(WCTW) At Some Point, This Won't Last
If you are invested in energy, and you are not frustrated by what happened to oil prices in the last week, then you might be a saint. Truthfully, what had happened since last Thursday was so absurd that you can't even make it up.
On Thursday, oil prices sold off meaningfully (~$5/bbl) following a fake news leak that Israel and Hamas were about to sign a peace deal. An hour later, the report was reneged, and over the weekend, the peace deal, that was speculated on, isn't materializing.
As for oil? Well, it's still trading near $73/bbl. But what's funny about the crude sell-off is that refining margins are now roofing.
Source: Barchart.com (Please divide it by 3 to arrive at crack spread)
In addition, the physical crude market remains tight indicating that there's nothing amiss despite the sharp financial price sell-off.
Source: Barchart.com
In addition, global oil inventories, which were expected to build in Q1, have meaningfully declined to start the year. Despite our recent crude storage revision due to lower refinery throughput, we still expect US commercial crude storage to be sharply lower than last year by mid-February (53.6 million bbls below).