I follow analysts that say the market is pricing oil correctly and therefore there is plenty of oil to go around. Up until the beginning of the year, the market was fairly balanced at a little over 100 million bbl/day production and consuption, give or take. Oil prices were set by the marginal barrel. A million bbl/day up or down could have a real price impact. All of a sudden, we are supposed to believe that a 10 milllion bbl/day deficit for several weeks is meaningless? I dont think so.
Thanks Goetz, agree with you. Suddenly it doesn't matter? That seems awfully silly. Invert the logic and that means all this time (SPR aside) commodity producers who live on thin margins were wasting all their working capital storing so much crude/products they never really needed. Think commercial stocks are much lower than people think, and SPRs globally will continue to fall. Add Iranian leverage, high short interest, and you have a combustible cocktail there.
given china is just as clueless as trump regarding forward flows, can they continue this for years? any benefit to others from their strategy is happenstance.
what happens when iran decides that when the us navy leaves, aggression from Israel (via trump's help) is reason enuf to choke the strait?
btw, most gop no longer want to continue the war we already won 40 times. and many more think trump did a great job keeping america safe from an imminent (since 1990?) iran attack. the 14 point deal only bugged a few that thought obama's deal was worse.
Oil tourist here, so I could be getting this completely wrong, but is there a chance china is deliberately keeping the regional product market tight? The obvious arb should be: import marginal crude, run spare teapot/state refining capacity, export gasoline/diesel/jet into very high Asian cracks. That doesn’t require running down China’s existing crude inventories - it’s incremental crude in, products out. So if the trade is available and Beijing is still constraining exports, maybe that is the point?
Great article
I follow analysts that say the market is pricing oil correctly and therefore there is plenty of oil to go around. Up until the beginning of the year, the market was fairly balanced at a little over 100 million bbl/day production and consuption, give or take. Oil prices were set by the marginal barrel. A million bbl/day up or down could have a real price impact. All of a sudden, we are supposed to believe that a 10 milllion bbl/day deficit for several weeks is meaningless? I dont think so.
Nice article, Nelson.
Thanks Goetz, agree with you. Suddenly it doesn't matter? That seems awfully silly. Invert the logic and that means all this time (SPR aside) commodity producers who live on thin margins were wasting all their working capital storing so much crude/products they never really needed. Think commercial stocks are much lower than people think, and SPRs globally will continue to fall. Add Iranian leverage, high short interest, and you have a combustible cocktail there.
given china is just as clueless as trump regarding forward flows, can they continue this for years? any benefit to others from their strategy is happenstance.
what happens when iran decides that when the us navy leaves, aggression from Israel (via trump's help) is reason enuf to choke the strait?
btw, most gop no longer want to continue the war we already won 40 times. and many more think trump did a great job keeping america safe from an imminent (since 1990?) iran attack. the 14 point deal only bugged a few that thought obama's deal was worse.
Oil tourist here, so I could be getting this completely wrong, but is there a chance china is deliberately keeping the regional product market tight? The obvious arb should be: import marginal crude, run spare teapot/state refining capacity, export gasoline/diesel/jet into very high Asian cracks. That doesn’t require running down China’s existing crude inventories - it’s incremental crude in, products out. So if the trade is available and Beijing is still constraining exports, maybe that is the point?