BTW, I'd recommend following this guy @HE4DEYES if you follow me. He has consistently followed me for months and probably made a nice chuck. Whatever he's doing, he's sifting through the s*it on X and figuring out where the signal is.
US crude just hit $73.
๐Down 39% from the $119 March peak.
The market has officially priced the war as over.
Let me tell you what $73 oil is actually pricing in:
โ Hormuz fully reopened and flows normalized
โ Qatar LNG back at 100% capacity
โ SPR being replenished
โ Tankers freely transiting the Gulf
โ Inflation falling, demand recovering
Now let me tell you what's actually happening:
โ PetroChina couldn't find a tanker to load Iraqi crude this week
โ Freight rates are still 3x pre-war levels
โ Hormuz traffic: 29 ships in 5 days, 62% running dark
โ Qatar capacity: 17% damaged for 3-5 years
โ US SPR: lowest since 1983, still drawing
โ Jeff Currie: normalization "not until year-end at the earliest"
The financial market is pricing a political headline.
The physical market is pricing a broken supply chain.
$73 oil with empty SPRs, crippled Hormuz traffic, and damaged Qatari infrastructure is not a relief rally.
It's the biggest disconnect between financial and physical markets I've seen in this crisis.
And disconnects this large don't close slowly.
Full analysis in my article.
Link in the comments ๐
Image Source: Bull Theory
US commercial crude oil inventories are reaching critical levels:
Crude inventories at Cushing, Oklahoma, the largest commercial storage hub in the US and the pricing point for WTI Crude, dropped -1.6 million barrels last week, to 20 million barrels, the lowest since 2014.
This marks the 8th consecutive weekly decline, totaling -8.3 million barrels.
As a result, Cushing now holds less than 2 days worth of US crude production, approaching the minimum level at which the facility can continue pumping oil efficiently.
Once inventories fall below ~20 million barrels, extracting crude becomes technically difficult and more costly, while oil quality can deteriorate due to water and sediment.
Meanwhile, the Strategic Petroleum Reserve is down to ~340 million barrels, the lowest since 1983, after 172 million barrels were released to contain war-driven fuel price increases.
US oil inventories down to levels rarely seen in modern energy markets.
Re: the US-Iran MOU and the all-important Hormuz clause (5), critically important element missing from copy signed yesterday (right) vs the draft seen by Bloomberg on Tuesday (left)
"Pre-war volume" pretty important parameter!
Tehran didn't actually commit to any traffic level
@DBatDad@chrismartenson Ypu forgot to mention that money will be lost in the process, because anybody that runs a profitable business doesnโt grow enough ๐.
March 9: "We're now totally independent of the Middle East. We don't need their oil."
April 1: "It doesn't really affect us. We have so much oil. We have tremendous oil and gas, much more than we need."
June 17: If I didn't agree to the MOU, we "would run out of reserves at about 4 weeks...we would really run out, and there'll be a time when you wouldn't be able to get it."