Long Energy And Hating It

I’m quite positive that the title of this post doesn’t make any sense to you. You’re definitely reading this, shaking your head, thinking, “Cain’s lost it.” And you’re probably right. But it’s precisely because this doesn’t make any sense that I’m confident it’s where I need to be.

Today we got another report of a multimillion barrel oil inventory build, accompanied by a huge build in gasoline stockpiles, and more evidence of a global slowdown. And we also got another shrug off from the market, which apparently doesn’t care.

I think it’s stupid. You think it’s stupid. Let’s get past that. This market wants more expensive energy. It wants more expensive energy for as many as three nonsensical reasons:

1. Hope
2. Potential money printing
3. Iran

Let’s just skip one and two here because you’re all familiar with them. More than the gain we’ve seen there, I also get the impression that oil could have as much as $10-15 tacked onto it because people are worried about escalating conflict with Iran in the oil hub of the world.

Christ, no wonder the Iranians are so excited about getting a bomb. It’s not like a thermonuclear weapon does shit for them strategically. Their efforts to design a missile that can carry something like that have been pathetic, and even if they succeed, Israel is still packing heat courtesy Uncle Sam.

Right now Iran is under the muddy boot of the West. Getting a nuke lets them get out from under the muddy boot and under the clean one. Whoop-ty doo.

But can you imagine what the markets would do to oil if Iran sets off a nuke? I don’t know how much money Iran has been sinking into their nuclear program, but I’m sure it’s a small price to pay if their hair brained, European-schooled physics graduates can figure out how to get the detonation sequence to work.

Nothing like seeing your oil denominated export revenue double.

If I were Iran, I’d build two nukes, then launch them at each other. What’d that get them, $300 oil? Of course, after they get a bomb and people realize they can’t use it, oil prices would have to settle down. So maybe Iran just keeps trying to get a nuke, forever? You know, build a bunch of ’20’s styled, post-modern steel containers that look “spooky”, and leave them in a dessert with bright orange paint around them. Then the U.S. can spot them with our kickass satellites and piss ourselves from excitement. $100 oil hereafter, regardless of economic demand.

Alright, enough armchair general play. Demand right now should see oil being crushed, but some assholes are working hard to buy every dip. Maybe they have motives to see higher oil; maybe they think higher oil will “instill confidence,” maybe they’re just idiots “trend following.” The point is: I don’t care how weak volume is, so long as I have enough buyers to sell into in about two weeks. If people were dumb enough to buy money printing as an excuse without European results (and a plethora of European failures) then they’ll be dumb enough to keep buying that story for a little longer. Especially while the EU is spending up their emergency funding keeping Italian yields below 6%.

After that point in time, oil is fucked and people bidding it up are going to get dragged off a cliff like a ragdoll. And when that happens, I want to either be short energy again, or sitting on a lot of cash. But for now I’m gambling because my performance sucks and I really want it to suck a little less before January.

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