1) power outage in Japan, so Japanese refineries production halt. 2) Middle east is priced in and situation is contained.

Stop looking at supply, demand is key...

 

^^^^Also, risk off trade as record amount of long positions were unwound (that's why the movement down has happened across the entire curve).

I've gotten really hurt this week with how the oil curve has moved...oh well, better entry point for the new investors coming in on April 1st I guess...

A lot of this move is non-sensical (at least for the longer-dated contracts). The oil curve is so mispriced it's ridiculous.

 

Valid point. We had huge length in Oil, record short in natty, and large positions in USD before Japan blew up. Will be interesting to see on friday if the CFTC reports show how much funds have unwound all that shit.

Besides NBP going nuts, as Japan possibly needs tons of new energy sources to serve lost nuclear plants. Not much else has traded rationally in the commodity world this week.

Pretty sure gartman was talking the same messed up valuations of the long-dated oil curve as well before Japan blew up.

 

hmmm, Front month seems right to me. I was pretty bearish at 102+ level. Fundamental doesn't support that. Now it comes down, I am starting to turn Neutral/Bullish, cuz the demand from rebuilding Japan. Long dated oil is definitely mis- priced. 2-3 years oil should hit definitely hit $130 -140 lvl for many reasons, including super-cycle, cautious nuclear power development etc.

 

All commodities are falling, classic risk-off USD/JPY/CHF buying. All short-term of course with the expectation that the rebuilding phase will increase demand for oil.

 

I trade around them but yes I am thinking they will go higher. Not to say in the short term they will loose a buck here and there. Flat price will continue to move higher and spreads will collapse. HOGO is another trade to look at..

 

I'm bearish US cracks near term. Keep in mind there's been about 1.2 MMBbl/d of capacity offline in the Gulf Coast due to planned maintenance that is coming back online mid-March. At these levels utilization is going to jump higher as these guys are going to try to make as much cash as they can. Product inventories are already above the 5-yr average and are going to get even worse with increased utilization, there just isnt enough underlying demand to support it.

 

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