Airlines Thinking High Oil Prices Won't Last

[Rodent + 1,424]

Delta, United, American, along with Dubai's Emirates aren't going to hedge fuel deliveries this year--in a clear signal that these airline giants are not expecting prices to hold.

Brent up past $70 today.

[TraderTate + 186]

Mad Money Cramer today pointing how how 'contradictory action in oil prices and airline stocks, two related sectors benefiting from the bull market.'

 

[Seleskya + 50]

Noticed that Delta's earnings were well-received ... 

[Carlsbad + 19]

what Cramer is saying is that logically, oil and airlines should be able to rally at the same time ... yet here we are

[Addy + 14]

17 minutes ago, Carlsbad said:

what Cramer is saying is that logically, oil and airlines should be able to rally at the same time ... yet here we are

right, but I think this only works if airlines hedge against higher fuel prices.

[TomTom + 183]

Cramer could be right - the growing economy is leading to quite an increase in demand for domestic and intl flights... they can't even find enough pilots to man the damn fleet... 

Also, ask yourself, with a record number of longs in oil markets, wouldn't a correction be likely in the short term?

[LAOIL + 33]

Definitely hedging on a short-term correction here, barring some catastrophic event. In the meantime, I'm wondering if everyone's going to stop betting on API data ....

[Rodent + 1,424]

12 minutes ago, TomTom said:

Cramer could be right - the growing economy is leading to quite an increase in demand for domestic and intl flights... they can't even find enough pilots to man the damn fleet... 

Also, ask yourself, with a record number of longs in oil markets, wouldn't a correction be likely in the short term?

A sober correction, yes. The production war between OPEC and US Shale I fear will end badly. US shale is, at $65, profitable and therefore unstoppable, at least in theory, but US shale will have to put on the breaks when prices fall as inventory rises and the market gets nervous. What we'll have then is lower prices, with OPEC still producing less. I honestly don't think every OPEC member can afford that--some members will therefore start producing more, sending prices even further downward. On the other hand, US shale is in an entirely different position. The US may lose a few less thrifty players in the next price slump, but that's not the same as having its whole economy riding on it like some OPEC members.