Oil Plunge 20%+
Crude just dropped 20%+, I’ve seen as high as 30% drop. Where do you think the market will go from here.
Oil traders how are y’all responding to this, did any of you make or lose money from this? Anyone else trade NG or other related products?
Junk Bond traders any opportunities opening up or staying far away?
Investment Bankers, for the O&G space do you think they’ll be more M&A activity in the space or a major slowdown?
Commenting on the unprecedented crash in oil, Pickering Energy's Dan Pickering put the crash in perspective: "From OPEC share announcement in 2014 it took 14-15 months for oil to break $30 (Feb 2016) This time it took less than 1 trading day. Breathtaking! Energy industry, welcome back to Hell."
He is right, and nowhere more so than junk bonds: once markets open tomorrow (assuming they are not indefinitely halted), keep a close eye on HYG, which consists more than 10% of energy junk bonds, and is set to plunge by the most on record.
And speaking of the plunge in crude (and "value" energy stocks), tomorrow we may also see the VIXtermination-like vaporization of 3x levered oil and E&P ETFs such as UWT and GUSH, for which the 30% drop in oil will be a liquidation event catalyst.
As an oil trader, you can fill storage as contango has grown.
That's the only way now! And looking also at the dry bulk index... fill it 'till explode boy!
Any idea how the trading firms (Glencore, Vitol, etc.) will be impacted? Does it depend on how they play their cards or is there going to be an industry-wide decline in profits? Supposed to start at one of the traders later this year and worried if I need to start thinking about backup plans if offer gets rescinded.
One would expect them to be printing near record profits this year. Every trade shop in the world is long volatility and they especially benefit when that volatility results in a steep contango like we are seeing. Companies like the ones you mentioned just try to stay alive during "normal" markets so they can print money in markets like these.
That makes sense--Thanks for the reply Rotterdam, your posts have helped me over the last few months in securing my offer. Will keep fingers crossed that I won't be out of a job.
Pardon my ignorance, but what is "contango"?
Marketing/trading shops are fundamentally long volatility. Therefore, they may have short term losses but longer-term they’re fine.
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