.

My friend has invested in USO when it was at $5 or $6 I think and is afraid if USO could be “ERASED” totally - is that even an option ? (I believe NON LEVERaGED ETF’s - should never reach ZERO - right ?)

My friend is considering selling his positions in USO and buying XOP as it is based on natural gas as well - and took a hit.


Would love to revive some input,


Cheers - and hoppy trading.

ziggy123 

Hi all, Was wondering about the exposure in USO - since I understand it is based 25% on future contracts ? - could price reach ZERO - or NEGATIVE numbers like yesterday’s futures contract (5-20) ? I thought USO was based on the actual underlying aggregated assets of actual oil companies. My friend has invested in USO when it was at $5 or $6 I think and is afraid if USO could be “ERASED” totally - is that even an option ? (I believe NON LEVERaGED ETF’s - should never reach ZERO - right ?) My friend is considering selling his positions in USO and buying XOP as it is based on natural gas as well - and took a hit. Would love to revive some input, Cheers - and hoppy trading.

Really good question. USO invests in Crude Oil Futures contracts and NOT Oil Companies. As Futures go down USO does down as well. What happens if futures go negative. Great Question. Guessing USO goes bankrupt and that there is a massive problem with the exchange. USO down 36% today!

** USO **

ziggy123 

Was wondering about the exposure in USO - since I understand it is based 25% on future contracts ? - could price reach ZERO - or NEGATIVE numbers like yesterday’s futures contract (5-20) ?

SMCJB 

Really good question. USO invests in Crude Oil Futures contracts and NOT Oil Companies. As Futures go down USO does down as well. What happens if futures go negative. Great Question. Guessing USO goes bankrupt and that there is a massive problem with the exchange. USO down 36% today!

Been thinking about this. Isn't it even worse than that. With margin at $7500 for June starting tomorrow if June trades below $7.5 isn't USO unable to meet initial margin calls and hence insolvent?

Interesting article below...

The fund held 23.5% of June West Texas Intermediate crude futures contracts on the New York Mercantile Exchange as of Monday.

June OI is 581K. 23.5% is 136K. So USO is long 136k June Futures? This could get worse!

Bloomberg :- Oil Collapse Hits ETFs With Biggest Fund Running Out of Shares

https://www.bloomberg.com/news/articles/2020-04-21/u-s-oil-fund-issued-all-registered-shares-awaits-sec-approval