(WCTW) Oil Fundamentals Support Current Prices But Beware Of Hysteria

If all you have is a hammer, everything looks like a nail.

Not long ago, sell-side firms were jumping over one another trying to downgrade their oil price forecasts. Bloomberg, FT, Reuters, and WSJ all jumped on the "OPEC+ is going into a market share war" story, and hedge funds went record short. But like I wrote in the WCTW titled, "Extremes, Always." The oil market almost always reaches the extreme. In this case, the extreme was so obvious, it prompted me to contemplate just how long oil futures I wanted to be.

But fast forwarding to today and +$8/bbl in WTI later, it's not so extreme anymore. The investment community is finally realizing that while 1) 2025 oil balances may seem weak on paper and 2) OPEC+ does have uncertainty in H1 2025, the reality is not so bad.