Short sellers in the Oil & Gas Storage & Transportation sector hit “oil, black gold, Texas tea” in virtually every stock they shorted in the sector. Short interest in the sector averaged $13.76 billion in 2020, and shorts are up +$6.58 billion in mark-to-market profits, +48%. Only 6.5% of the shorted stocks lost money for short sellers in 2020, generating a miniscule -$2.07 million in 2020 mark-to-market losses versus +$6.58 billion in mark-to-market profits for the winners.
Enbridge (ENB CN) and TC Energy Corp (TPR CN) continues to be the largest shorts in the sector:
Short sellers were actively covering some of their exposure prior to last week as they began to realize some of their profits.
Over the last week we saw continued short selling in WMB and OKE and continued short selling in EPD and ENB while TRP, LNG, IPL and KMI short covering replaced by new short selling.
With oil production building and storage facilities closing in on full capacity, the Oil & Gas Storage & Transportation Sector is a potential epicenter of volatility over the short term. Short sellers are now in the unenviable position of trying to protect and\or realize 2020 mark-to-market profits versus deploying additional resources to a sector that may have room to run. In late March\early May shorts began reducing their exposure, but over the last week they reversed course and started short selling across a broad range of stocks in the sector. Further oil price volatility in the both the spot and futures market will create more opportunities in the sector.
By using our Black App and Blacklight SaaS platform to see weekly moves in shares shorted, investors can see trends on the short side starting and ending. This provides traders\investors with new trading ideas as well as helping them pick entry and exit points for trading activity.
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Managing Director Predictive Analytics, S3 Partners, LLC
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