If the price of gold went up 50% over a 1 week time span, would you have an interest in buying gold stocks? Similarly, if the price of oil went to $170 by May, would you be interested in oil stocks? Lastly, if SBUX was able to raise prices by 50% on their coffee, without seeing demand destruction, might you be interested in a small purchase of said shares?
Well, it’s not exactly that simple with the refiners, but almost. The profit margins, via crack spreads, have blown out to the upside and no one is paying attention. Spreads are up another 3.5% today, now trading above $28, up a staggering 100%+ year to date. At the same time, gasoline demand is on fire, with draws at 5 year highs. Naturally, it takes time for people to come around to a story, especially with a sector that is so tough to gauge. However, it is my belief that after earnings are announced, you will begin to see a titanic shift in the way these companies are valued. I may end up being woefully wrong. But that’s what makes a market. Go ahead, fuck face, bet against me.
For the day, thanks to stocks like MWW, WNR and ALJ, I lost a staggering 2.5%. I care not to discuss my losses with the likes of you, or offer any advice. It is what it is and it is fucking stupid.
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First GO WNR!
Anyone sell out of AMRN? Nice gain today…
Yes! and I was holding a few thousand shares. Nice since I’m down with a lot of my other stocks.
Amen brother
TNA saves the day!
TNA was down 4.5%. Come again?
Not if you bought after the opening gap down like a good student of the Bernank…
Shut the site down again.
Nobody deserves this.
2.5%. That’s got to sting a little bit. I can’t recall you having a down day over 2% in a damned long time. I would put a little aloe on that and maybe a bandage, and then delve deeply into your finest scotch.
I was down a full 4% at one point intraday, but managed to finish down only a 1.5% or so. Feels like a huge victory….
Since we are the subject of riddles, here’s another: If there was a certain mobile device maker that people stood in long lines to purchase their products despite the sleet and snow and it pulled back say, $55 per share over the last month or so… would you buy said shares?
Not saying it will happen TODAY, but following human nature concerning “fad” wares…at some point said products are bound to start emitting a homo stench
it will see 250 before long, they already started to “stench”. after holding said stench from 93,it was time to say asta at 351
You guys are forgetting that Apple knows what the consumer will buy before the consumer knows it wants to buy it. They are probably working on something that will blow your minds in 2020 already.
like buying a telecom company,and do battle with att. that would be cool
Rocket-boots app.
or maybe your just plain wrong…..
I am a little busy rebuilding the infrastructure of my house.
I am up 10% on my WNR position and I haven’t been wrong since I was able to grow a fucking beard, you clown fucker.
you mean since you call on CCME???… fuck off dick head
or BORN
you really zing’d him on that one, chief.
Never owned CCME, sold out of BORN. I suppose you have a flawless trading record, without losses, since you don’t trade at all.—just talk.
I was referring to my overall performance, not a single idea.
I think somebody has been buying and selling based on what the Fly does.
Was Fred raised by a black family in the hood? LOL… poser. The Stained guy is cool though.
Agreed
I think ..
Generally speaking you are supposed to buy refiners when crack spreads are on their ass and sell them when they spike. One manager told me today, that to buy refiners when crack spreads are at 4 year highs is “amateur hour”
However, i believe this time is differnet. I know for a fact that WNR is printing money in west texas as they are able to buy oil in the 80’s and refine and turn a huge profit. I agree with the fly that eanings season could be huge. If crack spreads are still in the 20’s 3 months from now these stocks should be higher. Much higher
Typically, I’d say yes. However, the valuations of the stocks are not at peak levels.
agree
WNR was much higher in 2007. and i liked your notes the other day from the company. i dont htink anyone believe these price levels are sustainable.. the wnr team sure believes different.
Long WNR and MRO. We will know alot when VLO reports next Tuesday. The Conf Call will be interesting to listen to. If they say crack spreads will stay, then I want to know why? I was down 0.93% today thanks to LVS and Apple. I want to see how the market responds to good earnings starting this week. The market has two kinds. The quick and the dead.
hey corn chip, did your manager forget to tell you that the refiners bought their oil when it was sitting idle in tankers for months with no place to go.i buy a 2×4 for a buck and 95. i cut it in pieces to fix a deck, i charge the customer 20 bucks.whats not to understand.
How do you do all this handyman stuff while you are so busy on this websiteand trading? Laptop built into your hardhat with a flip-down screen?
business has been real slow,but i did manage to install a bunch of curtain rods this morning for a repeat customer who’s a retired surgeon.finished a month long gig in early march.pretty much pick and chose who i will do any work for. oh and before i forget,it’s in my shoe,like get smart. dont own a cell, and never will
hey big snacks,
As Fly alluded, how is it “Amateur Hour” when these stocks have P/E’s that are sub 10?
In my humble opinion, the refiner story hasn’t caught up simply because no one is buying that the crack will stick. They think the Brent-WTI spread is ludicrously high and is a sure bet to come down. What these clown-faced dog and pony shows ignore, however, is that North America has turned into the House of Saud of the East. We’re drillin all over the freaking country. We have wells all over the place. Well counts are ridiculously high. Canada’s oil sands are viable since we’re above $75/bbl. You’re talking massive production here. In the Middle East, you have Nigeria/Libya going nuts. Tack on a risk premium of Saud/Iran involvement, and you have the makings of a sustainable WTI-Brent spread. I’m not even looking for good profits out of earnings. I want management teams to really drive home that this spread will exist for an extended period of time. This is the crux of a successful earnings season for refiners.
Should read House of Saud of the West*
Damn proofreading.
How do you arrive at a sustainable spread if the US is providing “assloads” of production (supply)?
(More supply = less premium to charge for the demand.)
More supply in North America = downward pressure on price of WTI
Problems in Middle East = upward pressure on price of Brent
Hence, Brent >>>>>>> WTI
To raise some issues with your thesis:
1) It takes years to bring on new supply from oilsands. Often more than 10 years.
2) Once producing, it takes lots of pipelines to get it down to the States.
3) Bitumen could be shipped to the West Coast and sold internationally if the Brent/WTI sustains this silliness.
4) There is not enough refining capacity to deal with a large increase in Canadian bitumen production (would take 10-15 years).
6) Most of the new wells getting drilled all over the USA aren’t for oil. They are for CH4.
7) Nearly all large, conventional oil fields and plays that have been discovered in the US have are on the ass end of their decline curves (the part just up from “abandonment”).
8) Cost to produce from “shale oil” is significantly higher than “gas to liquids” technology (methane to diesel).
9) etc.
But I do love a good Fly short squeeze idea…
go2mars,
Agreed with pretty much everything you said regarding tar sands, i.e. bitumen.
Couple of things I’d like to add to my argument about an overabundance of oil supplies in the U.S.:
1. Seaway and Capline pipelines that recently opened and are bringing oil from the Gulf to Cushing. Conoco Phillips is part owner of the Seaway pipeline and given their status as a refiner, have no interest in limiting the pipeline’s capacity.
2. The number of rigs drilling for oil is 880., or 50% more than this time last year. PADD2 production from North Dakota, in particular, has really ramped up.
I guess the point is is that this spread doesn’t need to last for the next 2 years. But right now, refiners are minting years’ worth of profits. If this spread continues just through the end of the summer, refiners will have made years’ worth of profits at $30 crack.
There will never be tanker traffic on BC’s west coast. 2-3 a month out of Vancouver maybe, but that’s it.
Kitimat.
The crux: Can WNR make enough in the short term to stay solvent (beat shorts) thanks to huge (if transient) crack spreak? Fly is gambling 40% of his loot that they can. That’s a bigger bet than I’d place, but I think the odds are in his favour.
6) Most of the new wells getting drilled all over the USA aren’t for oil. They are for CH4.
Not so fast my friend. The oil vs. natural gas rig count is now more than 50% oil for the first time since around 1994. This is why US rig counts are still very high despite horrible NG prices.
And the US Dollar goes out right at support of 75.50. I really hope we have seen the bottom of the Dollar and we will start an uptrend, imho, the Bearded Clam is really hurting our country in the longterm.
re: bottom dollar?
as soon as a viable plan to repay/structure…hide…conceal …debt issues is presented….you know like a magician pulls an elephant out of a rabbits ass trick…
I LOVE that Trick…it must be a really tiny elephant though. BTW, I would be just happy to see the stupid Shanghai Copper Bubble pop…this may do it?
Lol. Again with the copper bubble. I would love to read your full position paper on that in the peanut gallery some day Nymphy!
i dont think she has to,now anyway. with the 2 hundred or so tornadoes that touched down in 6 states with full scale devastation. yea copper.but i would keep a very keen eye on my long time honey lpx. wont be much pcl, and only a little wy pin action.lpx is so close to that area,that using anyone else would just add up in transport costs. not too cost efficient either.
Would like to do an entire book on the full history of this Bubble 101 one day.
Amazon Best Seller 2015: The Anatomy of a Chinese Copper Bubble, written by the Bare Bear
“The Anatomy of my favourite bubbles: A photographic journey” -By The Bare Bear.
“If you’re too Early, you’re still Wrong” – Bare Bear
lol….On a bear skin. Po, Seeing it at the start and watching it grow is not early, As Soros says its like watching a Tree Grow…and I have been watching it since it was a Seed.
I don’t know which would be more popular:
“Stacked” -Bare Bear
“Fly’s guide to playing with egrarious crack spreads via oversized WNR” -Fly
Gold was expensive at $800, $1000, $1400 and it will continue to get much more expensive for the foreseeable future.
Really interesting action today, I wonder who held the gun to S&P’s head this morning? Can’t see the Bernanke taking too kindly to that.
I will offer a polite counter thought, not counterpoint, just a counter thought.
Gold up 50% tom, gold stocks up 70% probably?
Buy? Yes, if gold prices there are sustainable.
Sell? Yes, if they weren’t.
I have pondered this trade and wondered if you may have to wait slightly for sustained mega crack spreads. Just 3 or 4 years ago bidding up refiners only to see spreads come back to earth murderholed people.
They are probably skeptical.
Reason for the market or skeptics to believe these spreads will be sustained = cocaine mega rally. Maybe the market is still skeptical
I gotta make some money here – I want that Lamborghini Miura back that was once owned by the Shah of Iran. Anyone remember last May and the Fly’s VXX win?
I’m hurtin’ bad on this stock. Looking for the next high bid.
Who said SLV would close on the upside today? Oh, wait, that would be me.
RESPECT THE MONKEY! The US economy is trashed. When nobody has a job the unemployment rate will still be under 10%. Go figure.
WNR is going to pay for my next car.
AND MORE.
and don’t forget the hurricane season is just around the corner and that should help spike things up in WNR, OXY, etc.
While you’re waiting on Katrina, I’ll get out my divining rod and find you an oil well.
Waiting for The Fly bounce…nobody bounces higher.
This time is different my friends! I have the finest crack the world has ever seen. We will all become WNR’s as there is no way a gay spread like this can be resisted.
-MyCrack
any relation to oprahs’ crack
I want that stupid $million dollar comic book back too. I want it all back….my castle….my 30 motorcycles……all of it!
Try making a sequel to Moonstruck
You should have listened to me about WNR! I am short WNR in my charitable trust.
Ben Bernake: What is this? What is this? Where’s all the money?
President Obama: That’s as good as money, sir. Those are I.O.U.’s. Go ahead and add it up, every cent’s accounted for.
Look, that’s a car. 275 thou… might wanna hang on that one.