Love the technical response and understand so appreciate it. Had a friend who died in 9/11 who was a big trader in Oil Futures for a subsidiary of a French bank called Carr Futures who taught me a bit when I was in college taking Russian because I was thinking their energetic sector would truly open up (before Khodkorvsky was arrested by a couple of years after he came back from a meeting w XOM and Putin decided that wasn’t cool). Then on Corp fin side doing project finance deals and financing some middle market E&P, usually second lien on PPP.lagerhead wrote: ↑Wed May 12, 2021 5:41 pmFFG the contracts were penultimate, expiring the next day, commercials were not trading. The Chicago mafia aka the algos were trading. Crack spreaders made good money that day buying crude at negative prices and selling refined products in the same contract delivery month. There was no convergence to cash, futures contracts are structured to tightly. Very few commercial deliveries are done through the exchange maybe 20 MM BBLS a month, be happy to pint you in the direction of the exchange data but both cme and ice make it hard to get historical delivery data. The disconnect between futures and cash is real. Every ETF and commodity fund sellS front month and rolls to deferred contracts to avoid margin. The retail ETF products sold to the general public give the perception of exposure to commodities, but with carry charges you sell a cheaper contract to buy a more expensive one. Look at the USO ETF. The exchange lists multiple derivatives priced off Cushing BBLS, ULSD and HO delivered into NY harbor. And ICE and CME are allowed to use each other’s settlements to list contracts, all the trades are arbitraging the two exchanges. Guess how many round turns an algo shop will trade to make one tic. A: 10 if they lose on two, scratch 5, and positive p&l on 3 they have made one tic. Exchanges let the trade for free and sometimes rebate them based on volume. You know why, the other side is paying full fee. Oh by the way those algos don’t carry open interest unless the have locked in an arbitrage profit. When they do the pay member rate margins, can offset with contra contracts as well. Trading futures is trading paper, very little to do with underlying asset.Farfromgeneva wrote: ↑Wed May 12, 2021 1:28 pmWell you really couldn’t have physical settlement as there was nowhere to store it which is why the price mechanism was negative. Literally had barges sitting in the water. And the various market makers on the street have generally been forced to divest from their storage. But this doesn’t mean the price mechanism doesn’t work in commodity futures. Having invested in or traded other esoteric synthetic instruments I’m quite familiar with markers where the dedicate pricing diverges from cash but this isn’t one of them yet (such as bespoke HY CDO basically a cash flow contract supported by the theoretical payments made to a A or BBB rated tranche using 50-100 crappy corporate names or a tri party ethanol hedge created by Goldman in attempt to hedge the unhedhedgeable risk in corn based ethanol production which is the complete lack of correlation between corn and Nat gas or oil prices-over 30yrs its .02...)lagerhead wrote: ↑Tue May 11, 2021 7:40 pmPaper traded negative no oil changed hands at negative prices. Where were futures the next day? Trading commodities futures is trading paper, real conversion to cash prices has gone away. Look at the number of energy, agriculture, sugar, soy derivatives tied to futures contracts. CME publishes actual deliveries at the end of each month you would be surprised how little delivery goes through your price regulated transparent pricing mechanism.MDlaxfan76 wrote: ↑Tue May 11, 2021 6:39 pmSheesh, the oil market went so belly up owners had to pay others to take their oil as it was costing more to transport or store it than anyone was willing to pay.Farfromgeneva wrote: ↑Tue May 11, 2021 9:01 am You are not intelligent based on your presentation here. If it’s an Act it’s lack of any thoughtfulness because when I watch Calvin Candy I’m aware it’s an actor playing a role, if it’s not an act...
Just don’t get it. I guess that’s why you use the clown emoji so often to let everyone know your life and profession.
The words you use in reply don’t even follow macroeconomic or english language logic. Inflation is measured by a basket of prices chucklehead. Bitcoin, an asset, is 5x, lumber is well over a double. Those tax cuts and Covid reflect the dollar and price changes I your dummy chart probably pulled from from an Alex Jones website.
Inflation isn’t one commodity.
And my answer didn’t say trump but you stated Biden was responsible for this unsolicited so it was actually you making the specious claim out of stupidity or dishonesty,take your pick. I’m talking about the actions and market events (as well as a major exogenous one) that impacted this. You inferred the person who had more involvement in this phenomena then the one you explicitly stated is responsibility. Keep on being dishonest.
My wife joined the board of a family holding company last spring, family dough came from Standard Oil...then first to create self serve pumps...still significant oil and gas exploration and tanker business...it was scary times...it'll be interesting to see how that business evolves over the years, but they're certainly breathing a bit easier right now.
Nah, that belly up turn wasn't Trump, it was the pandemic. And now we're going in the opposite direction with world demand. But what a lot of hooey that a pipeline that's never been built being canceled would cause a spike in prices. Absolutely so dumb that the only explanation becomes "dishonest".
But hey, trolls troll.
So if you are suggesting the cash price was real and futures aren’t id reject that pretty fast. Some counterparty was transacting On those contracts.
"WTI is special in a way because it's so tightly connected to physical oil," said Derrick Morgan, senior vice president of American Fuel & Petrochemical Manufacturers
And I’m not sure your point when one clown puts up a chart as evidence of something about our president gong back two years and ignoring the reality in the markets that forced oil down and the rebound is natural. Unless it’s a point of diversion as a tactic from the original worse than specious argument.
When cash was in the 30s and 40s I know for a fact the integrated a we’re buying smaller E&P debt at less than 50 cents on the dollar. My new business was in extended conversations with a decent sized Gulf region bank to manage about $2Bn of non performing assets (loans) a majority of which were energy sector. Would’ve been a nice piece of business but unfortunately they decided to dump the worst half billion of that debt for 52-55 cents on the dollar to Oaktree. Bottom line is anyone showing a chart of gas or oil prices starting in 2019 and the dip and rise and suggesting it’s the president and not acknowledging this is dishonest or not informed enough to make these arguments.
Oh and the dollar chart overlayed in the last year...most contracts are in what currency still?
All good. It still doesn’t explain the chart which was the original point of the thread which was a guy claiming using a bad chart the reason gas prices were up we’re somehow a couple months worth of policies regardless of the contango situation and specific price only a fracture in markets for a moment not the trend. Otherwise we should find out what Trump did that was so great to get oil prices down. Maybe he was in the middle of the intervene (fake) fight between SA and Russia last year which I learned a lot from my DOD friend in SA shared with me. You’re taking technical about one day price change from a market perspective not from an end user perspective and more importantly a longer term directional change that can easily be explained by Covid and the dollar not some silly suggestion a president who’s been around a couple of months means we’re going to $100BBL in a secular change. (and the futures market still exists because of real end users as I’ve had to do a ton of work regarding the CFTCs post financial crisis clearinghouse rules within Volcker for interest rate derivatives and between credit and rate contracts I’ve learned enough to know that any friction or anomaly exists because of cash users in said market not fast money participants, they simply function to extract any excess bid/ask spread from the market)