Commodity Research Group (CRG) is an independent research consultancy specializing in base and precious metals, as well energy products. The Group provides research and general price analysis for these markets, along with advice to companies seeking to construct hedging strategies.
In this podcast, oil market experts Andrew Lebow and Jim Colburn discuss key fundamental forces driving oil prices in both the futures and options markets.
About Your Hosts
Andrew Lebow has been involved in the energy derivative area since 1980. He began his career with Shearson Lehman Brothers where he worked in the initial formulation and marketing of the NYMEX WTI crude contract in 1983 as well as the NYMEX gasoline contract in 1985.
Mr. Lebow has appeared before the State Government of Alaska as well as the State Department of Defense to discuss hedging techniques. Mr. Lebow is also well known as a market analyst and is quoted frequently in the financial press. He has appeared on television on CNBC, NBC, CNN, CBS, and PBS. Mr. Lebow holds a BA from Lafayette College and an MBA from the Kellogg School of Management at Northwestern University
Jim Colburn is a futures and options professional with 30 years of wide ranging experience in commodity markets. For much of his career, at Man Financial (1989-2011) and Jefferies LLC (2012-2013), Mr. Colburn worked with major integrated oil companies, hedge funds, pension funds and other entities to develop market hedging and trading strategies.
He has conducted trading, hedging and risk management workshops in energy markets worldwide.
Mr. Colburn is a published author on options trading, hedging, market making and risk management. In 1986, while at the New York Mercantile Exchange, Mr. Colburn helped develop new markets in energy option contracts by educating the oil industry, banks, floor traders and brokers, worldwide.
*Podcast was recorded October 8, 2020.
This is Jim Colburn of Commodity Research Group.
I’m with Andy Lebow, also of Commodity Research Group, and we’re here to talk about energy markets.
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This podcast should be construed as market commentary, merely observing economic political and market conditions and is not intended to refer to or endorse any particular trading system strategy or recommendation. We are not responsible for trading decisions taken by anyone. Information is not guaranteed to be accurate. This is not an offer to buy or sell any derivative.
Today is October 7.*
Good morning, Andy.
Good morning, Jim. How’s it going?
Is going well, how’s it going with you?
Good oil markets. We like to say there’s a lot going on, but, uh, from our last podcast, there’s not maybe a little more movement, but we’re still seems to be around this 40, $41 magnet or area.
Yeah, we we’ve. We tried to break down and, uh, market came right, right back into, uh, into the equilibrium zone.
Let’s, let’s start with that. Um, you know, if you then following the, uh, the press, um, the major stories seems to be how global demand is flagging. And, uh, we’ve see, in, in, um, the EIAs monthly oil report, which was released on Tuesday, um, they reduce their demand estimates for next year. What’s what’s going on.
Yeah. I don’t think it was a big surprise that they’ve reduced their demand estimates. We’ve been saying pretty much every month, I think for the last three or four months that these, these numbers are, uh, are way too high. And, you know, I think they’re going to be reducing them further. Some of the problems I think with these estimates is that they, you know, they, they have their models, but, uh, sometimes don’t really refer to the, uh, to the facts on the ground, uh, as, as we call them. And, you know, you can see that demand is, is simply not picking up anywhere near where, um, the EIA IEA or OPEC have been forecasting. And, um, you know, that, that hasn’t been that difficult to predict Jim, to be quite honest. I mean, you could just see that, uh, you know, we we’ve talked about, you know, all the fuels, um, that make up total world demand, you know, gasoline diesel in particular jet, as well as, um, the, uh, NGLs and, um, you know, they’ve certainly picked up a lot from the lows, but you know, whether or not we’re going to see the types of growth that, um, the, these big three are forecasting, you know, I, I just don’t see that at least in this quarter and probably into the next quarter.
Yeah. So th so you, I think it was like two or three, maybe, maybe three months ago, you, you were talking about how they were overestimating demand and they’ve reduced demand pretty much every month since, and yet our, our market is a kind of, it’s not tried to collapse, but it bounced back. It’s it’s, uh, again, a WTI is up around 40, $41 as we speak. And, um, why, why with all this kind of bearish, uh, uh, stuff going on? What, why were we holding up here so, well, well, first of all, yeah, we’re holding up. It isn’t as though this is a, you know, this is a spectacular price at, uh, at $40, but, uh, um, and, and I’m sure that when, uh, OPEC plus finally came to, uh, came to a deal earlier in the year to try to balance some market, you know, they, they, this was not their goal. Yeah. They didn’t want to balance it. They didn’t want the bat to balance some market here. You know, they would be, I think they would much prefer five to $10 higher than here, but I think Andy, I thought, I think Goldman came out with something earlier that said, ah, Saudis working with $50 in their budget. So yeah.
So there you have it, I mean, I think that’s, that’s a number that they would have been obviously much more happy with. So, you know, they’ve been able, I think they’ve done a pretty good job, uh, uh, balance in the market, but the reason I, I think, you know, let’s, let’s look at what’s happened at least in the, in the short term where we’re, we are losing some serious supply. The, you know, we’ve lost the total of, of tens of millions of barrels out of the us Gulf coast over the last month because of these series of storms that are, that are coming through. And this one, you know, Delta coming through now, uh, and we’ve also lost some we’re, we’re about to lose some production in the, uh, in the North sea owing to, um, you know, in the region oil strike. Now those are, those are short term, but it’s probably helped to keep the market here.
And as you pointed out, Jim, you know, the economies they are growing, you know, it’s a question of what extent, you know, w we’re seeing economic growth for one a, I think that’s a, you know, that’s certainly a key factor and a demand is while it’s not improving anywhere near what I think what these big three are saying, you know, it, it is improving. So, you know, I think they’re there, you can see at the margins, you know, we are seeing, we are seeing improvements and that is helping to keep, I think the market here, plus, you know, in terms of our balances, you know, just looking at what we do, uh, here at, uh, commodity research group. And I probably changed these balances all the time, but, you know, we still had, we were still showing stock draws. So that’s not fair either, uh, right as we speak, we’re seeing stock draws. And, and, uh, to what extent, like what rate we seen them, well, I’m all over the place on the, on the rate, but the last numbers that, uh, that we did, I was showing a, uh, around a 2 million barrel a day draw for third quarter. I think I’m going to probably lower that a little bit more over the next month, uh, fourth quarter, one and a half. And, uh, it looks like first quarter right now. I’ve got about one closer to two, uh, for the first quarter. So, you know, we are, we are drawing inventories slowly, and it does look to me like maybe second or third quarter of 21 we’ll we’ll have, I mean, that’s, that’s the good news. The bad news is that inventory spilled so much in the first half Jim, that we have a long way to go and that we’re probably gonna get alleviate just that build sometime in the second or third quarter of 21, I think.
Hmm. Well, you know, I, I, I like to look at this, uh, Atlanta fed, uh, now casting, cause it not, not for their absolute, uh, number they’re looking for, I think plus 35% GDP growth in this quarter, but two, two revisions ago, uh, they showed, uh, an uptick of 2.5, 2.6 GDP percentage points higher based on the economic data that was coming out. And that’s been within the last one. So, so, you know, if you go pre COVID, the whole economy was only growing by two, a little more than 2%. So it’s kind of a, you know, it kind of underlines how these economic numbers are, are, uh, uh, how, uh, sort of drastic these, these numbers are, and the revisions are to these numbers. So, so I can understand how hard it is to get a handle on something like current demand and future demands. So it, it, and, and, but they, I guess the big three have been sort of missing it in the same direction for a few months in a row. I’m just wondering, you know, when, uh, when are they going to miss it, you know, on the other side, so what are they going to go through their estimate? Yeah. Underestimate and you’re saying, well, we’re not there yet. Bottom line.
Yeah. We’re definitely not there yet. I, that the, the big problem is, uh, continues to be jet fuel demand. That is until international travel is, is loosened and people are, and at least from a, on a business perspective, number one, and number two, you know, people aren’t fearful to fly. Uh, we’re, we’re no matter what, we’re going to have a three to 4 million barrel a day haul on, uh, on jet fuel consumption. I mean, it looks like China’s picked up some on jet fuel consumption, but, um, you know, we’re not seeing it. It’s certainly not. We’re not seeing those numbers here in the, in the U S still jet fuel demand still stinks. I mean, it’s running like eight or 900, it’s running about 50% of, of, you know, last year’s numbers, which, you know, which has always been a problem. When we talk about our markets for airlines to hedge going forward is that the question has always been, what will you, you really don’t know what your demand’s going to be, or do you, and certainly now it’s even, it’s even worse. I mean, you might want to take advantage of what you think are low prices, and yet, uh, you don’t know how many planes you’re going to have in a year going forward. And I think, uh, when you look at the, the, the, the three reports that come out of the EIA, the IEA and OPEC, um, the difference in their estimates from 2021 and 2019 is mostly jet fuel. Right.
Is that correct? Yeah. Yeah. Well, Chad fuel gasoline has made a, you know, certainly made a comeback from, from the lows and, uh, diesel too has made a, as made a nice comeback from the lows, but we’re, we’re, you know, we’re not, we’re nowhere near, Oh, we’re getting on diesel and gasoline. We’re getting somewhat close to the 2019, but still that’s a long way to go. But jet is the, is definitely the, the, um, overriding big problem. Number one in diesel, I would say not number two.
So we had the early in the lockdown, we were talking about, uh, how diesel was kind of hanging in there because trucks were still moving, delivering products, cars were, you know, people weren’t going out of their houses. And now that’s kind of flipped. I mean, we seem to have more, more diesel around and, and, uh, and, uh, as you say, jet fuel, but, uh, gasoline demand has been, you know, okay. Is that, yeah, I think that’s, I think that’s fair. I mean, guessing it’s been okay. It’s not, you know, it’s not, it’s, it’s not great, but it’s for him, let’s just look at the law just recently. The four week average for a gasoline is running around 8.6 billion barrels a day here in the us. Five-year average is 9.234 for this time of year. So we’re, you know, we’re still running 600,000 barrels a day behind, behind last year. And diesel, uh, is running around for around 400 a day, uh, behind on, on of course, as we know, diesel is very sensitive to the economy and you’re right, Jim, there were, there was a, uh, you know, there was a big demand for goods, uh, earlier in the year. And that certainly helped, uh, help diesel demand, but looking at, uh, some of the manufacturing numbers, particularly in September, that, that, uh, weakened, you know, that that’s a slot and that’s a week, but it’s definitely, uh, definitely softened.
We’ll see what, uh, we’ll see what fourth quarter has, has to, you know, what we see here in the later in the, in the fourth quarter. And of course the stimulus is, uh, will be, will be important because, you know, if we, if we can increase demand for goods, that’ll certainly help the, uh, help diesel demand. And, uh, if we can increase demand for labor, um, that will help, uh, gasoline demand, no doubt. Uh, so I think the market has, uh, rightfully so been watching the, the imaginations in Washington over this, uh, over the stimulus package, because it has an impact. It definitely has an impact on, uh, on demand here.
And what do, uh, what have you seen refiners do to, uh, adjust to this crazy scenario?
Well, they’re, they’re really have got it’s fit. It’s really rough go for, uh, for refiners, the getting back to diesel we’re, we’re, we’re still in a big surplus, you know, we have too much diesel, there’s no demand for jet fuel and you don’t want to make too much gasoline. So, you know, it’s, it’s really, it’s been difficult for them to, uh, to try to balance a market. They’ve cut runs significantly. And they also, um, w we took, we’ve had these hurricanes going through the Gulf coast, that’s taken out re refinery capacity, which probably helped to balance the market somewhat. But, you know, the trick there is, you know, the trick is to figure out, you know, what your yields are going to be, right. You want to keep the diesel yield as low as he can. Right. But you don’t want to swamp the gasoline market, luckily gasoline’s in okay.
Shape. So I think if, you know, for finer can figure out a way to run, you know, run for less diesel and jet, you know, and they’ve been working on it for months now, maybe we’ll, we’ll get into, you know, a little better balance, but let me, let me just talk about the balances for, for this little it’s. And, um, we have 172 million barrels in inventory right now, uh, which compares to 140 for the five year average. But, you know, we talk Jim that it’s not so much like the total number, but what’s really important is the day’s use. Right. You know, which is day’s supply. Yeah. Stocks compared to demand.
Right. And we’re always looking at, okay, where are we on day’s supply? And this is the lifts are 48 days supply right now, which compares to the 45 year average of 35 days supply. So we’re 13 days. So what does that 33 would do my head with 13 days over. What’s not great. And you know, this is, this is the thing that’s really disappointing is that in early August, a couple of months ago, we were also 13 days over five year average. So we’re not really making any big progress on getting rid of the, uh, getting rid of this, uh, diesel surplus, you know, cracks are, they’ve rallied a little here in the last week or so, but they are, you know, they are running significantly below last year, last year and five year average levels for, uh, for diesel. So there’s no incentive really run, you know, for refiners to run diesel. As I run for diesels, I tried to match it.
So, um, it’s, it’s kind of a weird season, uh, for a lot of reasons, but we’ve had these hurricanes hit the golf, take out some refiners, and then we’re going into a turnaround season.
They do the scheduled maintenance so that you think these come don’t come out of maintenance or they stay in longer. Yeah.
Yeah. I think they are going to, I think they are going to stay some, have not come back from, you know, hurricane Laura that they’re just now coming back. Cause they haven’t had, they haven’t had power. So they may, they may want to stay in longer maintenances the, yeah, let’s talk about what, what refinery runs are, its demand for crude, right. Ultimately their crude runs. So, you know, we’re running on refinery runs using the same right now we’re at the four week. Average is 13.6 million barrels a day. The five year average is 16.2. So what is, what is that 2.6 million barrels a day under where we usually are for September, you know, that’s, that’s a big hit.
So do you think that I saw that Noah, uh, has a, uh, is expecting a cold winter? I mean it, this year, I think it’s like a degree days maybe plus 5% from the five year average, is something, something like that enough to, uh, reduce distillate the heating all demand enough to take it down or is that not, not use heating oil anymore?
Well, it, it could be like 300 a day here in the U S you know, if we get a really cold winter, it’s not a, you know, is it a game changer? Not anymore. I mean, there are so few homes now being heated by heating oil and much more towards, uh, towards natural gas where you get a fridge and winter and it, you know, it certainly can’t, it can’t hurt, but it’s gonna take, it’s gonna take a while to get rid of this, uh, to get rid of this, this led surplus and what was really disappointing in the last week’s EIA report was the production of diesel and gasoline. Both, both diesel went up just a little went up. So that, that was a little, uh, that was a little unnerving, but it’s just the, it’s just the one week report I will demand should pick up somewhat here in October for the harvest, uh, for, for diesel. But, um, you know, when you’re 13 days over, it’s a long, it’s a long way to go champ. Let’s swing over to, uh, OPEC, um, which they’ve actually been increasing over the last couple of months production. Uh, can you just take us through what’s what’s been happening and what you think is going to happen with, uh, OPEC OPEC plus? Yeah. Uh, OPEC have been increasing, uh, the, uh, they, they OPEC themselves put the August production at like 24 million, 24 point CRO million barrels a day. And, uh, the numbers, their final numbers haven’t come out yet, but Reuters had them, the last Reuters report had them at 24.4 million barrels a day. And, uh, they’re, they’re probably going to keep going up because we know that, uh, Libyan PR you know, Libya’s, which was a 0.2 million barrels a day is moving up to 0.5 probably by, you know, late later in November and December. So, uh, and it’s unclear whether, uh, and Iran also out of, uh, ran spun up by a hundred thousand barrels a day. And, uh, out of that, that’s certainly we’ll have, uh, you know, w we’ll be talking about ran a lot next year. I do believe, yeah.
Polls are right. And we have a new administration. There’s a, there’s a lot on the table. Right, right, right. And, uh, you know, C w vis-a-vis the JCP, uh, uh, you know, what, we’ll see, you know, which in which direction they, uh, by an administration wants to go towards, uh, towards the Rand. But, so I th I think OPEC production is, is on the, is on the rise. The both ope, you know, the OPEC pluses have been tapering and, uh, production that they told us. So, you know, production is going up to a million barrels a day in August. And it’s also due to go up in the first quarter of next year. But with Libya coming out and were priced as being where they are, I think it would be, I think OPEC plus would be hard pressed to really increase for the auction in the, in the first quarter. You know, I think they would have, I think they will just keep production flat here. And, uh, you know, nobody cut cutting back for Libya, but, you know, not, not increase in production and, um, hope that they can get, you know, hope price, demand improves enough to get prices up to maybe closer to $50. I don’t see that right now, but yeah. And then maybe for second or third quarter talk about increasing production, but it’s very clear to him that the market does not need more OPEC barrels, OPEC plus barrels in the first quarter of next year will not need.
And, and, um, Russia is producing within the agreement. Are they, are they liberal?
Yeah. They’re offer, but they’re not, you know, it’s not a greeting, it’s not egregious. And, um, yeah, they’re there. I think they will be chomping at the bit, but I’m not sure there’ll be comping at the bit at, uh, you know, $42 sprint. You know, if, again, if the market was a lot higher. Yeah. But, and, and knowing that Libby is about to increase production, you know, they don’t have a quote, you know, they don’t have a quota. So I don’t think, uh, I don’t think Russia is going to be pushing very hard for a, uh, for an increase for the first quarter, kind of gets a sense of, so one of the things that we saw early on is that a lot of these, especially in the U S but also OPEC, they, they cut back production. Obviously a demand went away. I mean, they could, you can’t produce oil. If your customers don’t want it can’t take anymore. Right. And now it seems like maybe they’re increasing, based on customer needs. They may, maybe they are there, it’s there.
Like you said, we’re still drawing, despite their increase in production, we’re still seeing draws and you expect to see draws going forward. Uh, it would be nice if no more barrels get leaked onto the market, but that’s probably going to be difficult. Uh, I, my opinion, but in the U S we’re start, w we’ve seen production decline based on prices. COVID that kind of thing. But also, uh, we took a couple of what would be two acts right now, maybe three for, uh, storms. Right, right. And I think the EIA has production going up for a little while and then down again. Right. And what do you think about that?
You know, it’s really hard to get a handle on, on exactly where production is, because I, at least with the EIA is saying, cause they have like production in September up, up where couldn’t have been because of these storms. Uh, they have 11 two, and then October, November, December the right around 11 to, uh, next year, it goes down to maybe it’s pretty steady around 11 million barrels a day, which looks to me like a massive pond on the part of the, part of the IAA.
Their nerves have to be a little frayed this year, trying to keep on top of these numbers. Holy cow.
Oh man. Yeah. It’s very difficult. I mean, it’s, it’s difficult. I think they do a really good job, but it’s, it’s, it’s really hard getting these numbers, right. Yeah.
Okay. So what else we want to talk about? Um, so you talked about stimulus checks. Um, I happen to think this president might be a long gamma. I think his tweets are moving markets. And remember they used to say a Saddam was saying, was trading the oil markets cause his commentary was, uh, moving prices all around. But, uh, yeah, the, the option where we, we actually picked up in volume in, in the last month, um, from a dismally low number. So, so these, uh, you know, WTI options are easier to follow. Um, and Brent kind of, they don’t trade as much, but they kind of trend with WTI options in terms of, uh, direction. So August we saw about 62,000 options a day, which is a really, really low number. And then September bumped up to 104,000 a day. And, you know, the big, the big month of the year was the Oak.
When the OPEC meeting collapsed back in March, we saw like 235,000 a day. So that kind of gives you a perspective of where we are, but on, um, on Friday it was kind of interesting because we saw a lot more, uh, puts than calls trade. Good. It was almost 200,000 total, uh, but, but open interest on the calls increased by double the puts. So it looked like a little bottom picking and it was a down day and valves were over 50% and, um, and we we’ve bounced off of that. And then, um, I guess it was, uh, two days ago, uh, we saw like on Tuesday we saw like a, another big option day, 200,000, not, not crazy, but relatively speaking, it was a good volume. And we saw a big decline in open interest on the calls and puts, and we saw for the first time, in a while we saw three strikes trade over 10,000 lots.
We don’t, you know, we had a Novi 35 put trading almost 20,000 times. No, we 37 foot, uh, almost 17,000 times. So there, so it was a, like a liquidation type thing going on there. So, um, you know, there’s activity, uh, I’m not, I’m not sure. Uh, uh, you know, I did, I did have a lunch with a guy that used to work on the floor, uh, active trading, still trading. And he said he lost money earlier in the year. And he lost money in 2018 because he’s done something, he changed the way he traded and he started selling vol. So I, you know, and he got, he got whacked. And so now he’s back to being trading from the long side and seems to be doing a little better. So anyway, that’s, that’s just one, one trader. So, uh, we’ll keep an eye on this stuff.
CSOs that spread options have been relatively quiet. Um, biggest open interest is in the November lease minus 50 puts over 10,000, but that’s that’s from a while ago, I think. And, um, you know, we’re not, we’re not seeing the big purchases of, of these, uh, CSO, uh, puts that we saw earlier in the year when everybody was expecting, um, uh, storage facilities to be overwhelmed, uh, which of course led us to that negative pricing day. So increase in volume of Val did trade over 50% on Friday, it’s back down, uh, by about 10 vowel points. Novi vowel is a little bit under DCE. May, maybe there’s a, a, an election event there. I don’t, I’m not sure that’s, you know, I don’t know if that’s true or not. If people are actually buying, you know, refraining from buying Novi and buying these cause w w we can get volatility in going into the election as much as coming out of it. So, um, yeah, that’s, uh, I’ll leave it there, but we’ll keep an eye on this stuff and a report next month.
Well, the good news is that at least you seeing it may not be every day, but at least there are a couple of days here where it’s been good volume. Yeah.
Say what volume you have to be careful interpreting what’s going on. We talked about this Andy and one of our weekly, uh, commodity meetings that we have. And, uh, we were, um, you know, you hear people say, I heard somebody on, in a financial press, uh, news TV saying, um, you know, somebody is buying puts and puts spreads on the stock and that’s a bear sign. And, and really, you know, it’s, it could be not so bearish because maybe they own the shares. And instead of selling the shares, which would be really bearish, they’re buying, put some, put spreads as protection, cause they think, well, maybe it’s just short term and then we’re going higher. So it’s hard to interpret that, but following the option flow does give you a sense of what people are thinking about, you know, uh, out in the future and away from today’s price. So it’s kind of interesting to kind of, you know, you, you see what the fundamental news is, and then you see action, or you don’t it in the, in the options market. So earlier this year we saw those minus $4 puts trade in size and we’re, you know, that kind of said, wait a second. Some at least one person thinks that there’s a chance we, this market collapsed. And it did, you know, we’ve got a guy I’d like to meet him someday. I think that’s the option trade of the year award.
Definitely. Right. But, but that’s still faded, right? The option trader of the year award, that’s like the cover of sports.
It is. I gave the award out, I think, four years in a row in the next year, the person who won it got totally hammered. So I stopped giving it out.
Yeah, yeah, yeah. You didn’t want to win the option trader of the year or no, it was, it was a curse. It was a curse.
That’s why, I’m why I’m watching Guiana very closely to see if they have an oil curse going on. But anyway, let’s talk about prices going forward. Do you see this market, uh, staying where it is in this four WTI and a $40, eight area? And, you know, we didn’t talk about Brent T eyes, but they’ve narrowed and, uh, you know, maybe, maybe Brent 42 and 44, what do you, what, what’s your, uh, you know, without giving us what y’all basically, what are you working?
I don’t, you know, I’d love to say, you know, the market’s really, cause I think the market’s going to just, you know, boomerang out of these, out of these, the ranges that we’ve been in, but you know, if you’re looking at the underlying fundamentals here, I think we’ve, we’ve spoken about, um, you know, demand still lagging and still gonna take a while for it to recover. Uh, we’ve spoken about supplies are, are probably on the rise, you know, going to a OPEC print they’ll link to Libyan production and then, um, you know, OPEC, the upcoming meeting, you know, may keep, you know, I don’t think there’ll be an increase, but if there is, that’s certainly not, not bullish. So I, and refinery margins are still pretty weak. So it’s hard right now to see the market really breaking out of these ranges, Jim, uh, you know, I wish that certainly everybody I’m sure it would wish that, uh, that it would, but uh, you know, it just doesn’t seem to be in the, be in the cards right now. So yeah, I think, yeah, I think I’d still, you know, still play the, uh, you know, still be in, be in this range, you know, it’s possible. That’s why, uh, when vol popped up over 50%, it got in the market sort of recovered, it just got slammed down. I mean, maybe people are who like to solve our saying, this might be a, a good number, you know, to, to, uh, sell. I, my, as you know, my feeling is when I, when I ever get the feeling that I want to, uh, sell vol I lied down and put the feeling that feeling goes away.
Right. Which brings me to my next question, which I already know the answer to. So if we think the market’s going to be at these ranges, what about selling the ranges? Exactly.
Yeah. That’s a tray. He probably, you know, for, for someone’s, who’s afraid like me, I would be looking at selling call spreads and put spreads. So, so, you know, if something really bad happens to your position, at least you’ve got some coverage on the wings, you know, you always like, always like buying those wings to, uh, protect the position. So, yeah, but in terms of our rights, our rights. So, I mean, I’ll write quote and put some down.
Um, I’m most skeptic. I don’t, I just, not the way I like, I like to sleep at night and that’s just me, but I think overall, I think I have the, uh, the anecdotal evidence to show that, uh, you know, it’s these, these, uh, I learned a lot about risk from talking to people on the floor. When I worked at the Merck, it was incredible how, you know, these folks, uh, that, you know, they weren’t the big investment banks or the big banks. They weren’t the big, you know, they didn’t get MBAs from the top schools and they knew more about risks than anybody in the marketplace. Not, not all of them, but, but you get, you know, you get those guys and because they’re trading their own money now, they can’t, they can’t afford to blow up. And so, yeah, I think, uh, you know, the, the ideas you’re, you’re picking up dimes in front of a steamroller, that’s, that’s just not appealing to me cause I, you know, I fall down a lot. Yeah. So I, I, it’s just, uh, if you, if you do it, you don’t want it to become like the cornerstone of your portfolio. You can take a little bit, uh, but, uh, I, again, I would rather not do the risk reward to me is always not, uh, uh, not worth it. What else? So, so products you think, I mean, D diesel gasoline, which one should outperform going forward into the winter season, but again, you’re asking me for a heat to guess, [inaudible] I tried to backdoor that slow way couldn’t go higher. Well, we all know that the nickname of a heating oil, gasoline spread is this long bit long, been the original, the original Widowmaker. So to, uh, you know, recommend, recommend anything.
And that’s spoken from someone who’s been following the heating little contract since it began. And I’m not even, I’m not even gonna mention when it began. Yeah.
Speaking of time decay. Right, right. Yeah. Uh, anything else? Uh, I’m trying, I’m just looking at my notes. I think we’ve pretty much covered everything. Well, not everything. I mean, there’s this a lot more to cover, but I do want to mention to him that, you know, every one of these energy markets monthly, we end up talking about crude and we’re hoping either in November or December to, uh, do a special on, on natural gas. And we have a very special guest coming on with us, who those much more, you don’t want to have us through about the natural gas market. So I think that, that, that, and we’ll talk to trolley of too, but I think that’s going to be a really, really interesting, Oh yeah. I mean, if I just read, if you look at the EIA report released on Tuesday, that they make a very bullish case for natural gas, I’ll be anxious to hear what, uh, what we’ll focus on that a little bit more.
That’d be great.
And we’ll also be, um, you know, the election, hopefully we’ll be done and dusted. We hope so. We’ll also talk a little bit about what, what we see going forward with the nest next administration in energy period in both natural gas and in, uh, crude right.
And I would say CRG where I post articles of interest, uh, you know, if you’re kind of a market junkie like us, I think you’ll find them interesting.
And Andy, we have our podcast up there as well, and then I’m on LinkedIn. I also take one a week and then always get to it, but like a greatest hits of, of the articles that I pull out. And it’s usually commodity related, usually definitely market related and, um, uh, get some pretty good, uh, interest people will send me stuff about it and, uh, get a little good dialogue going on.
So two ways to keep in touch with us and anything else at Commodity Research Group, you can reach me at a Lebow, firstname.lastname@example.org.
And these podcasts are available anywhere you get your podcasts under “Commodity Research Group”.
All right, Andy, we’ll pick it up next month.