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triage (and others)

hat-tip to Investoboy

Contagion in Oil futures. Paper buyers and Physical sellers.


when storage tanks are full, what happens? (= the May anomaly of negative prices likely to occur again)

Retail is piling in to ETPs like USO; producers have buyers BUT futures have an end date. Normally, settlement of paper and rolling forward is achievable, but the imbalance is pushing out into following months



ETPs not necessarily capped at zero. .... a loss that won't be covered, so who carries the loss. Broker, manager, exchange? And the squeeze. 130,000 July contract. 100,000 Aug contracts. (June should be OK as Cushing may absorb)

USO owns 1/4 of market, broker can't liquidate if there are no buyers of physical oil. (no wonder trump wants to kick start economy)


But how do you buy a failed market??? Are ETPs a flawed structure? will this bring everything down like mortgages did in 2008?

Financial incentive to continue to produce oil that has no place to be stored. Producers have binary choice, to keep pumping or shut down (and trigger widespread defaults which are already junk status)


there is a sequence of events. By early June (July contracts) out of storage; .... rinse, repeat


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The disruption in global energy markets has claimed its biggest victim so far – Chesapeake Energy Corp filed for Chapter 11 bankruptcy protection on Sunday in the US, ending life as a fallen pioneer of the fracking boom and now bust.




saw these type of thingy coming, thought i had right bet.....but............................ only can cry for myself!! :sadsmiley02:



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OPEC, specifically Saudi Arabia has blinked on global oil production curbs.


Confidence in the current level of global oil prices will take hit from reports that Saudi Arabia wants to slash the 9.7 million barrels a day production cut due to expire at the end of the month.


Media reports at the weekend said the OPEC + group, which includes Russia and several smaller producers will be asked to approve a Saudi move to trim the 9.7 million barrel reduction by 2 million barrels a day, to apply from August 1.




the big swings already over , not sure at what level people can bet on oil again???? :unsure::sadsmiley02:



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There are also rules that forbid trading with the goal of deliberately affecting the settlement. In 2008, Dutch firm Optiver was sanctioned by the CFTC for abusing the TAS mechanism and boasting about its exploits in emails. And in 2011, the agency introduced a rule prohibiting a practice known as “banging the closeâ€, which it defines as trading heavily during the settlement period in one market to influence a larger position elsewhere.



bang on close?? for sure , just look at last 10 minutes trade CME can have clues . i guess they just don't want to do it!! :grrr:



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is this an heroic assumption, or will it come to pass?

Oil companies are risking some $400 billion in stranded assets with their focus on petrochemicals production growth that relies on strong growth in demand for plastics, Carbon Tracker has said in a new report. ....




While the major displacement of oil demand in the transport sector has yet to materialize as EV penetration has been slower than major projections estimated, the crusade against plastics has begun and will only intensify in the coming years. This would mean more initiatives for banning single-use plastics and more regulation in place for plastics recycling. Without regulation, the crusade will fail.According to Carbon Tracker, however, it will win, not least because of problems inherent in the plastics industry.


Plastics impose a massive untaxed externality upon society which this report estimates is about $1,000 per tonne ($350bn a year) from carbon dioxide, health costs, collection costs, and ocean pollution, the report authors wrote, adding that these can be mitigated through recycling, replacing with alternative materials, and improving the design and regulation.


If demand for plastics falls, then some 80 million tons of new plastics production capacity worth $400 billion will be stranded....

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Oil has surged to an eight month high overnight, with vaccine hopes and the smooth transition to a Biden presidency supporting risk assets across the globe.


A strong rally through November had put the oil market on track to reclaim its highs from late August, with hopes an effective vaccine could be rolled out within the next few months offsetting concerns over lockdowns and rising COVID19.


Brent crude surged 4 per cent to $US47.89 a barrel, its highest level since March 4, while West Texas Intermediate advanced 4.2 per cent to $US44.88 a barrel.


The strong surge has Brent crude up 27.9 per cent for the month, one of its best months on record

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WTI technical analysis


Prices for West Texas Intermediate (WTI) crude oil have responded to the bullish news, breaking out of the 3-week sideways range to hit the highest level in more than a year. From a technical perspective, the commodity has been consistently riding its 21-day EMA higher since mid-November, signaling a healthy uptrend. Meanwhile, the recent sideways consolidation has taken the RSI indicator back out of overbought territory, potentially clearing the way for a continuation higher as we move through February:


In the short term, the bias for WTI will remain bullish as long prices can hold the breakout above $54.00. After providing strong resistance over the last three weeks, this level should serve as support moving forward. To the topside, there’s little in the way of resistance until a minor high and psychological resistance at $60.00.




just one of the studies , DYOR AS ALWAYS!!



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Oil prices lost ground on Friday as energy companies in Texas and nearby states began preparations to restart oil and gas fields shut down by freezing weather and power outages.


Brent crude futures ended the session down $US1.02, or 1.6%, at $US62.91 a barrel while in New York, West Texas Intermediate (WTI) crude fell $US1.28, or 2.1%, to settle at $US59.24. For the week, Brent gained about 0.5% while WTI fell about 0.7%. Last week, both benchmarks climbed to the highest in more than a year with WTI above $US60 a barrel.


The big freeze in Texas and the Plains states curtailed up to 4 million barrels per day (bpd) of crude oil production and 21 billion cubic feet of natural gas, according to US energy analysts.


And on Friday it was revealed that US energy firms this week cut the number of oil rigs operating for the first time since November, according to the weekly Baker Hughes survey. US oil rigs in use fell by one to 305 last week, while gas rigs numbers rose one to 91, their highest since April 2020.


Despite rising for six months in a row, the combined count is still 393 rigs, or 50%, below this time last year. The total count is up from hitting a record low of 244 in August. the number of active oil rigs fell to a low of 172.



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