Oil Mini-Glut Is Coming: Short Oil Stocks

Quote from jamis359:

I believe EIA's demand estimate is too high; a slowing US economy will trigger softness in other national economies, taking the edge off of world demand.
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Agreed.
 
What I keep hearing is a glut of heavy/sour crude and an increasing shortage of light/sweet. Most of the recent Saudi supply increases are HS and they are having a hard time unloading it. They are tapped out on LS and may be on the right side of the Hubbert peak already.

How to play that? Sort whoever is levered to HS and long Valero for the crack spread?
 
Quote from zf trader:

Either there is a supply disruption and oil goes to $100 dollars or the most likely scenario that LNG infrastructure creates cheap substitutes while oil nations increase production to maintain revenues leading to a collapse in prices and we end up at $20.
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LNG is not a cheap substitute. Even optimistic forecasts have the cost of LNG well over $20 per barrel of oil equivalent for the forseeable future.

The only substitute cheap and plentiful enough to drive WTI prices to $20 is good old conventional crude oil. The only sensible argument you can make for $20 crude is based on supply and demand of conventional oil.

At today's high prices, it makes sense to talk about new technologies, substitution, etc. Those lead naturally to a bear case of $30-$50, which is the range of marginal production cost for unconventional petroleum as well as breakeven costs for substitution.

Martin
 
Hi. I'm from Norway.

Stockmarket normally leads crude oil down/up. $Nikkei has been good with turningpoints like jan.1997, feb.1999, oct. 2000, oct.2003 for crude oil.
$XOI-index has often been lagging, maybe because it's also some type of utility ?
 
Quote from seriouscoin:

Jayford,

Am I missing something? Wouldn't a drop in oil put more spending money in pockets to improve consumer spending? Or maybe you're saying a recession would hit oil prices...either way, a major decline in pump prices would improve a lot of sectors.

I think an oil decline would be bullish for the economy as a whole.
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First the recession, then oil drop. Not forcasting recession due to oil. Hasn't seemed to put much of a dent in growth last few years. Several other factors have me believing this (econ cycle in general, consumers nailed by RE quagmire, etc).
 
Quote from Jayford:

First the recession, then oil drop. Not forcasting recession due to oil. Hasn't seemed to put much of a dent in growth last few years. Several other factors have me believing this (econ cycle in general, consumers nailed by RE quagmire, etc).
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Higher oil price means higher interest rates at end of econ cycle --> it destroyes the breadth($nysi,$nasi) and the homebuilders in the market.
 
Here we just had the finance minister on TV babbling about how the world will certainly run out of oil, and that the price of oil will only move up in the future.

When politicians are bullish, it's time to SELL.
 
Drillers have rolled over on the weekly charts after 3 years in bull mode. They look terrible (good short).

This appears to be a harbinger of lackluster demand for their services in the coming quarters.
 
Quote from Artie21:

Drillers have rolled over on the weekly charts after 3 years in bull mode. They look terrible (good short).

This appears to be a harbinger of lackluster demand for their services in the coming quarters.
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Yes. RIG,DO,NE,GSF are lagging the $OSX, and the $OSX lags the $SPX.
 
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