Rick Rule: The world has systematically underinvested in oil.
- The oil industry is underinvesting in sustaining capital by >$1B/day
- This underinvestment will reduce future oil production
Oil is a cyclical industry, and a sustained period of underinvestment will lead to lower production in the future... we are still in the underinvestment period despite high prices.
In addition to the massive underinvestment:
- The industry has to fix oil infrastructure impacted by the Iran war
- The world will have to refill their SPRs
- Countries will expand their SPRs
Hormuz or no Hormuz, the supply/demand picture for oil is favorable over the long term.
The price of #Silver will most likely spike above $200 USD per troy ounce when #Gold breaks out and FOMO kicks in.
However, #Silver above $200 is unsustainable. Industrial users will have to find alternatives at those levels.
@GavMcCracken Also, from a practical standpoint, Bessent can’t short and deliver much more than about 42,000 contracts per month to physical buyers. Each contract represents 1,000 barrels, and the SPR’s maximum release rate is only about 1.5 million barrels per day.
@GavMcCracken Excellent point tonight about the growing share of physical buyers in futures as trading volume dries up. I’d add that this isn’t just a volume effect: as futures become increasingly suppressed relative to the physical market, additional (arbitrage) buyers are likely to step in.
Why has POTUS seemed particularly erratic and unstable this week? It's because he knows the 2026 Lehman moment is coming, and the headline will read a lot like this: ENBRIDGE DECLARES FORCE MAJEURE AT CUSHING STORAGE HUB. God speed to you all.
@CRUDEOIL231@MercJunkie Going to laugh if there’s no major flush. Despite the ‘certainty’ of the deal Friday, we only moved down a few percent. It’s been two months strait of flushing longs.
Fully agree and I don't think it will age poorly
It's absurd that oil didn't even make nominal all time highs in the greatest supply shock in history
We've become incredible can kickers
@GavMcCracken Pretty wild. We’re already starting to see mining curtailments. The residence time for sulfuric acid from production plant to mine site is only 2-4 weeks depending on the location. There isn’t ‘extra’.