Loading ...[I didn’t think a V recovery was possible but if this article is correct, there could be quite a violent recovery from a panic drop into the a$15-$25 range-maybe not to 60-80 buck oil but just to 40-50 buck oil would suffice to make XOP calls a big winner]
“Historic” oil price war sends crude into downwards spiral—March 8th 6:31pm
But the end-game here is not low oil prices, but rather forcing Russia back to the negotiating table. The question is how long – if at all – that will take. “We would stress that it is not in any OPEC+ nations’ interest to have sustained oil prices below US$50, and hence we see this solely as a strategic move from the Saudis,” RBC says.
Put spread traders are set to almost 10x their bets. WTI June $34/$29 put spreads, which traded almost 13,000 times on March 4th for $2.9M, are now worth $26.5M. In early trading, more than 200 May $15 puts traded.
“What makes this price war especially dangerous and historic is it breaks out simultaneously with a massive demand shock… from the coronavirus. “We have not seen that toxic combination since the early 1930s when [Texas’] monster Black Giant field started up in the teeth of the Depression, sending crude oil prices down to pennies on the barrel,” Robert McNally, president of Rapidan Energy Group, a Washington, D.C.-based energy-market consulting firm, said.
https://seekingalpha.com/news/3549585-historic-oil-price-war-sends-crude-downwards-spiral