Oil itself may or may not take a price hit, depending on whether producers decide to stop production or sell at lower prices. But producers's stock prices will fall regardless, so the best way to play this on the short side might be to short oil and gas stocks. On the long side, there's an opportunity in shippers. I didn't realize this was happening, but Saudi Arabia has already driven tanker booking costs to record highs with its increase of oil output. And now tanker booking fees may go even higher as oil producers all over the world look to ship their excess crude to available storage locations. The danger with playing it this way, however, is that tanker demand will eventually fall as storage capacity runs out and producers cut production.
- PADD 2: ~50% utilization, operational capacity ~100mmbbl
- PADD 3: ~55% utilization, operational capacity ~340mmbbl