More Noise Than Ever
Oil has been stuck in limbo land, for what seems forever, and this is creating more noise than ever. EIA's weekly oil storage report didn't do the market any favor showing large gasoline and distillate builds, while crude showed a minor build versus our expectation of -4 million bbls.
As we wrote in a tweet following the report, EIA counted imports early and delayed exports. Our modified adjustment showed a massive jump to ~1 million b/d, the highest it's been at since the "transfers to crude oil supply" was introduced in early November.
This massive jump will reverse in the following weeks. We estimate the delta to be ~7 million bbls, so EIA's figure will surprise versus our estimate by that amount.
But the EIA report is not the real reason why there's so much noise. For starters, CFTC positioning has shown that speculators are wildly exiting and re-entering every week. The financial fund flows are not only impacting sentiment but starting to impact the investor psyche.
Bearish Oil Bets Surge
Record Nasdaq Longs
For many energy investors watching the market daily, watching the Nasdaq tick ever higher with the likes of Nvidia hitting new all-time highs, and simultaneously watching energy names trading at 2.5x EV/DACF trade lower is akin to committing financial Seppuku.
The thoughts of, "what would have been if I had only avoided energy", must be pervasive, and while this is entirely useless to figuring out where we are going forward, this too is creating more noise than ever.