Monthly Archives: June 2020

Still Floating – An Update on Oil Markets

Seven weeks ago, I wrote a post about the contango in oil markets. To summarize, the world was falling apart and there was nowhere to put all the extra supply of crude oil and refined crude products, causing oil to briefly trade negative and oil tanker rates to skyrocket. As a result, tanker companies presented an extremely attractive investment opportunity.

What We Got Wrong

The length and severity of the oil price contango. The price of oil has rebounded significantly since its collapse into negative territory in April, leading to a flattening of the crude oil forward curve and a reduction in the contango opportunity:

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Our April Commentary

April was a considerably better month than March.

Massive global fiscal and monetary responses fueled a strong market rebound in April despite macroeconomic data that showed the huge economic cost of the COVID-19 shutdowns.

Once again, we were reminded that markets look to the future. However, in March, with markets down 35% from their peak in February, the future looked very bleak indeed. We saw the exact opposite when markets rallied on the day when the worst unemployment numbers in US history were released. Crazy.

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