My initial reaction is uco/sco arbitrate, but can't quite put my fingers on it yet.
Anyone w/ some ideas, i only do stock/option, no future, please. TIA
PS. Pls dont downvote me too hard, i wanna learn from TRUE oil expert, not some slobs in investing subreddit.
Dear r/oil, TIL theres a $35 spread betw physical vs paper oil. Now, how do i profit from this as a traders perspective
byu/IWantoBeliev inoil
Posted by IWantoBeliev
14 Comments
You don’t.
You bag hold until the exposed institutional investors are clear of the risk.
Only way to take advantage is if you can take physical delivery of oil. Buy a futures contract at $80 for a May 21st delivery, sell on the spot market at spot prices ($120+).
May futures settle today so prices should converge a bit
Today was supposed to be the day when WTI short sellers need to cover, deliver oil or take massive loss. Neither is happening.
You don’t that’s the neat part. Don’t jump in oil unless you want to waste your money. Stay away from futures and options if you don’t want to lose your money.
You buy Brent futures and an EFP for a few cents a barrel on ICE to offload the oil to some other guy physically once your contracts expire. Done.
I’m just slowly accumulating energy (OXY January calls, XLE) and recently bought a couple of BNO July $60 calls as a small bet after reading [this](https://www.hfir.com/p/wctw-the-oil-market-breaking-point-eab). Confirmation bias, but it essentially matches what I’ve spent the last two months researching: The physical damage already done to the global energy markets is baked in even if the conflict ends today…but the markets (and algorithms) are still treating this like a switch can get flipped with a diplomatic resolution and everything will go back to normal. There’s no good precedent in the training data for supply-side destruction.
I’m not trying to day trade anymore – bought and sold OXY calls earlier in the crisis and now I’m just using my winnings to slowly accumulate for what appears to be a reckoning when reserves start to drop.
Definitely not an expert but this is me.
Where are you pulling the price difference from? I can only view ‘old’ stuff from the free sites and public releases. On those I’m not seeing a spread that large (unless comparing WTI to Brent which isn’t quite accurate since the moving WTI to sea is logistically constrained in the US).
Basically you need to have an oil tanker
Buy out futures contracts for $80, then take delivery of the oil, the sell physical for $120 to a refinery
If you are naive, then you buy that cheap paper oil and hope it gives you expensive physical oil.
If you know a bit better then you realize that maybe that cheap paper oil results in force majeure and no physical oil at all.
just buy the oil companies man equinor, bp, shell, chevron hell even respol spanish giant has got back its rights to drill in venezuela
Is there a place where an ordinary human can find the spot price of oil at different places? Even if it’s a day delayed?
Buy the futures, take delivery of the oil, pay for shipping, assume the risk that the price drops before you deliver it and lose out on millions of dollars.
That’s the only way to profit off of it, and it’s not a sure thing by any means.
If you bought when future prices were $105 and tried to do this, you’d be out a massive amount of money after accounting for shipping, insurance, etc.
Drive or sail to where you can buy the oil. Then move it to where you can sell it for more.