Here's a thought from Keith Kohl

[dan_s]

Dare I suggest it (the Financial Times article) had anything to do with Wall Street hedge funds having a record short position on crude oil?

Oil Outlook 2024: Bearish Or Bullish?

Look, we can point to the fact that we’re inching closer to World War III on a daily basis, and that’s not an exaggeration, either.

More to the point, we’re inching closer to it at a time when our Strategic Reserves are dangerously low. And before the peanut gallery starts shouting that we’re filling it up — we’re not.

A million barrels here and a million barrels there won’t do the trick when it's still around half empty. If anything, buying barrels hand over fist right now while prices are below $70 per barrel would take more barrels off the market.

Even a bullish weekly oil report from the EIA yesterday, which showed 4.5 million barrel draw on crude stockpiles, didn’t even budge the dial. In fact, not only are U.S. stocks below the 5-year average, global inventories are as tight as you’ll get — 4% below the 10-year average.

Ahh… then it MUST be China, right?

The narrative that China demand is on the verge of collapse has been a media narrative for a few years at this point. What we do know is that China’s GDP grew 5% during the first half of 2024

Even if Goldman Sachs and Citigroup forecast 4.7% growth in 2024, I can’t help but think… just 4.7%?

But let’s also never mind the fact that India’s soon to become the leader in global oil demand growth, with demand projected to hit 6.6 million barrels per day by 2030.

I’ve told you before that there’s a disconnect from reality, and it won’t take much to push the momentum bullish.

And I think it’s going to happen sooner than you think.

Now don’t get me wrong, there is such a thing as too bullish. You have to take the IEA’s egregiously absurd claims with a grain of salt almost as much as the other side.

In OPEC’s latest World Oil Outlook 2050, there’s plenty to roll your eyes at. According to OPEC’s projections, global demand will top 120 million barrels per day by 2050, which I’ll note would be driven by non-OECD countries.

That’s also not to mention the fact that OPEC believes more than $17.4 trillion needs to be invested in the oil sector to meet demand, or about $640 billion per year.

If oil prices are going to break the backs of those record short positions, it’ll come this quarter as the global supply falls into a deficit.

By then, it’ll be too late.

Until next time,
Keith Kohl