Energy Prospectus

From Morgan Stanley Research 4/5/2018:

The "GLUT" is long gone: "Global oil inventories drew overall in the week ending 30th March, with a counter-seasonal draw in crude stocks driven by the Atlantic Basin, and a larger-than-average draw in product stocks. Distillate and fuel oil stocks continue to look low versus their 5Y averages."

Despite higher than normal imports, U.S. crude oil inventories declined. U.S. gasoline inventories are higher than the 5-year average, but falling fast and below 26 days of supply.

Morgan Stanley's "WAG" of global inventories is based on oil inventory data that are available on a weekly basis for the US from EIA, Japan from PAJ, Antwerp-Rotterdam-Amsterdam (ARA)
region from Genscape and PJK, and Singapore from IE. Most interesting to me is that draws from global inventories are counter-seasonal. Inventories of crude oil and refined products need to build in February and March to meet the spike in demand that comes in Q2 and Q3.

Do you have any explanation for the downdraft in the energy sector today? Just when you think things are getting better it falls off the cliff.

Wall Street and the speculators that determine the daily moves in the price of oil, don't know how to evaluate the impact of this "Trade War" between Trump and China. My guess is that the FEAR is much worse than reality when it comes to demand for oil.

U.S. and global inventories of crude oil and refined products are back to the 5-year average. They are way below the 5-year average on days of supply. Since we use a lot more oil based liquid fuels than we did five years ago, days of supply is a better indication of how tight the market for oil has become.

These almost daily 300 to 500 point swings in the DOW are freaking out the fund managers. It is heaven for the Day Traders.

Just remember that all commodity prices are eventually determined by simple supply/demand. Demand for oil based fuels is going to spike in Q2. EIA should be reporting weekly declines in crude oil inventory for the next six months, although there may be a week or two of small builds just because of the timing of imports. With the oil market this tight, it will only take one "unplanned supply outage" to cause WTI to break through resistance at $67.