Oil Had a Bad Day

At least crime is down.

Dow: -592.05…
Nasdaq: -89.41… S&P: -51.40.

WTI crude futures for May delivery collapsed 306%, or $55.83, to -$37.63/bbl ahead of tomorrow’s expiration. The negative price also indicated that producers are paying someone to take their oil. 

Tankers out in the deep blue sea are overflowing.

Oil tanker companies showed a sharp move higher as producers are paying for oil to be taken away; these tankers can be used to store oil off the coast. FRO, TK, STNG, and NAT are some names in that space.

OIV, the VIX for oil, popped 270% today.

Regular WTI closed around $21.

Russia is basically a gas station and a one-trick pony. It might be worth watching this one if things get worse.

More rebalancing?

Remember the month-end rebalance I told you about at the end of March? There was a lot to buy and the market caught the beginning of that big rally.

Morgan Stanley QDS estimates that pensions and asset allocators would have to sell $30-50bn of global equities in order to rebalance over April month-end (nearly all from the US).

Context 1: this is larger than average but pales in comparison to an estimated ~$160bn bought over the end of March.

Context 2: everyone laughed at “rebal” flow last month, until they didn´t….

Context 3: lessons from previous rebalances are that you start 5-7 days before the month-end.

Other Crashy Things

Here were some panic crashes/sell-offs/drawdowns that were not followed by a recession.

1987 Black Monday: -35%, 1963 JFK: -28%, 1998 LTCM Russia: -23%, 1966 Bear Mkt: -22%, 2018 Fed QT: -20%, 2011 Greece Default: -19%, 2010 Flash Crash -16%, 2016 China Forex: -15%, 2003 SARS: -15%.

*average 4.7 months without a recession vs. 22.2 months with a Recession – BNP.


Oil was a big drag on things today, but most of the hoopla was around the negative oil price that was specific to the May contract. Everyone loves a cool headline and the masses suddenly become crude oil experts so the chatter becomes beyond obnoxious.

Once that May contract gets out of the way tomorrow I think we’ll get a better read on oil.

There seems to be a $20 floor (maybe just psychological) on oil. If that breaks though, $15 probably comes next.

Also, even though oil was crushed, there still seems to be a disconnect with many oil “stocks”. Many look like they have bottomed. APA, SLB, ET, and others. Developing.

Interesting times.

One to watch

DPX – You can see in the daily chart that it broke out today on good volume. The downtrend line comes in around 23. Above that look for 25-26 if this momentum can continue.

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