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Strategies & Market Trends : TRIPLE TRADES -- Ignore unavailable to you. Want to Upgrade?

To: robert b furman who wrote (828)	6/3/2021 10:35:07 AM
From: yard_man	Read Replies (1) \| Respond to of 4392

Hey Bob. I don't think you ever told me how the fishing went? Like to get your comment on something ... the last part of this piece zerohedge.com >> Remember how easy it was for shale guys to ramp up production last time? My hunch is that the ramp up will go slower this time around, meanwhile many years of underinvestment around the world will begin to take their toll on supply. What if XOM is just the first of many ETF hijackings? What if the attack on XOM changes how CEOs run their energy companies—if they want to keep their cushy jobs, they may need to stop drilling. What if the guys running the largest ETFs believe that they can accelerate the transition to “green” energy by dramatically increasing oil prices and making “green” products more cost competitive? It sure seems easier than lobbying governments for “green” subsidies while increasing taxes on fossil fuels—especially in emerging markets that are less focused on the environment. If increasing the price of oil is their “green” transition plan, the current oil price uptick won’t be a short-term thing. Maybe the heat of the move is still coming and it is in the deferred contracts? I bring this all up as the December 2025 contract is only $6 above where it was during last year’s oil glut—though it is up $10 in the past 6 months. Due to the backwardation of the curve, call options are rather cheap. If the supply side remains restricted, by 2025, the demand side should adjust the price of oil a good deal higher—perhaps dramatically higher. It seems odd that given what we’ve just seen last week, the deferred contracts haven’t really reacted—yet that may be where all the exponential action is. In any case, I like owning things that haven’t yet really moved, despite a positive change in the thesis. I enjoy the simplicity of trades—rather than guessing which producer or service provider to purchase. Last week, I purchased December 2025 futures and futures call options. Despite continued appreciation at the front of the curve, the back hasn’t really woken up. Figured I ought to bring this to your attention. I have a hunch that adding new supply this cycle will be a lot harder than anyone expects, as no one expects the new type of roadblocks that are suddenly getting thrown up. If so, this clearly isn’t getting priced in. <<