Are Oil Market Fundamentals Healthy Enough To Support Prices Here? Yes, They Are
Geopolitics today is gaining all the attention. For energy investors, the better question is, "Are oil market fundamentals healthy enough to support prices today?"
I think the answer is yes, and while some commentators will point to 2025 oil market balances as the key assumption as to why oil prices should be lower, I will argue the other side.
Oil Market Balance - Where are we today?
For oil bears, the argument for even lower oil prices goes something like this.
Global oil inventory draws are negligible relative to the size of the OPEC+ production cuts.
OPEC+ crude exports remain low, and despite that, global oil inventories are meaningfully accelerating downward.
China remains down and the latest stimulus efforts won't be enough to turn the ship around.
I think while all of these factors are true (to an extent), that's more backward-looking than forward-looking. Why? Because it assumes that China's oil demand will remain weak despite the material change in tone from the Chinese government.