Shorts on Oil Cos Rising: Oil Price Heading Down?

The short base for Neste Oil Corporation (NTOIF.PK) (as measured by Percent Shares Outstanding On Loan) has risen 1.43% over the past week and now stands at 4.3% which is a new 52 week high. Over the past month, the short base for the stock has risen 19.61%. Other oil companies are also seeing an increase in short base, even as the price of crude has rallied over the past three months, Exxon (XOM) is 0.4% up 4.4%, Marathon Oil Corp (MRO) is 0.6% up 43%, and Imperial Oil (IMO) 0.46% up 21%. Overall the short base in these companies is relatively low, but the fact they are increasing could point to a lack of confidence in the price of oil.

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Comments

[Mad Hedge F...:]

Like oil, like dollar The stage is now set for oil and the dollar. With the US 20 months into a recession, it’s just a matter of time before the Fed pull us back from zero interest rates. With the ECB late to the funeral, European Central Bank president, Jean-Claude Trichet, last week reaffirmed his commitment to keep their benchmark rate at 1% to restore the economy. There’s your trade. The next move in the euro/dollar spread will be in favor of the greenback, as the US will be the first out of recession. On top of that, you can pile a fading US stock market and a back off in commodity prices, which are also oil and dollar positive. Thus, you can expect the euro to trade down to the low $1.30s and crude to the fifties. Mind you, this is still a counter trend trade, which I generally try to avoid. I still think it will cost two Euros to buy a buck and $200 for a barrel of oil sometime in the foreseeable future. For those hardy few willing to scoop up some pennies in front of a steam roller, look at the 200% short euro ETF (DRR), which has backed off 34% from $63 to $42 since November.

Jul 05 11:51 AM

[TradingHelp...:]

First out of the recession compared to the Euro-zone but latest data indicates the UK economy is already enjoying positive output month-on-month. From a recent article:

UK economic news over the week continues to point to a modest return to growth in Q2 and Q3 relative to a very weak Q1. Most pleasing is the breadth of improving news covering a number of sectors including services, housing, manufacturing, equity markets and consumer confidence. Looking briefly at each issue:

1. The service sector grew in June for the 2nd successive month.
2. The residential property market has enjoyed positive price growth in three of the last four months.
3. The Purchasing Managers Index (PMI) a broad measure of UK wide business activity has risen above 50 (the line between contraction and growth).
4. Equity markets, although not building further on March to May’s gains, are staying firm with bargain hunting helping prices on weakness.
5. Even the depressed retail market is showing signs of recovery, with the Marks & Spencer Executive Chairman, Stuart Rose, suggesting an element of “stabilisation” has returned to the high street.

tradinghelpdesk.ning.c...

On Jul 05 11:51 AM Mad Hedge Fund Trader wrote:

> Like oil, like dollar The stage is now set for oil and the dollar.
> With the US 20 months into a recession, it’s just a matter of time
> before the Fed pull us back from zero interest rates. With the ECB
> late to the funeral, European Central Bank president, Jean-Claude
> Trichet, last week reaffirmed his commitment to keep their benchmark
> rate at 1% to restore the economy. There’s your trade. The next move
> in the euro/dollar spread will be in favor of the greenback, as the
> US will be the first out of recession. On top of that, you can pile
> a fading US stock market and a back off in commodity prices, which
> are also oil and dollar positive. Thus, you can expect the euro to
> trade down to the low $1.30s and crude to the fifties. Mind you,
> this is still a counter trend trade, which I generally try to avoid.
> I still think it will cost two Euros to buy a buck and $200 for a
> barrel of oil sometime in the foreseeable future. For those hardy
> few willing to scoop up some pennies in front of a steam roller,
> look at the 200% short euro ETF (seekingalpha.com/symbo...),
> which has backed off 34% from $63 to $42 since November.

Jul 05 12:48 PM

[T.Stamps:]

If oil drops and dollar rises that equals high unemployment
and bad times.

Jul 05 02:17 PM