Discover and read the best of Twitter Threads about #Brent

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Sell #WTI puts to corporate hedgers
Sell front month #Brent calls
(short a front month strangle)
EVM option models show short dated options still rich to fair value

Buy 6 month Brent calls

Net short vol to fund exposure to tightening market in 2020
What did I mean by "sell #WTI puts to corporate hedgers"?

Many shale firms are required to hedge per loan terms. In other words, they're forced buyers of puts which overpay for the insurance.

The spike in vol created a great entry point
"Sell front month Brent calls"

Again, the vol spike on the Saudi news created a great entry point to get short the front month while simultaneously buying 6m calls

1m - 6m spread 88th percentile over past year
Read 4 tweets
More details on Abqaiq (as reported by @energyaspects): Attacks caused shut-in of 5.7 mb/d of crude production (58% of current output), 2 bcf/d of gas output (18% of annual average domestic gas sales) and over 0.5 mb/d of ethane and NGLs output (50% of current production). #oott
Attacks damaged parts of 7 mb/d Abqaiq processing facility and another plant that handles output from the 1.2 mb/d Khurais field. Although redundant processing capacity should enable some of the affected output to return quickly, a full restoration will likely take weeks.
Saudi crude contains H2S & must be processed to make it fit for transport through pipelines or processing in refineries. EA understands that at least 1 of 7 stabilisation trains at Abqaiq has been severely damaged while 8-10 of the 18 desulphurisation towers are out of action
Read 10 tweets
1/13 On oil & oil equity prices:

So why does oil and oil equities underperform the S&P and NASDAQ in 2019 by a wide margin? #OOTT #brent #WTI #oilprice
2/13 As shown by Crescat Capital, this is a growth/ETF/momentum market which left commodities at 50 year relative historical lows! @crescatkevin @TaviCosta
3/13 So how do oil prices format?

Short term, spot prices #trade around inventory levels.

However, it is hard for #Brent and oil equities to go up on declining inventories while demand/macro weakens (macro outlook uncertain). #OOTT #WTI @HFI_Research
Read 13 tweets

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