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  • Certainly these are interesting times. I wish I was savvy enough to know how to capitalize on the carnage in WTI today but alas I don't. The price correlation of oil ETF's like USO look absolutely dreadful in this market and unfortunately I misplaced my empty oil tanker in the gulf...

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    • Originally posted by Vae Victis View Post
      Certainly these are interesting times. I wish I was savvy enough to know how to capitalize on the carnage in WTI today but alas I don't. The price correlation of oil ETF's like USO look absolutely dreadful in this market and unfortunately I misplaced my empty oil tanker in the gulf...
      Do you have a pool? lol

      I looked earlier this am and thought about buy some puts on the futures since they seem to have a mispricing and seem to be priced as an equity, that is there is a zero lower bound. As many people learned today that isnt true for oil, a commodity that has a cost of carry, namely storage. It can go negative due to the extra cost necessary to store it. I dont think options reflected that, but didnt pay attention rest of day dang it, these are the kinds of trades you want.

      I'll look again but Im sure market makers will be up all night adjusting pricing mechanisms and models.

      FWIW, USO is not the way to play the may forward contract, it is only holding june as it rolls with 2wks left in the contract. It would have went to 0 today had that not been the case. June is over 20 bucks and I dont think people are going to suddenly have used up all the oil by the next contract expiry.

      Crazy times.

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      • Originally posted by Vae Victis View Post
        Certainly these are interesting times. I wish I was savvy enough to know how to capitalize on the carnage in WTI today but alas I don't. The price correlation of oil ETF's like USO look absolutely dreadful in this market and unfortunately I misplaced my empty oil tanker in the gulf...
        You were savvy enough to stay away. A lot of people got caught (*ahem* USO) with their pants down.

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        • Originally posted by Zaphod View Post

          FWIW, USO is not the way to play the may forward contract, it is only holding june as it rolls with 2wks left in the contract. It would have went to 0 today had that not been the case. June is over 20 bucks and I dont think people are going to suddenly have used up all the oil by the next contract expiry.

          Crazy times.
          I have a feeling it's going to be a similar situation for the June contracts. Demand likely won't magically rebound that quick and it isn't as easy as turning off the spigot, at least in the US.

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          • I did take a peek at some of the oil short ETFs under the assumption that June contracts would undergo a similar fall as May, as there is no reason to believe there will be a big leap in demand. It would have been a nice bet, seeing that the futures are implying a 35% jump in the ultrashort ETF. But that can go both ways and my goal here by moving to cash was to reduce volatility, not morph into a methamphetamine-laced power trader. So, I sit and I watch and shake my head.

            2008 had the "Lehman moment"... anyone think that this historical collapse of oil might be signalling something more ominous than just a technical curiosity of futures contracts?

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            • With the June and July contracts also weakening, does this tell us something about the likely rate of rebound of the overall economy, or lack thereof? Along with other indicators such as drying up of credit (lenders tightening standards), treasury notes, withdrawal of corporate guidance, etc.

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              • Originally posted by EntrepreneurMD View Post
                With the June and July contracts also weakening, does this tell us something about the likely rate of rebound of the overall economy, or lack thereof? Along with other indicators such as drying up of credit (lenders tightening standards), treasury notes, withdrawal of corporate guidance, etc.
                It tells us that shutting down production in the US isn't as easy as turning a valve. Many wells can't be restarted once they are capped or fracing stops. Many leases have clauses in them that they can't stop production. It honestly doesn't say a whole lot about the economy.

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                • ill take the hippie side of this.....glad the industry is capsizing and imploding. happy to have many of these operations closed full time. hopefully some of those communities can pivot, otherwise they can be left by the wayside.

                  force some change to renewables, keep some of this cleaner environment for a little while longer, etc, etc etc.

                  other than that i dont really have an interest. carry on!

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                  • Originally posted by Peds View Post
                    ill take the hippie side of this.....glad the industry is capsizing and imploding. happy to have many of these operations closed full time. hopefully some of those communities can pivot, otherwise they can be left by the wayside.

                    force some change to renewables, keep some of this cleaner environment for a little while longer, etc, etc etc.

                    other than that i dont really have an interest. carry on!
                    Well, aside from the fact its simply a marker for greatly reduced economic activity and all the consequences therein.

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                    • Originally posted by Zaphod View Post

                      Well, aside from the fact its simply a marker for greatly reduced economic activity and all the consequences therein.
                      yea no skip that...

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                      • Originally posted by Zaphod View Post

                        Well, aside from the fact its simply a marker for greatly reduced economic activity and all the consequences therein.
                        Is it really though this time? So much of the reduced use is artificial and because of the shelter in place orders. I am sure it is correlated but maybe not as bad as it would seem.

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                        • Originally posted by Peds View Post
                          ill take the hippie side of this.....glad the industry is capsizing and imploding. happy to have many of these operations closed full time. hopefully some of those communities can pivot, otherwise they can be left by the wayside.

                          force some change to renewables, keep some of this cleaner environment for a little while longer, etc, etc etc.

                          other than that i dont really have an interest. carry on!
                          Plus, if anything, crude being so low really takes away much of the economic incentive of these green companies. I'm wondering when Tesla is going to come out with an ICE vehicle.

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                          • I am personally going to go 2 months without buying any gas. Incredible.

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                            • Originally posted by Peds View Post

                              yea no skip that...
                              Don’t forget the cow farts. Without oil and cattle, any suggestions for Texas or just shut it down?
                              Cowboy coding school? Tourism? YouTube sensations?

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                              • If I had a Tesla, I’d be thinking of buying a Diesel generator for the electricity.

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