The Incoming Setup In Oil Is Just So Interesting
I think an oil price spike is coming. There are many fundamental variables that I will share in this article that point to that direction. But before I continue, there are important archived articles you need to read.
We will discuss two important themes that aren't getting enough attention in the oil market.
US oil production understatement pre-June 2023, which ultimately resulted in overstated growth assumptions in 2023, and why this is critical to oil market balances going forward.
We covered this topic in detail in many of our public US oil production reports. Here's the main one you must read to familiarize yourself with our thesis.
The OPEC+ production cut wasn't a real production cut (starting in June 2023), but it is finally starting to look like a real cut (one year later). The timing of the real production cut is coinciding with the incoming US presidential election, and we think the Saudis and Russians are going to spike oil prices to help Trump get elected.
You can read our thesis on why it wasn't a cut here. We followed with our latest reports on why OPEC+ appears to be pivoting towards a price spike (part 1 here, part 2 here).
Finally, as a side catalyst, US oil demand is surprising to the upside. While it is not for certain yet as the trend continues to develop, there is a meaningful counter-seasonal move we are seeing in gasoline demand and the big 3.
Gasoline + Distillate + Jet Fuel
Gasoline
With all that said, let's get started.
US oil production, the narrative will start to change...
What if I told you that US oil production was lower y-o-y by ~200k b/d?