BL

Commodity trading firms Trafigura, Vitol, Guvnor, etc will make a killing on oil trading this year.

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(edited)

The pressure on oil demand and increased price volatility will allow these trading firms to make huge profits.  

Its a buyer's market. The trading firms will be able to buy oil at deep discounts and lock in hefty profits hedging with futures contracts.  There are all kinds of trades they can execute.  Their ability to take ownership and make deliver is a whole different ballgame then just trading oil contracts.

Supply was greater than demand before coronavirus. With the pandemic it will be substantially increased.  There was too much oil even with a 1 million decrease in Libyan production. An OPEC cut of 500k will not fix anything.  Russia's January production was highest in almost a year. Does OPEC+ carry any weight. 

Crammer is correct.  Investing in Oil Companies is over.

Trading oil futures is not what it use to be.

Only value investors should buy oil and gas companies for their dividends.  I would not buy yet.  Wait till after the consolidation and oil price settles down to a sustainable level wherever that is.  

 

Edited by BLA

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You make money trading, marketing physical oil. These companies and others have to compete and find the oil resources to market at much lower costs. I know I do everyday. Oil futures and hedging is one way but, you need to have the physical oil to make money.

Value investors are one thing and the others are long term investors who are not rattled by daily up and down. OPEC + is talking about cutting 1,800,000bpd of production.

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(edited)

On 2/5/2020 at 6:05 PM, ceo_energemsier said:

You make money trading, marketing physical oil. These companies and others have to compete and find the oil resources to market at much lower costs. I know I do everyday. Oil futures and hedging is one way but, you need to have the physical oil to make money.

Value investors are one thing and the others are long term investors who are not rattled by daily up and down. OPEC + is talking about cutting 1,800,000bpd of production.

These large trading firms buy the physical oil and most have their own tankers. In an oversupplied market they will name the price.  Its a buyer's market for probably at least the next 6 months.  They don't pay the contract settlement price.  They can buy at large discount in this environment.

China is turning away contracted deliveries of oil and natural gas.  Force Majeure. 

Regard cutting 1.8 million bbls. The truth is OPEC+ has not really cut that much.  Its all smoke and mirrors. They changed the rules stating condensate no longer counts as oil.  Therefore Nigeria , Russia and others suddenly are compliant for the first time. Its all fake. 

Russia's January production increased substantially. Highest in almost a year.  All phony.

Poster Buckland made a good point today.  We keep finding new supply for now.  The more important point is that there is no transparency as to world reserves, production or storage inventory.  We could wake up tomorrow and see there is nowhere near the supply.  Do you believe anything OPEC says ?

The difference going forward is how fast will electric cars uptake be.  Wait till the Democrats get control again.  You will see all types of green technology legislation mandating green use like electric buses, electric buses, high onerous taxes on all types of hydrocarbon use etc.  Thus increasing short term supply or reserves claimed

If Brent stays in the $50's  watch the oil companies earnings reports next quarter. Disaster. 

Better yet watch what happens when ARAMCO stock comes off lockup.  Look out below. 

Only good thing to come out of this is we will probably see the much needed shale consolidation. 

The shale problem is not a demand issue, or price issue .   It's a balance sheet issue.  Over half the shale companies need to reorganise.  Even with reorganization the will need to sell because they don't have the size to gain efficiencies. 

The virus just expedited a consolidation that needed to happen.

Edited by BLA

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13 hours ago, BLA said:

These large trading firms buy the physical oil and most have their own tankers. In an oversupplied market they will name the price.  Its a buyer's market for probably at least the next 6 months.  They don't pay the contract settlement price.  

Regard cutting 1.8 million bbls. The truth is OPEC+ has not really cut that much.  Its all smoke and mirrors. They changed the rules stating condensate no longer counts as oil.  Therefore Nigeria , Russia and others suddenly are compliant for the first time. Its all fake. 

Russia's January production increased substantially.

Poster Buckland made a good point today.  We keep finding new supply for now.  The more important point is that there is no transparency as to world reserves, production or storage inventory.  We could wake up tomorrow and see there is nowhere near the supply.  Do you believe anything OPEC says ?

The difference going forward is how fast will electric cars uptake be.  Wait till the Democrats get control again.  You will see all types of green technology legislation mandating green use like electric buses, electric buses, high onerous taxes on all types of hydrocarbon use etc.  Thus increasing short term supply or reserves claimed

If Brent stays in the $50's  watch the oil companies earnings reports next quarter. Disaster. 

Better yet watch what happens when ARAMCO stock comes off lockup.  Look out below. 

Not all large trading firms have their own tankers, they have them on time charter or voyage charters and always looking for arbitrage opportunities and they also go and make deals for long term supplies under  market prices with "independent" producers by giving them access to markets. Companies who pay contract settlement prices dont make profits (mostly) in their upstream or downstream operations.

It is a buyer's market most of the time if the buyer has the financial resources and credit and market access, logistics and can help the independent producers. I have seen dozens of European companies establish themselves in the US domestic market because of the shale boom and they have been making billions every year.

Russia, OPEC may not give the full facts on their production cuts but it is in their own self interest to cut production and comply with it as much as possible to sustain their cash requirements and their budgets and keep dissent down within their borders. If they keep flooding the market, they lose revenues and cant sustain their budgets and keep their people somewhat happy and not end up with political/civil/social dissent.

Green green greed, nothing is green about it.

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(edited)

On 2/6/2020 at 12:41 PM, ceo_energemsier said:

Not all large trading firms have their own tankers, they have them on time charter or voyage charters and always looking for arbitrage opportunities and they also go and make deals for long term supplies under  market prices with "independent" producers by giving them access to markets. Companies who pay contract settlement prices dont make profits (mostly) in their upstream or downstream operations.

It is a buyer's market most of the time if the buyer has the financial resources and credit and market access, logistics and can help the independent producers. I have seen dozens of European companies establish themselves in the US domestic market because of the shale boom and they have been making billions every year.

Russia, OPEC may not give the full facts on their production cuts but it is in their own self interest to cut production and comply with it as much as possible to sustain their cash requirements and their budgets and keep dissent down within their borders. If they keep flooding the market, they lose revenues and cant sustain their budgets and keep their people somewhat happy and not end up with political/civil/social dissent.

Green green greed, nothing is green about it.

TRADING Firms make money on the TRADE.

Simple.

They are making a killing in the present market. 

The present market will probably last 4 to 6 months.  

The End

Edited by BLA

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15 minutes ago, BLA said:

TRADING Firms make money on the TRADE.

Simple.

They are making a killing in the present market. 

The present market will probably last 4 or 5 months.  

The End

So am I, and will continue to do so into the very long future . THE END !!! 🍸

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