Oil Prices should be higher per HFI Research

[dan_s]

Notes below are from HFI Research

If you are invested in energy, and you are not frustrated by what happened to oil prices in the last week, then you might be a saint. Truthfully, what had happened since last Thursday was so absurd that you can't even make it up.

On Thursday, oil prices sold off meaningfully (~$5/bbl) following a fake news leak that Israel and Hamas were about to sign a peace deal. An hour later, the report was reneged, and over the weekend, the peace deal, that was speculated on, isn't materializing.

As for oil? Well, it's still trading near $73/bbl. But what's funny about the crude sell-off is that refining margins are now roofing.

In addition, the physical crude market remains tight indicating that there's nothing amiss despite the sharp financial price sell-off.

In addition, global oil inventories, which were expected to build in Q1, have meaningfully declined to start the year. Despite our recent crude storage revision due to lower refinery throughput, we still expect US commercial crude storage to be sharply lower than last year by mid-February (53.6 million bbls below).

At some point, this won't last..
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MY TAKE: OECD Petroleum Inventories are way below 30 Days of Consumption and on decline during a period of the year when they should be building. Something has to give, because based on Days of Consumption, Brent should be over $90/bbl.