There is some serious margin compression taking place in the oil sector, especially in the refiners. With oil wounded like a sick dog, down at these levels, I want to increase my short exposure to the space.
I know the whole dollar argument and the possibility that inflation may reemerge its ugly head. To hedge inflation, I am shorting treasuries, via TBT. However, I feel extremely comfortable shorting the like of XOM, CVX and COP, up at these levels.
When you narrow it down to marginal players, like HK or GMXR, one can make an argument for a total loss in those names, eventually. I mean, if financing is unavailable and margins are squeezed to the bone, what do you have left?
I’ll tell you what you have:
XOM buying your capped wells in bankruptcy.
At any rate, like I said earlier, I reduced my downside exposure this morning. But, at the present, I am 100% balls to the wall short crude/gas stocks, via DUG and ERY.
Fuck them.Comments »