Oil sure is cheap, I don't think it can get much lower

[Specterx]

My working scenario is that oil will drop to a low around 22 and remain below 30 for at least six months.

I don't see it as likely that either the Saudis or Russians will suddenly back down. Russia is in decent financial shape to withstand extended low prices while the Saudis started this in the first place, MBS won't just reverse himself after a couple of weeks - maybe after three or four months if their financial situation really deteriorates and unrest heats up. And of course, COVID will be weighing on demand during the same time. The combo of both is highly likely to drive prices below the 2016 lows, IMHO.

 

[traider]

Just wait till Russia has covid. Low numbers probably mean no testing right now.

 

[ironchef]

Russia and Saudi are the pro boys shaking the trees to get rid of US shale producers? Their fight is for show?

 

[elitetrader02]

USD has increased in value so $33 is same as $50/barrel. for exporters of oil who take USD for payment.
it's not 'cheap' it's US and Cananadian high cost producers who are screwed. US and Canadian oil sand producers are high cost and cost is in USD.

the USD strenght has increase 30% from the lows of 2010-2014 compared to other currencies.

natural gas is a waste product and cannot store it. that is why so cheap. cause it cost them nothing.

 

[Overnight]

...

natural gas is a waste product and cannot store it. that is why so cheap. cause it cost them nothing.

Please stop.

http://naturalgas.org/naturalgas/storage/

 

[KCalhoun]

https://www.cnbc.com/2020/03/13/oil...strategic-reserve.html?&qsearchterm=trump oil

I bought UWT GUSH OXY

 

[Smart Money]

OK, you can call me a liar, but when I opened this thread, after oil spiked a little bit I sold it. Made about 15%. But now I'm calling a "near bottom". I just bought UCO (2X ETF) for 2.02 a share. It would have cost me 11 times as much in January. My logic is one general push of an olive branch would make it spike. T.A. is failing me here since the price has shot past every indicator. When 1,000 shares of something that used to cost $22K only costs me $2,020 plus a trading fee, I can afford to wait around a while. FOMO.

 

[Smart Money]

Heh, tried to buy more at $1.84. Went down to $1.80 and my order didn't fill and then it bounced back up. Perhaps because the ETF is tied to the spot price and not really willingness to sell the ETF?

 

[Smart Money]

My working scenario is that oil will drop to a low around 22 and remain below 30 for at least six months.

I don't see it as likely that either the Saudis or Russians will suddenly back down. Russia is in decent financial shape to withstand extended low prices while the Saudis started this in the first place, MBS won't just reverse himself after a couple of weeks - maybe after three or four months if their financial situation really deteriorates and unrest heats up. And of course, COVID will be weighing on demand during the same time. The combo of both is highly likely to drive prices below the 2016 lows, IMHO.

FWIW, I agree with you. Oil is at $22 now, and a move to $30 would be so sweet with leverage! I imagine that the Saudis and the Russians have everyone in the oil industry trying to smooth things over. Everyone keeps saying "The Saudis can sell oil at $1". That might be true, but they can't supply the world and it will take lots of time and money to noticeably raise their output. Oil fell about twice as far as it's fair value, IMHO. Secondarily, some of this move was propelled by the flight to the petrodollar. That has to unwind eventually.

 

[PoopyDeek]

Went long oil a couple of days ago too. First with futures at 29, sold at 34, then thought why not use those extreme volatility spikes to my advantage and sold 37 days out ATM puts. Two of them so it is almost 1000 long deltas.. The same as long futures, but my break even price is now below 30.. Will do it again and again and if CL keeps tanking, my entry price will be lower and lower.. At 25 I will just go long 2 CL futures again, no short calls because rallies at some point will be vicious and would not want to limit my upside..

I mean can oil go lower? Sure. But this is not some stock that can go to zero and with those prices already there will be problems for many countries. Russia is trying to be brave saying they can endure oil at 25 etc, but many countries budgets will be decimated at those levels. US shale is what, 50$.. This can take maybe a year or more, but at some point I think not to far away crude will again be at least 40$ or more..

Cool story, Bro. You sold to cover $3 higher than it printed all week. Then you went short puts... where? This magical $34 handle? What's your secret?