iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
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Mysterious Drone Strike Causes House of Saud to Shut Down HALF of Their Production

Zerohedge has the coverage. I’m merely a trading fool with a sharp intent to gamble in stocks until I die. This is very reminiscent of Hurricane Katrina. Any of you fuckers remember that?

Oh, it was sublime — not the death and destruction part, but the rise in oil and especially natural gas. Stocks were fucking ripping out spines and tits to the upside. The initial move was grande, but it lasted a solid week — with plenty of money to be made for Johnny Come Latelys. I suspect, we will see the same type of trading action next week, as the world tries to adapt to 5 million barrels per day being stricken from their reservoir of oil. It is going to be outrageous.

Brief snippet from WSJ:

A coordinated drone strike hit at the heart of Saudi oil production on Saturday, sparking an enormous blaze and forcing the kingdom to shut down about half of its crude output, according to people familiar with matter.

Iran-alled Houthi rebels in neighboring Yemen claimed responsibility for what would be one of their largest-ever attacks inside the kingdom.

The Saudi production shutdown amounts to a loss of about five million barrels a day, the people said, roughly 5% of the world’s daily production of crude oil. The kingdom produces 9.8 million barrels a day.

I don’t care who did it. I would not be surprised to learn they did it to themselves, on the heels of Saudi Aramcos IPO. What I am interested in are the consequences. People are throwing out scandalous numbers like $100bbl next week. Fuck all of that. This is a temporary shut-down, but it can last weeks. My back of the envelope prediction suggests crude will easily Jimmy up to $75 next week and sustain those levels — because the market is going to interrupt these attacks as a permanent risk to Saudi oil production. Having said that, you’re gonna want to get long a fuck load of crude stocks, especially those evil frackers, into the melee.

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14 comments

  1. the hungry dog

    Come on Fly you are Southern Gentlemen now throw us a bone give us some stocks you like in the Oil & Gas sector. What should we buy Monday morning?

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    • snoozemr

      oil has already had a bit of a run. XOM on something like a 10 day streak from 67.5. Have not even looked at the news but likely nail on the head with Saudis and ARAMCO. Although that is November at the earliest so there will have to be quite a few more ‘attacks.’ If oil were to take off I would likely trade some permian producers like FANG and PXD that are still relatively close to their lows. But only if …

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  2. ferd

    Lots of companies in the sector failed to come off of recent highs (for long), even as crude’s breakout looked to be failing last week. The market is wicked smaat.

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    • s.k.

      Critical thought is not your strong point. Instead of the market being “wicked smaat” as you so eloquently theorized, maybe larger factions were behind this and positioned themselves to profit from it as well. Hopefully that doesn’t give you headache.

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      • ferd

        Fly once explained that sarcasm is lost on total morons – I guess he was correct.

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  3. moosh

    How many times and years is this now that aramco is going ipo?

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  4. fxtradepro

    This is going to be wild. Also, DYK every recession since 1970 has been preceded by a doubling of the price of Crude. The consumer will not be pleased with this one. Good luck and Godspeed to the Energy “bears”.

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  5. soupbone

    Trump knows the oil price must stay low and lucked into a technology shift due to shale fracking so far. There will and must be reprisals for those drone attacks. If in the attacks the electrical infrastructure was affected we are talking one month with all working like hell to fix it. If just tanks were hit, they can be valved off and continue operating mainly. This will not go far for the perpetrators. (seems a wee coincident with mustache man Bolton departing but a long shot there).

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  6. The_Swede

    This happened in Aug too:

    o, what’s driving oil higher? Oil prices edged up for the week ending Aug 16 amid a weekend attack on a Saudi oilfield by Yemeni separatists and easing concerns about Sino-U.S. trade worries. Yemen’s Houthi group has been recently responsible for a drone attack on an oilfield in eastern Saudi Arabia, resulting in a fire at a gas plant. Saudi oilfield attack has, thus, added to West Asian turmoil. Needless to say, oil prices rallied after such an attack raised concerns about supply disruption.

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  7. MSGT HARTMAN

    A million miles of pipe there, crude is re-routed automatically by SCADA systems.

    ZeroHedge, Breitbart, HuffPo, all click bait sites.

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    • moosh

      Exactly. Do you care to offer an opinion on how much they say is under the sand is for real?

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  8. snoozemr

    will be interesting to see if we tap our emergency petroleum reserves – we in the past have been looking at much higher prices when we fall back to this. but seems that they are saying that we will. .and the reserves tend to often be tainted with high levels of sulfer, although it normally can be cleaned.

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  9. The_Swede

    With my luck, I will join Exodus, and LeFly will then proceed to put his trades out in the blog for free again.

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