Energy Investing - Romm - Naked shorting can proceed forever, no? - Energy Investing - InvestorVillage

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Msg  501792 of 552049  at  6/5/2023 9:34:37 AM  by


 In response to msg 501765 by  Lakeview21
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Re: Romm - Naked shorting can proceed forever, no?

"What if the shorts don't have to cover? What if they have almost infinite amounts of US government money to roll contracts over indefinitely? This epic battle may be bigger and longer than we initially think."
The roll contracts over strategy can be applied to equities around expiration dates.
But for oil and other commodities ALL contracts at expirations must settle in end user and producer hands. Those who remain short must deliver physical oil according to contracts, those who long must purchase physical oil.
In order to roll over, if you are short, you must cover front month before expiration and short the next month. 
It is easy in equities due to unlimited liquidity assuming liquid names.
But in oil at supply/demand deficit covering at expiration becomes very difficult due to deficit of sellers, simply put - no physical oil sellers for some barrels.
Other paper traders are not interested to sell or short for the reason of delivery.
What will you do? Right - raising prices until physical sellers emerge...who it will be if not OPEC+
Bottom line: rollover, price cap and other manipulation technics are workable in the supply/demand surplus adding SPR barrels, refinery maintenance and repair, lockdowns etc. But in the deficit environment it woks the other way...
ABS is creating deficit....especially during high demand season...possibly large deficit. 
Note: shorts may still be active until it worked...during the day and for a few days, but will hold positions very limited time. 

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Msg # Subject Author Recs Date Posted
501812 Romm - Thank you for sharing the mechanics of oil settlement, BUT coolreit 2 6/5/2023 10:23:48 AM

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