OIL : threads, links, data, charts - the Notable ones, An index is in the Header / what shall I add ? Options

[DrBubb]

OIL : threads, links, data, charts - the Notable ones
An index is in the Header / what shall I add ? / Find this under the GEI logo as "OIL"
===================================

Image : Barrel or "Nodding Donkey"
.


GEI's Top Oil-related threads
======================
Hits--- :
18,100 : Kerr's Oil thread : $200-400 Oil : http://www.greenenergyinvestors.com/index.php?showtopic=3164
+6,600 : Major Low in Oil Coming : http://www.greenenergyinvestors.com/index.php?showtopic=5014
+1,400 : Be Careful with the Oil Etfs : http://www.greenenergyinvestors.com/index.php?showtopic=5612
+1,000 : Gold-to-Oil Ratio : http://www.greenenergyinvestors.com/index.php?showtopic=1157
++ 800 : Signals for Oil : OIH as a Bellwether : http://www.greenenergyinvestors.com/index.php?showtopic=5412


Chart : WTI Crude ... update .................... : Chart : WTI-to-OIH Ratio ... update
.

Chart : XLE leads OIH and WTI ... update




*Oil Link?
DubaiFM vs. Oil/USO ... update

Funnily enough, DubaiFM sometimes leads oil

LINKS
++++
Nymex WTI.. : Closing prices : http://www.nymex.com/lsco_fut_csf.aspx
ICE Brent..... : Closing prices : https://www.theice.com/marketdata/reportcen...4&hubId=403
Google news : http://news.google.com.hk/news?hl=en&q...sa=N&tab=wn
Oil related.... : McDep : Zman Notes
How wti Futs : http://progressive.powerstream.net/008/001...rude/index.html
CHARTS
+++++
Ratios:
http://tinyurl.com/gei-gold-wtic
http://tinyurl.com/gei-GDX-OIH
http://tinyurl.com/gei-GDX-XLE

[DrBubb]

SUPER CONTANGO

According to Goldman though the steepening has more to do with credit constraints than anything else. They write:

While historically these extreme degrees of contango, often referred to as super-contango, are associated with full inventories and therefore due to constraints on available storage, this time they are likely attributable to constraints on available credit. This indicates that the impact of the credit crunch on the oil market is not waning and continues to exacerbate the pressure on prices coming from weakening economic fundamentals.

Credit constraints are not only distorting the incentives to hold inventories but also limiting the ability to close arbitrage opportunities along the forward curve. The recent worsening of the dislocation in the oil forward curve indicates that the impact of the credit crunch on the oil market is not waning to any significant degree and continues to exacerbate the pressure on prices coming from weakening economic fundamentals.



They highlight the fact that timespreads have now breached the limit typically set by the cost-of-carry, which means those buying oil in the future are willing to pay a premium beyond and above the cost-of-carry and storage of oil bought today in the spot market.

Goldman says that in the past 20 years this has only happened in 1998 and temporarily at the end of 2001 and 2006. Each of those times, storage capacity was an issue. There wasn’t enough of it available meaning if you wanted to buy oil today to store and sell into tomorrow, you expected a premium for your efforts. But there is no such storage shortage today. The reason people are expecting a premium to sell oil into the future this time is due to limited access to credit and strong preference for cash.

As this intensifies Goldman says producers will be increasingly incentivised to shut-in their own production.

As the contango gets steeper, breaching the cost-of-carry, it becomes ever clearer that the structure of the forward curve is providing incentives for the highest-cost form of storage, namely production shut-ins. The “underground storage” is typically considered the most expensive because of the costs associated with shut-ins and start-ups of the oil fields and, more importantly, because it is normally far from the refinery centers

/see: http://ftalphaville.ft.com/blog/2008/11/11...super-contango/

[DrBubb]

FIND THE "OIL" LINK THREAD??

It gives the key OIL-related threads and links.

To find it in a hurry, look at the GEI Logo

.......................................... OIL .............................

...and right below "I" in global edge Investors, the "E" in green Energy,
you will find a Link to this thread

[DrBubb]

OIL Charts that I want to save - this shows the slide from US-Peak-Oil production, and why imports have risen.



Notable Charts : http://www.chartsrus.com/

[Wanderer]

Hello all,

Oil, and to a lesser extent OIH, have taken a hammering today in stockmarket falls. And gold has leapt up. I'm beginning to wonder whether this might be the time to hop from Gold to Oil?

I'm nervous about it. But I was nervous about adding to my losses when I tripled my holding in SLW almost at the nadir - best investment I've ever made as it turns out.

Remember, this doesn't mean I think that Gold is necessarily at a peak or Oil at the bottom, but the pair might be approaching a point where the potential upside for oil is greater than the potential upside for Gold, with correspondingly reduced downside risk for Oil than Gold.

There is a lot of Oil demand just 'baked in the cake' as a result of the sheer number of cars out there on the road and the sheer number of McHouses in the suburbs.

What do others think?

Wanderer

[sideshow]

I was thinking the same and started buying back in to USO last week. I think I made a mistake though - both in timing and choice of instrument. I think USO gets killed by contango, but I'm not sure I understand how. I'm not sure what the best symbol is to trade oil.

[double-agent]

I've been hammered on crud.l - Fridays bounce didn't even register on Monday mornings price. ho hum, you live and learn

[G0ldfinger]

http://gold.approximity.com/gold_charts.html

[rich6400]

I got hammered on LOIL.L this week too. To say I am an amateur at this is giving me too much credit! I guess I need to try and understand the differences between the different oil ETF's.

[sideshow]

I sold half of my USO position for 12% loss today. I only had a few thousand dollars anyway. Apparently, USL is a better ETF since the contracts are spread evenly over 12 months rather than front loaded on the earlier months. USL should therefore decay less than USO during contango.

I also sold my 200 shares of GLD today. I'm not sure if this was the right move. I've been sitting on it for so long, since trading at the peak last year, I took the opportunity to get out. I failed to average down much on the ETF as I started buying physical instead. I am hoping for a pull back to start rebuilding the position with physical gold.

Perhaps Dr. Bubb can advise of the best ETF for tracking the oil price?

[sideshow]

And here's the rationale for USL versus USO:

http://finance.yahoo.com/news/Dont-Buy-USO...e-14295114.html

[lupercal]

And here's the rationale for USL versus USO:

http://finance.yahoo.com/news/Dont-Buy-USO...e-14295114.html

Great article. Thank you.

[mSparks]

regarding oil contango.
I know DrBubbs pointed out that its tough to make money on oil futures, but I thought I'd drop in my 2c on what I am seeing happening atm.
spot oil is sticking around the high end of $35-40 (weep ye oil nations) but futures are still much higher than this (contango).
But, as we roll closer to the futures expiry the futures are being sucked down (only some downside to the futures at the moment, and not worth trading imho) towards spot (as opposed to spot being pushed up to the futures), I believe this is due to LEH holding a lot of long oil futures prior to its demise and those futures are being gradually unwound. (damn those weak American slaves for not Nuking Iran in time ).

[DrBubb]

Lehman's position would have been unwound a long time ago.

Optimism about the medium term and long term price of oil is what holds prices up. (LT near $70)
A glut of spot supply holds the front end of the curve down.

Let's see what lasts longer. I think the glut will ease first

[DrBubb]

GOLD/OIL RATIO : New Range (over 25!) - A Level not seen for many years
===========

Gold - in Barrels of WTI Crude - with gaps up


This chart (from Goldfinger) shows brief spikes to 30 and even one to 33.

That was typically followed by a collapse in the Ratio back below current levels.

Gold Stocks relative Oil Service Stocks : Ratio of GDX-to-OIH - w/ gap breakout


Gold Stocks relative Major Oil Stocks : Ratio of GDX-to-XLE - w/ gap breakout


I think that there are some relative bargains in the Oil sector, and I plan to continue a gradual shift
of my portfolio in that direction, while simulatneously boosting cash levels for a possible early March
low in stocks.

[mSparks]

Lehman's position would have been unwound a long time ago.

Optimism about the medium term and long term price of oil is what holds prices up. (LT near $70)
A glut of spot supply holds the front end of the curve down.

Let's see what lasts longer. I think the glut will ease first

hmm, depends how big a position it was doesn't it?
Most of their trading desks were sold on to the likes of Barc et al, better to trickle out a massive net long position built up over 3 or 4 years over many months (Leh collapse was only just 5 months ago) than dump it all in a few, especially if they were buying multi year dated futures.

I'm sure I read somewhere in the past that several fields sold their entire estimated lifetime production through futures contracts.

[DrBubb]

I'm sure I read somewhere in the past that several fields sold their entire estimated lifetime production through futures contracts.

Sure. I used to be in that business (in fact, I suppose I "invented" the oil swap contract back in 1986, believe it or not.)

Lehmans was not a big player in the oil swaps business. For example, Morgan Stanley is far larger.
Whomever assumed the Lehman's oil swaps, would also have taken over their oil futures books.
So the Oil futures shorts covering any purchase of an oil swap, would be gradually wound down as the swap expires.

The net oil futures position would have been far smaller.

[mSparks]

Sure. I used to be in that business (in fact, I suppose I "invented" the oil swap contract back in 1986, believe it or not.)

Lehmans was not a big player in the oil swaps business. For example, Morgan Stanley is far larger.
Whomever assumed the Lehman's oil swaps, would also have taken over their oil futures books.
So the Oil futures shorts covering any purchase of an oil swap, would be gradually wound down as the swap expires.

The net oil futures position would have been far smaller.

I have no trouble with removing Leh from that post and replacing it with other firms with net longs.
My main source for this assumption is how much oil was bid up during all the Iran/Israel debacle.
Before Iran started to rattle its sabre back at us.

[DrBubb]

I have no trouble with removing Leh from that post and replacing it with other firms with net longs.
My main source for this assumption is how much oil was bid up during all the Iran/Israel debacle.
Before Iran started to rattle its sabre back at us.

All banks have position limits which restrict their "net long" or "net short" oil bets to a reasonable percentage of their Net Equity.
They are set up to manage and control these positions in a sensible way. But that is not the end of the stoty, unfortunately.
They get into trouble, when they think they have a hedged or low risk position and it turns out not to be so.

[rich6400]

I got hammered on LOIL.L this week too. To say I am an amateur at this is giving me too much credit! I guess I need to try and understand the differences between the different oil ETF's.

I discovered this on the google finance chat board:

http://finance.google.com/group/google.fin...6eba68c1ac43f30

In Jan LOIL was at $5.60 when spot was approx $39 a barrell
After rollover, In early Feb LOIL was approx $4.00 when spot was £39 a
barrell
As we approach the next rollover $39 a barrel would equate to LOIL at
approx $3.45 (currently it's much lower though)

Learn quick.
CONTANGO = LOIL goes down
This is explained v eloquently above

The professionals (ie guys like the ones at ETFS controlling LOIL's
performance) sell spot close to rollover (otherwise they'd have to
take delivery of this stuff and who wants that?) and they then buy the
next month at a HIGHER price thus reducing the value of the fund!

The very act of these professionals selling en-masse at the same time
drives the price down even further

It is not so much the fund tracks the index which tracks the price of
a barrel of oil.
More - the spot price of a barrel - especially near rollover - is
influenced by the movement of funds in an out of these ETFs which is
then reflected in the index.

Any one thinking that it'll all be OK in the end because the price of
oil will go up in 6 mths time hasn't understood what's going on

Next month the price of a barrel of oil will again be approx $39 (at
some point) and LOIL will be at approx $2.00

By May - your stash is worth pennies - and the price of a barrel of
oil will still be around $39

The good news is that the reverse is true when CONTANGO is reversed -
probably 2010 at the rate were going

(assuming you have any stash left to take advantage of it)

I guess I should sell my LOIL position.