Oil Traders are so caught up in the headlines they've lost track of the 8-Ball. Asian floating inventories have fallen from 102 million barrels 3 weeks ago to just under 42 million barrels today.
That is 60 million barrels less in 25 days. A loss rate of 2.4 million barrels a day. At this rate of decline Asian floating inventories will be depleted in 17 days.
Even if the Straits of Hormuz opened today it would take vessels 20-30 days transit time to reach Asia. What we are looking at is a heavily localized short term supply crunch. There is virtually no world where the straits actually open today, the reality is our best case scenario is 2-3 weeks. Followed by weeks of uncertainty as traffic slowly resumes.
My price target for oil remains $150 a barrel in April. Asian buyers will be outbidding every other buyer in the world, desperate to hedge against the possible shortages. This will trickle its way first through Brent Crude (BNO) and then West Texas (USO) to a lesser degree and over a longer time frame.
Positions and Disclosure. I am a retail trader. Not a finance or oil pro. I hold Calls in USO and BNO.
https://www.reddit.com/gallery/1s2t1aq
Posted by BFLO-Retail
25 Comments
What are you smoking, the USA has 400m barrels and Europe has 1.8 BILLIONS barrel
I own a small store importing toys to retail shops in Europe.
Freight prices have doubled and I have postponed ordering the Christmas delivery.
Can tell you that Chinese factories will soon be switching to 4 days production like during covid. Next will be European port cities.
ðŸ¥says its fine so its fine
What about the Russian oil.
They don’t care, the USA sent a peace proposal to Iran so oil is dropping even more and stocks are up. Even if Iran and/or Israel say no it seems the market is assuming the strait is open by tonight
Your treating floating storage like it’s the entire supply, misreading a logistics shift as a shortage, and ignoring how quickly oil markets rebalance.
The whole thesis depends on multiple unlikely assumptions lining up but it’s in true wallstreetbets fashion
The US strategic reserve was apparently only at 60% capacity. Big brain move by the administration as always…
Nice what about GUsH callsÂ
Lmao sounds like bitcoin gonna hit 1 million this year.Â
My price target for oil is $149
He’s smoking mostly Cigars sounds like he doing fine
All that hopium will help your short dated USO calls!!
Free the Russian oil that Europe and US etc sanction that is the key 🔑
Puts it is then
I was never tracking that
so whats the play
This is a vibe marker of course we focus on headlines
Realistically I agree with you but with the blatant market manipulation I’m hesitant to actually place a bet
Does anyone know of an OIL tracker ETF?
The problem is the oil market is insanely manipulated. Everyone “knew” for years there was plentiful oil supply. Turns out a few weeks of meaningful disruption quickly proved the world had no tolerance for it.
If it wasn’t for the insane manipulation, oil would have been trading much higher this entire time. And that’s the problem: I just assume it’ll continue to be manipulated because the world’s economy can’t afford oil to go higher. So I wouldn’t bet my life savings on it getting there since $150/barrel is the number JP Morgan claimed would cause a recession.
All commodity futures have the “trading market” and the “physicals market”. The trading market is speculative, but once the actual buyers and hedgers of oil get involved you see the price reflect reality.
IMO nothing but market manipulation is keeping /cl in the 90s. How else can you account for the disparity between its muted price increase and the exponential increase in Asia and Australia? The US is supposedly releasing 1 million barrels a day from SPR which is half full and you can only take say half of that or the salt caves collapse. So we have 15-20 more days to deplete before that ends. I have been running 3-5 dte iron condors in it but i am fully expecting it to pop well over 100 any day now which is why I’m risk defined. I am definitely setting up some diagonals in oil related products though.
China gets whatever they need from Russia on un-reported transactions.
Yes and no. Imposible to guess without further data. It is likely the Asian countries will negotiate safe passage with Iran separately. Plus there is also Russian oil
So if traders are focused on headlines why do you hold calls?