Bill Novac

Business Owner & Investor. Never Investment Advice

[Bill Novac @BillNovac]

@chriswmayer In Alice in Wonderland one had to run fast in order to stand still. In the stock market, the evidence suggests, one who buys right must stand still in order to run fast.

- Thomas W. Phelps

[Bill Novac @BillNovac]

@TedPillows Coca Cola and Clorox

[John @market_sleuth]

One of the wisest traders I ever knew shared this 26 years ago: “When markets fall on good news is when your antenna better go up.” 💯

[Bill Novac @BillNovac]

@Jkylebass Michael O'Leary also stated the airline has secured long-term fuel hedging contracts. The contracts provide some price cushioning, but they do not guarantee physical availability. The contract offers no protection when there is no product available to purchase!

[Bill Novac @BillNovac]

@Jkylebass The Ryanair CEO, Michael O'Leary, has stated that he is not concerned about jet fuel supplies. Of course he has to publicly say that, otherwise consumer confidence will deteriorate and ticket sales will plummet.

[Jeffrey Currie 🆔++ @CommodMkt]

Thanks @AlanEyre1. From Washington to Beijing, the response has been the same: reassure markets with words and hundreds of millions of barrels from strategic reserves. The gamble is that governments can bridge the gap until supply returns and prices fall.

The problem is that a falling oil price is not evidence of rebalancing. It is evidence that we are consuming the buffer and mistaking it for abundance.

There is a difference between a market clearing and a market solving. What we are witnessing is destocking: the drawdown of finite inventories accumulated over decades. You can only do that once.

The article notes that “inventories and government reserves run low”, but that understates the issue. Strategic reserves buy time, not supply. When tank bottoms arrive (likely later this summer), there is no price signal that conjures a new barrel into existence.

The “stream finds its way around the log” metaphor is seductive but flawed. It assumes the total volume of water is unchanged and that we don’t mind being thirsty. The Strait’s closure has not simply redirected supply; it has removed supply while the world burns through stored reserves to cover the gap.

When Jimmy Carter asked Americans to turn down the thermostat, he was punished for acknowledging physical constraints. His successors learned to promise abundance instead. That lesson is being applied again today, and the consequences will be proportionally larger for the delay.

You cannot print molecules. And you cannot destock your way to energy security.

[Bill Novac @BillNovac]

@SJosephBurns Revenge of the old economy

[Bill Novac @BillNovac]

@RobToThheOz In most cases, investors are using money on which they have already paid income tax. Taxing the returns generated from those savings at the same rate basically amounts to taxing the same capital twice. This reduces incentive to save and invest.

[Bill Novac @BillNovac]

@RichardYabsley Shouldn't have been in that situation to begin with. Thanks ALP.

[Bill Novac @BillNovac]

@rajasark WTI crude down 4%, but many oil companies are flat or even green. This tells you something..

[William Green @WilliamGreen72]

"We are definitely at a moment where there’s more greed than there is fear.” —David Solomon, CEO of Goldman Sachs, speaking at the Economic Club of New York

[Bill Novac @BillNovac]

@WhaleFUD 100%

[Bill Novac @BillNovac]

@DaveTaylorNews Woeful

[Bill Novac @BillNovac]

@Tejanobrown @Sean_PBurke It'll be $160 by 1 July.

[Bill Novac @BillNovac]

@Tejanobrown Hold on to your hat.

[Bill Novac @BillNovac]

@JohnFMauldin Yep it's different, and nothing like the dot com era. But strikingly like the railway mania boom of the 1800s, which was painfully worse.

[Mark @Mark4XX]

ART BERMAN'S BASE CASE: OIL SPIKES TO $160 THEN STABILIZES PERMANENTLY AT $110

Petroleum geologist Art Berman built a probability model for the current oil crisis that rejects political theater and quick deals. He treats every forecast as a distribution of outcomes because the situation has no historical precedent. His base case carries the highest weight and it points to a permanent break from the energy world of 2025.

ART BERMAN'S PROBABILITY MODEL

➡️ He maps best case, base case, and worst case scenarios instead of offering single predictions because no one can know the exact path through unprecedented disruption.
➡️ The best case assumes a perfect deal by early June yet still delivers only 50 percent of normal flows by the end of 2026 due to demining, insurance delays, and weeks of tanker queuing.
➡️ Even that optimistic path leaves three quarters of 2026 operating under severely reduced energy supplies with catastrophic economic consequences.

THE BASE CASE THAT DRIVES EVERYTHING

➡️ Iran has no incentive to ever fully reopen the Strait of Hormuz and will likely maintain control indefinitely.
➡️ Restarting shut-in production faces massive lags from damaged reservoirs, lost investment confidence, and infrastructure that may never fully recover.
➡️ The global system faces irreversible change with no realistic path back to 2025 economic conditions.

THE OIL PRICE PROJECTION

➡️ In the realistic base case oil prices will almost certainly spike into the 150 to 160 dollar per barrel range by summer.
➡️ Extreme prices trigger demand destruction that pulls Brent back down to around 100 to 105 dollars.
➡️ Prices then slowly rise and stabilize in the 105 to 115 dollar per barrel range through 2027 and likely beyond.

WHY THIS SHOCK IS 60 TO 99 TIMES FASTER

➡️ The rate of supply loss is 60 to 99 times faster than the greatest previous oil shocks in recorded history.
➡️ No rapid solutions like vaccines or policy reversals exist this time to cushion the blow.
➡️ Inventories have masked the crisis so far but those savings are running out fast and the full impact is coming.

THE BOTTOM LINE

Art Berman's model shows the world just suffered its greatest energy blunder in modern history by jeopardizing the entire global economy with one move.

Oil will spike hard then settle into a permanently higher range because the old supply system is broken beyond repair.

#OilPrices #ArtBerman #EnergyCrisis #OilShock #HormuzBlockade #DemandDestruction #NewOilNormal
HT: YouTube @PalisadesRadio @aeberman12

[Bill Novac @BillNovac]

@expomick Yeah nah.

[Bill Novac @BillNovac]

@JEChalmers Absolutely false.

[Bill Novac @BillNovac]

@NickNemo17 The perfect hedge given the circumstances

[Brian Sozzi @BrianSozzi]

Deutsche Bank on the huge stock market run-up:

"Since WWII, the only other time the S&P 500 has risen this rapidly (except after a recession) was months before a huge market crash."