The futures market doing precisely what futures markets do, pricing the consensus expectation that a disruption is temporary. More critically, the futures market and the physical market have broken apart entirely. Dubai crude used to price Asian oil is currently trading at roughly $37 to $40 per barrel above what futures contracts imply, a gap that was less than a dollar before the conflict. Which market would you trust, the one settling in paper, or the one settling in physical barrels?

Invoking the futures curve as evidence against an energy crisis is like pointing to a weather forecast calling for sun next week as proof that the hurricane currently making landfall is grossly premature. The screen and the physical world are telling two different stories. One of them is getting delivered to refiners at $138 a barrel.

The futures curve is also structurally blind to the nat gas dimension entirely. There is no futures curve pricing the reconstruction timeline of Qatar's North Field. There is no long-dated contract market telling you when the LNG supply growth story the market had priced through 2030 gets restored.

 

ill give the dude credit. his oil prognostication hobby has him convinced he sees how this is going to end. i suspect as that he’s heavily shorting the likes of united airlines and the cruise industry. i may not be as smart as him, but my family with deep experience and ties across the energy industry and associated markets feel differently. the fact that he made bets about what was going to happen to the upcoming wide body growth makes me wonder if he’s related to kit darby regard the pilot shortage 20 years ago. either way, it’s irrelevant.
one more thing-remember that peak oil argument from 20 years ago? man, those guys sounded very convincing based on their analysis and facts. they seemed to know something the rest of the industry didn’t.

 

Based on this statement zero chance you have any family with professional working knowledge of the energy market otherwise you would state something more concrete than "feels differently".

I don't short so another swing a miss. I'd tell you to keep trying but I'll save you time and give you my playbook.

I'm long in the following:

BTU and HCC (Coal)
PBF (Oil Refiner)
UNTC MNR CRK (Natural Gas)
UUUU NXE DNN (Uranium)
RIG VAL TDW (Deep water Drillships and OSVs)
AGI BTG ITRG SBSW ( Gold and PGM miners)
EGY TALO KOS (Oil Producers)
ASIX IPI (Fertilizer)

90% Equity 10% 2028 LEAPS

 

I hope like all the regime apologists that this doesn’t wreck the world economy. But let’s not pretend that if Biden had done this that you all wouldn’t have lost your collective ****. Some of you are incapable of seeing a different perspective.

 

So what? All that means is the short term uncertainty and disruption is not expected by the market to continue. They are putting their money where their mouth is.

 

Before the Great Financial Crisis Mortgage Backed Securities (MBS) were trading as if the underlying loans were sound. The ratings agencies (Moody's, S&P) had blessed them with investment-grade ratings, and institutional demand was so voracious that spreads were compressed to levels that made no economic sense given the actual loan quality underneath.

Dr. Michael Burry famously shorted them via Credit Default Swaps. Because the market believed these bonds were safe, the CDS premiums Burry paid to insure against default were cheap. He was essentially buying fire insurance on a house that was already smoldering, at rates priced as if there was no fire risk. His downside was capped at the annual premium. His upside was the full notional value of the bonds going to zero.

Just like the MBS buyers were relying on ratings rather than reading the actual loan tapes, oil futures buyers are relying on diplomatic convention and historical mean reversion rather than stress-testing the actual physical infrastructure vulnerabilities. The complexity of global oil routing is the equivalent of the CDO prospectus nobody read.

Be very careful hanging your hat on the positioning of Wall Street traders

 

No offense, but the last time you posted something like this you changed your tune within 3 days. I would recommend a "wait and see" approach.

A5S

 

HK doesn't listen to podcasts so......

 

I’m usually on your side and I agree with you on the contract. But come on, I’m still waiting on Tucker and Kent to be hauled in on charges from the FBI. Any day now…You can’t call out people and then not acknowledge your post history. But yeah, we have the company here and I’m totally in agreement with their strategy and it is exactly as I filled out my contract survey. Get me more pay and more time off. Make it simple and you don’t have to touch 100 parts of the contract.

 

But how exactly can be dangerous (looking at you optimizer). Be careful how you wish for things.