effect of oil stocks on crude price

[silk]

I notice that sometimes the crude oil futures trade as if they are an oil stock.

For example, friday SLB and HAL have blow out numbers and are up huge sending all oil stock indices and stocks soaring. I don't think its a coincidence that the price of crude also staged a big rally.

My guess is that many players are arbing oil stocks versus crude futures. So when money flows into one it can support the other and vice versa.

I've noticed on other days when oil stocks are taken down by what appears to be s&p sell programs a few moments later weakness materializes in oil futures. My guess is people start selling crude against oil stock longs that have dropped in price.

So i guess what i'm getting as is not only does price of crude move oil stocks...but it seems that oil stocks can move crude as well.

Then there are days where there is aboslutely no correlation between crude and the stocks. So go figure.

 

[Jayford]

Lots of crazy spec in both.

Weds is always fun. Doesn't matter what the inventory number is. Inventories can go up, and market rises in the face of it, and visa versa.

This is true with any news driven market (buy the rumor, etc), but magnified with oil. Its especially silly since this is a weekly thing.

I'm waiting for a near term long squeeze on a mega scale. Sorta like what happens with copper every few months. The funds all bail at the same time, (almost always the funds, not commercials), and a few days later start buying again due to long term supply probs.

Jay

 

[Lights]

maybe crude is now becoming more correlated with the equities markets. it used to be that one could take 15000 or more long SPY and come out with 40-50 cents whenever crude tanked a dollar and vice versa. the arb d'jour was to trade s&p500 inversely to crude. that lasted for months. perhaps, the thinking now is that crude has temporarily become an indicator of economic growth as people now realize more and more that it is economic growth and oil demand that's driving up crude. 60 dollar crude has not dented consumption as so many analysts predicted. s&p500 2q earnings will exceed double digits. so yeah, there is an arb that exists now that didn't exist say.. 3 months ago when the media went on an uproar about higher prices at the pump.

so when does it affect the economy. at 70? 80? 100? who know hell really knows.

Quote from silk:

I notice that sometimes the crude oil futures trade as if they are an oil stock.

For example, friday SLB and HAL have blow out numbers and are up huge sending all oil stock indices and stocks soaring. I don't think its a coincidence that the price of crude also staged a big rally.

My guess is that many players are arbing oil stocks versus crude futures. So when money flows into one it can support the other and vice versa.

I've noticed on other days when oil stocks are taken down by what appears to be s&p sell programs a few moments later weakness materializes in oil futures. My guess is people start selling crude against oil stock longs that have dropped in price.

So i guess what i'm getting as is not only does price of crude move oil stocks...but it seems that oil stocks can move crude as well.

Then there are days where there is aboslutely no correlation between crude and the stocks. So go figure.

 

[Lights]

btw that was a beautiful set up back early this year. crude tanks, take SPY size long, and short oil stocks. you limit systemic risk yet make on both sides.

Quote from Lights:

maybe crude is now becoming more correlated with the equities markets. it used to be that one could take 15000 or more long SPY and come out with 40-50 cents whenever crude tanked a dollar and vice versa. the arb d'jour was to trade s&p500 inversely to crude. that lasted for months. perhaps, the thinking now is that crude has temporarily become an indicator of economic growth as people now realize more and more that it is economic growth and oil demand that's driving up crude. 60 dollar crude has not dented consumption as so many analysts predicted. s&p500 2q earnings will exceed double digits. so yeah, there is an arb that exists now that didn't exist say.. 3 months ago when the media went on an uproar about higher prices at the pump.

so when does it affect the economy. at 70? 80? 100? who know hell really knows.