Refiner Insiders Buy Most Stock Since 2000 on Oil Bet

Quote from illinimatt81:

Anyone else going long on DUG to make a play on declining oil instead of taking on the risk of a margin call by shorting something such as USO or others?

I see it as a longer term play (3-5 months).
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Be careful with the DUG.
It is not highly correlated with the price of crude as the USO is.
Also, the USO might be hard to borrow depending on who your broker is.

There is a new "ETN" which is an Exchange Traded Note that just came out which is a much more pure play on Crude. Here it is:

Crude Oil Double Short ETN: (NYSE Arca: DTO)
Crude Oil Short ETN: (NYSE Arca: SZO)
Crude Oil Double Long ETN: (NYSE Arca: DXO)
Crude Oil Long ETN: (NYSE Arca: OLO)
 
Quote from Landis82:

Be careful with the DUG.
It is not highly correlated with the price of crude as the USO is.
Also, the USO might be hard to borrow depending on who your broker is.

There is a new "ETN" which is an Exchange Traded Note that just came out which is a much more pure play on Crude. Here it is:

Crude Oil Double Short ETN: (NYSE Arca: DTO)
Crude Oil Short ETN: (NYSE Arca: SZO)
Crude Oil Double Long ETN: (NYSE Arca: DXO)
Crude Oil Long ETN: (NYSE Arca: OLO)
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Thanks, I'll check these out
 
IMO these stocks aren't yet at a bottom. They are however compelling value. A bit like some of the better airline stocks.

It's all up to your trading philosophy. Do you prefer to get long too early in order to guarantee catching the move, or do you prefer to avoid the risk and pain of being early, but at the cost of missing the ultimate bottom.

Personally I have always found it more profitable to wait. Stay on the sidelines until there is true capitulation. Value players are ALWAYS early. The vast majority of profits in a secular move are made way *after* the bottom, by holding on and adding as the move doubles, triples, quadruples from the lows. Not whether you get the first 20-30% off the lows.

Still, this is a very interesting group to play. Thanks for the post.
 
the short-refiners-long-crude trade needs to survive until the end of the quarter so that hedge managers can get paid...

although the refiner call buyers sense that the trade will get unwound a week from today so they're trying to get the jump on it.

an opinion of course..
 
Earnings slashed by FBR today on the refiners with no sell off and TSO is up on the bad news, looks like the down side risk is minimal and a good way to go short oil without too much risk.
 
Refiners margins will go up no matter what oil does.

And now oil is looking very, very bearish.

The 2nd straight week of crude oil stock builds and gasoline stock draws.

Refineries entry point is now. Snooze and lose.
 
Quote from ByLoSellHi:

Refiners margins will go up no matter what oil does.
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Care to explain this, especially in lieu of lower gasoline consumption ( 2.1% lower than a year ago ) ?
 
Quote from Landis82:

Care to explain this, especially in lieu of lower gasoline consumption ( 2.1% lower than a year ago ) ?
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Pricing power. How much more do you think consumers can pull back on gasoline and businesses on diesel?

I'd argue not much more. The slack is in.

Now, refineries will have pricing power.

Look for crack spread margins to increase dramatically, especially on diesel.
 
Quote from ByLoSellHi:

Pricing power. How much more do you think consumers can pull back on gasoline and businesses on diesel?

I'd argue not much more. The slack is in.

Now, refineries will have pricing power.

Look for crack spread margins to increase dramatically, especially on diesel.
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Still not happening.

And you are going to have to see refiners go "off-line" in order to improve these horribly miserable "crack" spreads, which means dramatically less revenues!

Notice how much lower these stocks have gone in the last 10 days since this article came out ( that the OP posted on page 1 ):

VLO: From 43.50 to $36.90

TSO: From 20.73 to $18.50

FTO: From 25.60 to $21.70

Anyone that got into these stocks in early to mid-June has gotten CRUSHED.



:eek:
 
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