Wt Wti Crud 1xs Discussion Threads

[machoolahan] 06/8/2009 09:17

Indeedy - NYMEX contango seems to widened > 10% in the last few days.

The long ETFs are going to end up with 5% less barrels as a result of the roll. NYSE:USO fund in US has its rollover starting today I think.... so the UK traded ones end up partly in the backwash of that!

[dewi141] 05/8/2009 18:59

hi

just for info (for those who dont know).

in august, soil rolls from the Sep contract to teh Nov contract.
this happens betweeen 6th and 10th business day iof teh month - so mon-fri next week i guess.
(see

Right now, Sep is trading at 71.80 and nov is trading at 75.08
(see
so if this holds for next week, instead of being short oil at 71.80 we will be short oil at 75 dollars.

contango is a wonderful thing if you are short!

cheers

[andrewbaker] 29/7/2009 12:55

Longer term the price of crude oil is likely to fall, according to various people involved more closely than I am, so a short position may be beneficial going forward. I'm considering it, and thinking maybe to get in when $70 is reached and a reversal starts after.

[cottlet] 28/7/2009 23:24

AAh thanks AB. All is revealed.

[andrewbaker] 14/7/2009 16:28

$ not £

[cottlet] 14/7/2009 15:49

I dont understand the chart the price of SOIL today is£48.94 The graph above seems to be incorrect

What am I missing?

[rathkum] 17/6/2009 09:11

I am in a similar situation to yours and was thinking about the same strategy. My only concern if oil goes sideways in a narrow range or does a zig zag in the $60-$70 range.

[sichuk] 17/6/2009 08:43

Just purchased this @ $67, expecting it to act like a hedge for my other oilies which are tiddlers and wont be selling those for years! Looks good for the short term coorection I believe will happen.
Why?
*Inventories are very high - the stuff is being stored left, right and Chelsea.
*Demand is not large. Perhaps thats an understatement?

We will see?

[machoolahan] 09/6/2009 14:13

Well I know what you mean but there is supposed to be a relationship to the real value of crude, at least over short timespans, away from rollover dates.

Another interesting observation, if you take the value of SOIL from oil's $140ish high last July (~$30), and compare it to its peaks when oil fell to $35ish (~$120) - it has roughly kep par (i.e. 4x). BUT this must be due to the contango effect because "long" crude ETFs have kept par soooo less well (and hence lost any holders extra money)...

e.g. CRUD from peak to trough was $87 to $17 ( > 5x)..... LOIL? ugh - shiver....

[ted1806] 09/6/2009 13:46

Mac

These ETF's don't corrulate ever because I think they are, if you like reset every day. So every day is a new day and it plays on overall sentiment.
So just because soil was $20 when oil was $40pb 12 months ago for example when oil reaches $40 again does not mean soil will be at $20. It could be anywhere it is all due to sentiment per day. Same goes for CRUD.
Well that's how I read it anyway.

Ted

[machoolahan] 09/6/2009 00:55

OK - haven't seen this discussed anywhere else so bear with me....

Here are the main lows for (spot) crude from December and February.



Although the lows in both cases were close to the $35 mark - the difference in SOIL between the two corresponding "peaks" is ~ 15%!

Does this make SOIL a long term winner as long as contango is maintained (and as a mad thought - is this actually at the expense of the "long" oil ETFs?)

[andrewbaker] 19/5/2009 14:17

As SOIL gives the opposite return to CRUD, contango works in the SOIL holder's favour. Similarly, backwardation works against.

[machoolahan] 19/5/2009 00:00

Was never quite sure if contango was a plus for SOIL. If contango were to persist for many months (or years) to come that would give this an angle I hadn't considered.

Trying to find out how much a proportion of the last few years trading on oil futures has been contangoed.... vs. the opposite (uvavoed??)

Any thoughts?

[rathkum] 18/5/2009 21:16

AndrewBaker

Appreciate your explanation

Thanks

[andrewbaker] 18/5/2009 14:38

relishing -

Shorting SOIL gets rid of contango inherent in CRUD, and effectively leverages it in your favour, so if crude oil goes up you get the benefit instead of the contango drag. But I don't know anyone who would take the short, sorry.

rathkum -

Money is held on deposit as futures are bought not crude itself, so the deposit interest belongs to the holders and is added to the price of the ETF as a result. This is common with many ETF/N.

[rathkum] 15/5/2009 23:52

I fancy shorting oil if it moves beyond $60 but I read the following in the Investors Chronicle
"The price of ETFS Short Crude oil alters daily in accordance with an inverse correlation of the DJ-AIG Crude Oil Sub Index, and accrues a daily capitalised interest return.

What is the implication of the last point. Appreciate if someone can please explain what that means.

Thanks

[andrewbaker] 20/3/2009 18:15

relishing -

As CRUD is a short of SOIL, I wonder how a short position on SOIL would be different, unless you wanted to gear. In that case, perhaps go long on oil through a spread bet. It would be interesting to know your thinking in wanting this particular position.

[relishing] 20/3/2009 17:33

I'm aware of that Andrew.

I want to short SOIL.

[andrewbaker] 20/3/2009 17:22

relishing-

SOIL is short oil, CRUD is long oil.

[relishing] 20/3/2009 13:42

Does anyone know of any broker or spread-better that allows you to go short on SOIL?

[andrewbaker] 12/1/2009 13:34

markewizaard- Happy New Year. Lot has happened re oil since before Xmas. Missed the LOIL peak, drat, and decided to stay in SOIL as a result: even with Gaza, OPEC, Russia, et al, the price is trending down: millions of barrels floating around in tankers and massive stocks in the US and elsewhere, suggests demand is v. weak. I still see $30 coming. Other commitments make it hard for me to day-trade effectively, so SOIL does me for the medium term, and it's trending the right way, even with the intermittent down spike due to Middle East worries. Good trading to you too.

[markewizaard] 10/1/2009 08:32

A happy new yr to you Andrew hope your trading is going well....still finding my feet here after spending xmas reading my trading book,it would seem the downward trend is still prevailing i should have gone soil at $50 but still new here and as you said the trend is underway before your ready to press the buttons....still hoping to see $30 to go LOIL but if the middle east thing flares may soil again at near $50 where there seems to be resistance.
happy trading.

[andrewbaker] 18/12/2008 19:46

-markewizaard

Hi. I don't follow Dragon Oil, so can't comment there other than 6 out of 6 analysts rate it a buy right now: but what do they know!? Small oil companies fortunes vary a lot: I follow ATP Oil & Gas (ATPG on Nasdaq), and whilst I understand it's a strong company with great prospects (according to a client of mine who knows the CEO personally and who is a government and OPEC sought out oil expert of many years standing), its share price varies widely and wildly. Range trading here is effective too.

Right now I'm doubting brokers, producers, governments and a whole range of others who stand to gain from making money out of traders of any sort, stocks included; and I tend to disbelieve a lot of what is put out. So, trying to look just at what is happening and not what people say should or will happen, my belief is that oil will drop sharply. I can see $10 to $15 a barrel if this recession gets as bad as I think is on the cards, and $20 is definitely on the cards. I know me, and I tend to overdo things, so on what I've just said, if you look at $25 to $30, then it's still a big drop down we're looking at. That means small oil companies will trend down too, but with relief rallys on the way. I'll stay with ATPG 'cos it's American, finds oil in the North Sea and Gulf of Mexico (and maybe off other US coasts if Obama says OK?), and therefore I trust it more as a company.

If you know a bit more than me on brokers, tell me. Recently I wonder if the (lower) rate I pay to deal is the only effective charge as some of my trades seem to be at the bid/offer limits whilst trades either side get inside the spread. (I trade inside Isa and by 'phone.)

Anyhoo ... good trading.

Oh. Switched from LOIL to SOIL today, took a loss and gave up a good profit by doing it 2 days too late!

[markewizaard] 18/12/2008 16:23

Hi andy dumped 10k dragon oil yesterday,i feel oil will at one point touch$25 it's long term trend is back up 2-3rd quater 2009 but from here this is traders mkt i'm not sure i shall be playing along,recent interview on bloomberg suggested 75% of OPEC just cant be trusted they needed to take 4 million of the table but venezuala,iran,algeria etc etc need the cash some suggest russian poor quality crude is changing hands at 10$ barrel on the black mkt pardon the pun!I'd like your thoughts i'm no expert just trying to range trade dragon at mo!

[andrewbaker] 17/12/2008 13:12

This is hairy: stayed in LOIL but the price is not responding to the OPEC, Russia and maybe others anticipated production cuts. Thought of switching LOIL to SOIL yesterday, but didn't; so going to hang in here for a tad to see what goes!