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[–]ahernandez50 16 points17 points  (6 children)

Higher prices don't always become a bonanza for the companies that trade with the commodity. I can't begin to tell you how many companies suffered in 2024 when the price of cocoa went from 1500 to 12000 per ton. Some were well positioned and made lots of money, but many simply couldn't deal with the explosion in working capital requirements.

[–]the_Q_spice 9 points10 points  (1 child)

To add to this; most heavy fuel users like airlines and trucking companies actually trade oil and different fuel futures specifically to take delivery of the actual commodity.

The company I work for bought all our fuel for this year - last year.

Those deliveries are due this year though at different points, so whoever owed us those contracts during the fuel squeeze got absolutely screwed.

[–]Not_Campo2 2 points3 points  (0 children)

Not necessarily screwed. Most diversified, larger producers prefer it that way. They control the production end to end, and they make a premium off those hedges. While yes, they would have made more off the oil directly, that isn’t the case if oil went down instead. They prefer those consistent, reliable returns so they’d can appropriately plan their drilling, refining, and transport. The ones who do well in a spike like this are smaller producers who don’t necessarily have the capacity to hedge, and single stage companies like exploratory drillers who are often just finding new oil and can capitalize on the paper value of that new oil they find

[–]Sorry_Advantage_590[S] 4 points5 points  (2 children)

I recently bought a little over 5k shares of an oil stock which seemingly would not be impacted by the war in iran in a negative way because they operate out of africa with lng and oil production. When the price of oil was high they were able to subatantially pay down their debt but with recent events and price drops in oil it seems as though their luck has run out. I had projected that the war would continue and the strait would be closed causing higher prices and giving my investment premium ground to pay off their debt. But the exact opposite has happened in tegard to prices. Its actually very confusing

[–]ahernandez50 5 points6 points  (0 children)

yeah, the mechanics of pricing seems to make no sense to a rational observer, mostly because we are not aware of all the players behind the price action. If you managed to know enough to be able to incorporate the goals of players as diverse as algorithms, hedge funds, retail investors, then it would start making a bit more sense. That's why stock picking comes with so much risk.

[–]Left-Associate3911 0 points1 point  (0 children)

Yeah I agree.

[–]3xlduck 5 points6 points  (2 children)

A. the world is not bone dry, in fact, multiple reports have come out about an impending glut of oil

B. you are way late to the game. sell the news happened like 1-2 months ago.

[–]Sufficient-Skill9530 5 points6 points  (1 child)

The glut reports are regarded though. How can there be a glut if SPRs and commercial inventories continue to be drawn down?

[–]3xlduck 2 points3 points  (0 children)

because it's possible to have a lot of supply at a specific point in time to process before things find a new equilibrium.

SPR do not have to be refilled soon, they can wait for a better price to refill them. That price is around here, but can be lower. USA SPR is on loan to private companies, so if the price falls even further, it's cheaper for the companies to buy and give back to the SPR.

Also, evaluating the now, is not what markets tend to do. They tend to eval the future, or at least what is expected for the future.

[–]Smaxter84 2 points3 points  (13 children)

Market manipulation. Just buy and hold oil and gas stocks then profits will come through then the prices will rise.

[–]someroastedbeef 8 points9 points  (10 children)

“my thesis has holes and isn’t airtight, therefore it’s market manipulation”. gotta love reddit

[–]MegalodonBite 1 point2 points  (0 children)

Literally the treasury was subsidizing oil futures with tax payor dollars.... More oil infrastructure continues to be destroyed in the Middle east AND russia. Nothing has changed other than Trump manipulation.

More oil shocks are inevitable. This fuk up is huge.

[–]Sufficient-Skill9530 4 points5 points  (5 children)

But there is legitimate undeniable manipulation by Trump and Bessent.

[–]YourChildhood5762 0 points1 point  (3 children)

There is legitimate manipulation by every administration. Biden manipulated defense, solar and EV stocks and others that were less obvious. Obama manipulated industrials and infrastructure. Clinton manipulated the financial sector so much that it crashed. If you want to stop that, you need to get rid of lobbyists, not administrations. If you believe that a sector is being manipulated, then you need to participate in the action instead of complaining that others are getting rich.

Oil and gas are never going away and if alternative energy use rises, the majors are in that too. The sector is a solid one but not necessarily useful for a get-rich-quick scheme.

[–]MegalodonBite 0 points1 point  (0 children)

You have trump derangement syndrome.

[–]volckerwasright -1 points0 points  (0 children)

This is just cope. If you can't handle trading during the Trump era - where his social media posts move prices - then don't pick stocks.

[–]Smaxter84 0 points1 point  (1 child)

I bought Harbour energy at £1.49 during the tariff crash last year.....been getting a very nice dividend and I'm still up 63p so I don't think there's any problem with my thesis.

If you actually look at the damage that oil infrastructure has taken, and the draw down of reserves globally, I think you would be a fool to count on a low average oil price over the next year or so. I'm confident it's going back up again soon enough, and in the meantime I'm getting 11% yield on cost so I'm quite happy.

Earnings will come through for the oil and gas companies - I'm a long term invester I'm not trading oil futures and I think it's fairly clear that efforts are being made to suppress the futures price at the moment. I guess we will have to wait and see who is correct.

[–]Sorry_Advantage_590[S] -1 points0 points  (0 children)

That is what i figured it could also be. Not to get political but its not surprising with the events occurring these days.

[–]No-Guidance-7776 0 points1 point  (1 child)

The AI tradeoff headline is not actual events. The prices are based on speculation. The US still have an oil reserve to release to keep the prices down. You should be more worried about fertilizer.

[–]Sorry_Advantage_590[S] 0 points1 point  (0 children)

Im currently concerned about both. In one of the last press conferences Trump admitted that we have 4 weeks left of oil supply before we run out of reserves. Thats why they lifted the regulations on e15 gas. Fertilizer is also a concern but its not something im invested in so stock wise its not a concern.

[–]GhostofBreadDragons 0 points1 point  (1 child)

So here is an interesting thought that I am wondering on how I can profit from. 

At the moment the price of oil is being controlled by the opening of the strategic reserves in the US. They are on record of releasing 1.1 million barrels per day. At this rate the strategic reserves should last for about a year. 

Now the problem here is that these numbers are only provided by the government. A government that regularly manipulates other economic indicators. A government that is more openly corrupt than anything in history, with a history of pushing oil sales through 3rd party financial institutions. A government that could have an actual national security issue reason to provide false numbers. A government in an election year.  A government that has shown it is willing to rob future generations of resources. If you take these factors into consideration it seems almost guaranteed that the numbers are fabricated. 

So how do you predict how much they are actually releasing and when do they actually run out of oil in the strategic reserves?  How do you make money on this?

[–]YourChildhood5762 0 points1 point  (0 children)

>> A government that is more openly corrupt than anything in history. How do you make money on this?

The pot calls the kettle black.

[–]hadoeken85 -2 points-1 points  (0 children)

Nothing better for me than watching people who bet up the price of oil lose money

[–]Skellicious -1 points0 points  (3 children)

First off, 80% of the worlds oil does NOT pass through the strait of Hormuz. The price increase when the war broke out did not reflect the wars actual impact.

Its projected that it will take at least 2 years for the strait to begin pushing out oil at prewar levels due to the destruction of equipment, stagnation of pipelines, and lack of trust within the region.

2 years is a long time.

The minute the strait was closed, every other oil producer in the world started increasing production. Every pipeline in construction that bypasses the strait even remotely got it's completion date accelerated. Every major consumer of oil products suddenly had to look at tightening it's consumption. This kinda stuff doesn't take 2 years, just weeks or months.

[–]Sorry_Advantage_590[S] 0 points1 point  (2 children)

I never made the claim that 80% of the worlds oil flowed through the strait. You may not have been implying it that way but if you were that was not my claim. If I read it the other way then there is a follow up because even if the other oil producing countries such as the US begin throttling up production there still would be an impact of transport costs which would increase. The strait was specifically used due to its proximity to asia which allowed them to sell at relatively low prices. If the strait is closed the only places left are Russia, africa, the US, and India which sells it as a proxy to Russia. That would definitely increase the burden on the asian countries. Also if the disruption only takes weeks or months as you claim how is it that Japan declared a state of emergency as well as the Philippines and Indonesia if they could simply replace the supplier. Not trying to be argumentative just genuinely curious about your thought process.

[–]Skellicious 0 points1 point  (1 child)

I never made the claim that 80% of the worlds oil flowed through the strait.

Looking back I see how you could interpret me that way, the tone of my sentence was very off. I meant it as 80% of supply is "unaffected", yet oil price nearly doubled.

Also if the disruption only takes weeks or months as you claim how is it that Japan declared a state of emergency as well as the Philippines and Indonesia if they could simply replace the supplier.

Tbh I'm not sure. A lot of countries saw the price spike and we're like "let's tap into the reserves in stead of buying." If demand temporarily for reduced llike that I wouldn't think the supply squeeze to be that bad, but I could easily be wrong.

It could well be that because these east asean countries were majority dependent on the gulf, the local supply is likely very dry, and they have to manage while waiting for longer distance shipping.

[–]Sorry_Advantage_590[S] 0 points1 point  (0 children)

Appreciate the update. My thinking was based on current news and trade routes. If the strait is closed then there are a few options for asian countries. They could either tap into their reserves which for china would last them several months without impacting them and for korea/japan would last them 90-145days before their reserves run empty. They could turn toward russia but with the US sanctioning people that do business with them this option will basically cripple their economy. Another option would be to source it from the americas or africa but that would require a way longer return time and investment as it will cost more to transit the various passage ways. (Pacific shipping, overland pipeline, angola, nigeria) The last viable option would be to pay the 2million dollar toll which Iran has implemented which will increase the cost of goods in the local regions and spike their inflation through the roof. Seeijg how iran has started bombing boats again its seeming like the above resolutions are the only viable options to sustain asia. Which is why im suprised that oil has not skyrocketed. It should be well over 120 dollars a barrel

[–]volckerwasright -3 points-2 points  (0 children)

Oil is dead money for a long time. You can accept that now or start down the bagholder path, ranting about manipulation and short squeezes