By: Wilson
Even a blind squirrel finds a nut. That’s how I really feel about my memos over the past 2 weeks.
October 14 - I just don’t see how this ends well at all
Since April, I have been baffled by the broader market’s move higher. Then June came along; Trump timed the MOU signing with the largest IPO in history, SpaceX, and it all made sense. It was all just a pump job.
And for a short while, everyone thought the conflict was over. Crude oil is well supplied, and we have a refinery shortage. Now it’s a tanker shortage. Meanwhile, the market fixates on whatever is rallying in front of them and global oil buffers are running out.
First, we saw product storage run out. China, which relies heavily on Middle East crude imports, banned product exports at the start of the war, bought the world exactly 3 months by draining crude oil inventories, and ran out of domestic product inventory. During this period, market commentators were so eager to point to demand destruction of 4 to 5 million b/d.
Well, where the hell are they now?
Yeah, that’s right. It wasn’t demand destruction; it was bad data. Those pesky satellite onshore crude oil inventory data providers don’t really know what’s going on in China. Even my subscribers thought I was crazy when I had intel that China was set to resume crude buying back in June. But it is what it is; I’m not here to argue about historical facts; I’m here to make money.
Perhaps all of my ranting isn’t doing anyone any favors. I mean, seriously, who the hell reads this stuff anyway?
Well, too bad, I’m going to rant anyways, because I just can’t believe we had to go through 6 months of this stupid shit only to be back in the same spot we were in April. We are literally looking at operational minimums in global crude oil storage ex-China, and the broader market is still spitting distance from all-time highs. How the hell does any of this make any sense?
Yes, I sound like I’m crazy, but I’m not. The world has never seen a supply outage this large or this long. Never. And the last time it was even remotely close to this (1973-1974), the S&P 500 got destroyed.
Looking at history, the OPEC oil embargo only lasted until March 1974. That’s 6 months, and the deficit gradually increased. This time around? We are in month 8 and likely to get worse.
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