Market Overview

Oil Stock Short Sellers Up $6.5B In 2020

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Oil Stock Short Sellers Up $6.5B In 2020

So far, 2020 has been an extremely difficult year for investors. However, oil stock short sellers have been making a killing thanks to a pricing war between Saudi Arabia and Russia, a global travel shutdown due to COVID-19 and U.S. storage capacity approaching 100%.

The Numbers

S3 Partners analyst Ihor Dusaniwsky said Tuesday that short sellers have made a killing in virtually every oil stock they’ve targeted so far in 2020.

Short interest in the Oil & Gas Storage & Transportation group has averaged $13.76 billion so far this year, and Dusaniwsky said short sellers are currently sitting on a $6.58 billion mark-to-market year-to-date profit. In fact, 93.5% of shorted stocks in the group have been profitable for short sellers this year.

But some stocks have certainly been more profitable than others. Here are the five most profitable oil stocks for short sellers this year:

  • Energy Transfer LP Unit (NYSE: ET), +$695.5 millon.
  • Enbridge Inc (NYSE: ENB), +$694.2 million.
  • ONEOK, Inc. (NYSE: OKE), +$520.9 million.
  • Enterprise Products Partners L.P. (NYSE: EPD), +$465.5 million.
  • Pembina Pipeline Corp (NYSE: PBA), +$445.6 million.

Short Sellers Leaning In

Despite huge profits, short sellers are maintaining huge positions in oil stocks betting that the worst is yet to come. Here are the five most heavily shorted oil stocks as of this week, sorted by total short interest:

  • Enbridge, $1.89 billion.
  • TC PIPELINES LP (NYSE: TRP), $1.46 billion.
  • Energy Transfer, $589.6 million.
  • Enterprise Products, $496 million.
  • Williams Companies Inc (NYSE: WMB), $485.3 million.

Looking ahead, Dusaniwsky said short sellers have actually been adding to their positions over the past week as oil prices crashed below $0 for the first time in history.

“Further oil price volatility in both the spot and futures market will create more opportunities in the sector,” Dusaniwsky said.

Benzinga’s Take

Market dynamics drove WTI futures prices as low as negative $40 per barrel ahead of the May contract expiration this week. It’s unlikely the U.S. storage situation will improve over the next month given the COVID-19 shutdowns, so oil traders should be bracing for similar trading action as the May 20 WTI futures expiration date approaches.

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Related Links:

'An Outlier Event': Experts React To Oil Prices Dropping Below $0

12 Short Squeeze Candidates To Watch

Latest Ratings for ET

DateFirmActionFromTo
Jun 2020Piper SandlerMaintainsNeutral
Jun 2020BMO CapitalUpgradesMarket PerformOutperform
Jun 2020Morgan StanleyMaintainsEqual-Weight

View More Analyst Ratings for ET
View the Latest Analyst Ratings

 

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