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Energies

  #61 (permalink)
 
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Grantx View Post
According to Jim Cramer (it was my lunchtime and I was casually watching CNBC ok) the damage was to a part of the refinery that is responsible for a complex gas extraction process. So not a quick or easy fix.

Did he slam the green or the red button?

Z-J (353 +223/day) still widening fast versus everything else

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  #62 (permalink)
 
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Here's a chart of today's price move. You can see clearly what I meant by the Z9-J0 spread. I'm not sure what all this means but you can see from the Butterfly chart how even though CLV9 went up the most, the structure of the curve is discounting the impact until we get to Z9 or even F0 delivery.


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The only position I hold in the energies is the seasonal trade RB-HO. I am currently in the May contracts.

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myrrdin View Post
The only position I hold in the energies is the seasonal trade RB-HO. I am currently in the May contracts.

Best regards, Myrrdin

I liquidated some of the RB-HO spreads (very) profitably (May contract), and added new positions recently (July contract).

It looks like spring is approaching, and there will not be very cold temperatures in February / March 2020. Airplane fuel - as far as I know - is hedged via heatiing oil futures, and corona virus will take care that there are less flights in the near future.

Driving season will come - as in every year.

Current price level again invites to enter this trade.

Best regards, Myrrdin

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 myrrdin 
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I bought a first small position of CLN-CLZ today, and will add to this position at lower prices.

Seasonals suggest this trade.

Best regards, Myrrdin

PS: Liquidated the position.

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myrrdin View Post
It looks like spring is approaching, and there will not be very cold temperatures in February / March 2020. Airplane fuel - as far as I know - is hedged via heatiing oil futures, and corona virus will take care that there are less flights in the near future.

There is actually a Jet Fuel market (yes it's called Jet Fuel!) which trades Over-The-Counter rather than on Exchange. But Jet Fuel, like Kerosene, Diesel and Heating Oil are all considered middle-distillates and refineries can adjust the relative yield of each a lot easier than they can switch from say Heating Oil to Gasoline. So if Jet demand is reduced @myrrdin is right that should pressure the other distillate markets - eg Heating Oil.

For anybody interested Petroleum Refining in Nontechnical Language gives an excellent understanding of how refineries work, and is easy to understand.

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Reuters: Oil traders hit by unexpected slump in gasoil
https://www.reuters.com/article/oil-trading-diesel/oil-traders-hit-by-unexpected-slump-in-gasoil-idUSL5N2AQ7YT

"Russell Hardy, chief executive of oil trading group Vitol, said in late February that he expected at least a 2.2 million-barrel per day drop in oil demand in the first quarter largely due to the coronavirus."

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Reuters: Majors look to store jet fuel at sea as air travel drastically curbed
https://www.reuters.com/article/us-global-oil-fuel-refineries/majors-look-to-store-jet-fuel-at-sea-as-air-travel-is-drastically-curbed-idUSKBN2153KX

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Unfortunately, I did not re-enter the RB-HO spread aroud -50 - would have been a nice profit ...

My only position in the energies is some NGU futures. I expect a reduction of the production of natural gas in the US, as oil production is reduced. And - perhaps - we will see more exports to China and a hot summer. In my opinion, the medium term downside risk is limited.

Best regards, Myrrdin

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My thoughts were inline with yours. I was talking to a friend in the last few days that works on a big energy trading desk and they thought very differently. Said while all the financial trades love it, all the physical traders hate it. Worried that demand destruction will exceed supply reductions and that a large amount of LNG exports no longer make financial sense.

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Last Updated on December 11, 2020


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