The Commodities Guy

@MichaelPBento Oil always overshoots

My oil positions just went +40% and they are only a few hours old

@MichaelPBento Not stupid. If you want to stay in it with duration buy the backs or buy spreads. Dyodd

Any actual oil traders (not Robinhood kids), like old hands want to tell me if this is a stupid idea? Like I said I don’t have much experience with commodities, I’m mostly a bonds and stock derivatives guy.

@RachelDashCS @SchwabNetwork @SchwabTrading Agree. Finna rip

$CrudeOil this trendline resistance is the starting line…. 👀 (Mobile charts don’t show log scale😅) *Not a recommendation @SchwabNetwork @SchwabTrading

@Michael42414180 @OilCfd @NebHuskies @ALikhodedov @Rory_Johnston they are and they aren't... cushing south linespace bids are bonkers so anything in cush is getting diverted to usgc to either be consumed to realize beefy cracks or await exports to realize beefy export arb realizations

@OilCfd @NebHuskies @ALikhodedov @Rory_Johnston @CommoditiesGuy Why aren't traders executing the contracts from Cushing during the roll and paying the transit costs to Houston?

No, WTI isn't trading at a premium to Brent Front month WTI contract is barrels for May delivery; front month Brent now trading June WTI premium you're seeing is just huge prompt pressure (WTI prompt backwardation just hit a record) Delivery-month adjusted WTI-Brent spread:

@OilCfd @NebHuskies @ALikhodedov @Rory_Johnston think the diverts from asia to nwe was a euro pull, landed middie diffs are bidding the bbls away and to ur point beefy saudi osp's... i think wide open phys arbs are gonna keep pipe arbs bid, cushing at bottoms in june (or earlier)

@NebHuskies @ALikhodedov @Rory_Johnston @CommoditiesGuy well... these Cushing inventories are telling something.. saturation of light sweets?

@amital13 careful out there... k opts settle tomorrow

The paper oil market can be manipulated through margin hikes, selective liquidity provision, and Trump's rhetoric - but the moment of reckoning with physical reality is drawing closer. Next week's CME options expiry is a significant event to watch. Meanwhile, the spread between Brent spot and the front month contract (expiring end of month) continues to hold at historically elevated level 🔥🔥 #oil #reality

@fernandowavesfx thats a vol traders market

Oil Gap up -> 90 ✅ (first move completed) Next 90 -> 110 110 -> 60 /50 50 -> 75 75 -> 40/30

@NebHuskies @ALikhodedov @Rory_Johnston @OilCfd Then these rumors of deals and peace rinsed outright longs and the sprd starting to converge to cash

@NebHuskies @ALikhodedov @Rory_Johnston @OilCfd This period we had a double index roll. I think we chatted about it on another thread. Liquidity gets thin that far up but the volume that got rolled due to retail flows of multiple baskets overwhelmed it. That’s what kick started it front sprd trading down during escalations

@JuneGoh_Sparta @OilCfd Big exporters of ti

@OilCfd I wonder who is having fun

Have fun paying Dated +20 reuters.com/business/energ…

@mattvsmith01 @WarrenPies @HFI_Research @Kpler So, like… during max runs?

@WarrenPies @HFI_Research @Kpler For a return to normalcy we’re looking at a couple of months at least - so probably latter June into July is a best case scenario…

Gotta long way to go, but with the latest moves, are laden vs ballast VLCCs in the Mideast Gulf starting their gradual convergence to normalcy? Time will tell if this is a hiccup or the start of a trend...

@Foxy_Trader967 @alexlongley1 Top shelf troll

@alexlongley1 Mate so why is wti more expensive than brent ?

A short summary of oil at the moment: Dated Brent: $141, very prompt, very expensive May WTI futures: $114, less prompt, still pretty expensive June Brent futures: $110, even less prompt, still pretty expensive, not cheaper than June WTI futures #OOTT

@ALikhodedov @JuneGoh_Sparta @Foxy_Trader967 @Rory_Johnston Yes correct

@JuneGoh_Sparta @CommoditiesGuy @Foxy_Trader967 @Rory_Johnston so the swap - what - averages the front contract and once WTI expires, it switches to the next WTI? So May WTI Swap is 2/3 June, 1/3 July WTI future?

@JuneGoh_Sparta @Foxy_Trader967 @ALikhodedov @Rory_Johnston This is if you are trading cma’s vs bullet futures thus the exposure is dependent upon the grade you are originating. Grades south of Cush typically are vs dsw and north are vs cma. If you are doing lights your trading arbs. If your doing heavies than your using BK’s

I'm all ears also! My very basic understanding is May TI/Brent Future spread is May WTI vs May ICE Brent, but the May WTI Swap is mostly the June WTI Future and the May Brent Swap is mostly the July Brent Future. So May TI/Brent swap is (mostly) June WTI future vs July Brent Future

@tylermacro10 @ALikhodedov @hamilton_brewer @aghdbtudhf @Foxy_Trader967 @Rory_Johnston I don’t think details like legality enter Trumps decision tree

@ALikhodedov @CommoditiesGuy @hamilton_brewer @aghdbtudhf @Foxy_Trader967 @Rory_Johnston It’s not obvious export bans are constitutional

@hamilton_brewer @ALikhodedov @aghdbtudhf @Foxy_Trader967 @Rory_Johnston Arbs have been wildly open - so open I wondered if there’s enough physical to close them. I imagine in late April and May you are going to see some MONSTER export numbers out of the US

@ALikhodedov @aghdbtudhf @CommoditiesGuy @Foxy_Trader967 @Rory_Johnston For those who need the oil and can switch from Brent linked to WTI, are they doing so currently? Or are all the factors you guys listed above basically making it not worth the price difference seen on screen

@ALikhodedov @aghdbtudhf @Foxy_Trader967 @Rory_Johnston I don’t think it’s that simple as looking at arbs to assess phys arbs. The market will resolve in different ways, like regimes. I think you start with the assessment of - is it a push or a pull, then understand to and from where, and the components correct around the push/pull

Yes, thank you - this is what I assumed in my original comment, although have never actually done it. But given that ICE Brent/WTI is only one of 4 variables and others (MEH-WTI, DFL, freight) are large and volatile - ok you can calculate and see if the arb is open or not, but it does not tell you whether Brent/WTI is too low or too high. In normal times MEH-WTI, DFL etc are much more stable and also just smaller vs Brent-WTI, so you can link arbitrage to the spread. But now it is different. To put another way - in normal times Brent/WTI spread explains, I think a bigger part of arb calculation than now - when other components are large and not stable.

@aghdbtudhf @ALikhodedov @Foxy_Trader967 @Rory_Johnston Nice add - this is where dumb ppr guys like me leave off and the physical guys shine. Decades. Windows. Cfd’s. Regrades. Location trades. Blending. Sts transfers. The world is your oyster.

@CommoditiesGuy @ALikhodedov @Foxy_Trader967 @Rory_Johnston Just to add to the complication in calculating a fair value: 1/ reality works in a month’s decades rather than delivery/loading month in usual market circumstances. In this environment, pricing is even more granular. 2/ delivery into ice is another option

@ALikhodedov @Foxy_Trader967 @Rory_Johnston ya dawg ... back out freight, grades, ti sprds, add your dfl and landed diffs to ur ti br sprd realization and you can back into what 'fair value' is... given that these are all moving around as you said, its tricky... big picture ti/br compresses once the components settle

@CommoditiesGuy @Foxy_Trader967 @Rory_Johnston I understand ... Arb open = US market tighter. But my question I guess is - does it even make sense to try to figure what is a "fair" arb-driven spread between CLM6 and COM6 (or any other pair of WTI-Brent), given the current setup?

@ALikhodedov @Foxy_Trader967 @Rory_Johnston i think liquidations are a part of it... i think you got new shooters here... inflation expectations creeping up always have non natives come in and rip the front of the curve to hedge whatever (equities, nominal vs real yields etc)

@CommoditiesGuy @Foxy_Trader967 @Rory_Johnston also, why is the huge move today? someone with a big short in KM spread got liquidated (maybe pre-positioned for USO roll)?