Oil Chaos: Crude Tankers With Perfect Setup

by | Apr 21, 2020 | General | 0 comments

Summary

Due to COVID-19 shutdowns, oil markets are hopelessly oversupplied and conventional storage has rapidly filled.

We saw the brutal reality of this storage crunch with May WTI futures imploding yesterday, collapsing below negative $30/bbl.

Although the May trading was limited, this is indicative of the lack of available storage. June futures are closer to $21/bbl.

Last week’s EIA data (10 April data) suggests Cushing will hit capacity between end-April and mid-May. Gasoline stocks are already at record highs.

Biggest winner? Crude tanker companies. We called it six weeks ago and the trade has unfolded more beautifully than I imagined. What to buy now?

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About Mariusz Skonieczny

Mariusz Skonieczny is the founder of Classic Value Investors.