I've been doing this a long time.
Joined Oct 7, 2015
101 Blog Posts

The Crude Circus

Today’s Trade Rumor of the Week goes to Tropical Storm Irma, even though nobody knows the storm’s trajectory. Many traders got whipsawed when /CL dropped like a hot turd right before things got messy.

Your Labor Day Rumor will be the little fat man with the funny haircut and the possibility he is offed by Chinese agents before Mad Dog Mattis delivers a MOAB to his front door. Trade accordingly.

And if you somehow find yourself in the Leeward Islands, listen to the Authorities. Better yet, get the fuck out of the Leeward Islands and any spit of land with the word “Lesser” in it, pronto.

What do these rumors have to do with /CL futures, you ask? Nothing. And everything. It has been a rumor-driven and confounding ride for The World’s Most Volatile Commodity™ for many months and I do not see that changing any time soon. Hookah rules the trade and only the nimble will survive the month of September while trading crude oil. Welcome to the Big Top.

I have not updated my unofficial trading contest with the esteemed T. Boone Pickens due to the noise surrounding Hurricane Harvey but I feel Supremely Confident that my High-Risk-Mother-Of-All-Short-Squeezes basket of stocks will beat his Low(er)-Risk-Dividend-Enhanced basket. I will wait for la tormenta Irma to either make an appearance or fizzle out somewhere west of The Doldrums before I update the stats. Subscribers to Exodus can follow along and even pick apart my Methods. But I am right and you are wrong. I am just letting you know ahead of time.

Harvey confounded the speculators last week when it was clear the effect on crude pricing was going to be negative, which sent people scurrying for the exits. I naturally looked for more bargains in this horribly oversold sector and settled on adding yet another 1000 shares of Sanchez Petroleum aka Dirty Sanchez ($SN) when the beaten-down thing dropped another 5% in the chaos…plus I picked up a few hundred shares of $SOI, which had been on my radar, but in light of the massive damage inflicted by Harvey it became a no-brainer and it is moving higher daily. $SOI has proven technology that saves drillers a ton of money out in the field. This is a long-term hold. As for Dirty Sanchez, the company assuaged hapless investors by dropping a feel-good press release on the 28th. They delivered no updates in the days since, so either the management drowned or things are ok in their neck of the Eagle Ford (and all indications are that is the case, which my Texas Moles have assured me).

The nutcase running the Democratic Republic Of Korea just may have overstayed his welcome on the world stage by setting off his first hydrogen bomb. This should spike crude futures near-term and send the VIX back up to the high teens. Blessings to anyone holding $XIV and the like. But who knows, these days it would not surprise to see WTI drop on the news.

The spread between WTI and Brent stands somewhere around $5.50 last I checked, with backwardation being the norm with Brent for quite some time now. Market makers had a field day over the last seven trading days taking out the stop losses of retail dupes.

Said dupes can take solace in the strong late-day finish on both Thursday and Friday. /CL is currently trading up two cents in Asian trading which promises to be rather uneventful through Tuesday premarket. But one well-placed MOAB can change that in a heartbeat.

So pray for those in the (possible) path of Irma. Paradise ain’t all it’s cracked up to be.

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  1. heckler

    TLDR but I see you posted a NOAA graphic (fed gov agency). Still think that private industry could do it better?

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    • The Maven

      That comment is fake news. Government is doing exactly what government should do in this case, though I’d wager that Elon Musk would have had the islands evacuated by now had he been running the operation, rather than putting out a lame comment about “having a hurricane plan in place”. In fact, Musk would probably have ceramic-infused plexiglass domes rise over each Lesser Antilles and Leward Island that would deploy at certain atmospheric pressures. So in answer to your question, YES, but I would not trust a whackjob like Musk or a libtard like Tim Cook to have power over the citizenry.

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  2. sarcrilege

    there’s a lot of fake news going around everywhere, especially politics and markets, including crude. EIA with their stupid guesstimates is just one example.

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