Energy Prospectus

From yesterday Haymaker. Mike is Mike Rothman with Cornerstone:

Now, with what feels like the entire world negative on oil, Mike is, true to form, defending his beliefs with hard facts. When it comes to rebutting the growing bearish contingent, he recently pulled no punches per the list he sent out this week. To wit:

SEVEN BIG LIES:

1.  US crude output is surging

2.  Global oil demand is weak

3.  OPEC is cheating

4.  Oil inventories are high

5.  Saudis want to flood the market with oil

6.  Oil prices are overvalued

7.  The 2024 oil balances will loosen dramatically

The in-your-face title takes both chutzpah and a high degree of confidence in your methodolgy. If he’s wrong about his disinformation contention, you can bet he’s going to take an enormous amount of heat. From most of my research on the oil market, however, including from other sources, the Haymaker is in Mike’s corner.

Thanks Chuck!

Speaking to a few of the lies, the average price of WTI from Jan 2011 to Sep 2014 was $96. In today's dollars that is $128. That means today's WTI of $74 is selling at a 42% discount to a nearly 4 year period in the past. I don't call that expensive by any stretch. If someone wants to use the panic selling price dip during April 2020, okay, today is a lot higher, but there would soon be no gas at any stations. All wells would get shut in.

As far as OPEC is concerned, the only cheating is perhaps on the size of their petroleum reserves.

The Saudis sovereign wealth fund has not recovered from their previous attempts to flood the market in 2016 and 2020. The most recent attempt lasted perhaps a month before someone's head got lopped off.

The only thing I see going on is the fact that the ratio of paper to physical traders is so high the former can drag the market anywhere they please.

Kevin

Each week the EIA reports that crude oil, gasoline and distillate inventories are below the 5-year average in the U.S. and we consume more of each of them than we did five years ago.
Demand for oil-based products is "seasonal". Six months from today, demand for oil-based products will be over 2 million bpd higher than it is now.