Supply, Demand & Pricing | Still Bullish Oil, Cautious Gas

Yeah, I think what I read from some of the notes that you shared, you talked about sort of three basic truths that you use for forecasting the markets.

And so one, you just mentioned that it's stocks, not flows.

And so there's a lot of noise with the flows, with where it moves, but ultimately it comes down to monitoring and keeping track of stocks.

demand must equal supply.

Yeah, that one seems obvious.

I

don't know how you can be bearish if you look at overall from a high level.

I mean, the last time we saw this, we'll put the refining situation aside for the moment, 8 million barrels a day supply is still somewhat offline, offline, online, who knows? And demand is down by three, right? So That means that five has been offset with SPR flows, commercial stock pulls, everything.

But if your inventory of crude and product is dwindling, how else are you going to balance this market other than higher prices and reduced demand? And it's just that simple.

And I think sometimes that message gets convoluted on top of the refining situation.

So along the assembly line, it's funny because we started off with a crude problem.

Then it became a product problem with refineries, right? And now we have a transport problem because of the surging costs of VLCCs, where it's 10x in the span of two months and it costs $30 a barrel, depending on your shipping, right? So all of these things are adding so much noise, but again, sorry to go overboard, but supply must equal demand and the assembly line is just getting a lot more convoluted and how you get to that.

And then I think the third one was physical markets.

Yes,

over a matter more than financial.

Financial markets.

Yes.

And that was a hot topic because there's been so much, I guess, aversion to participating in the financial markets because maybe I might get run over by a tweet or maybe it's hard to play and hold this risk when it's so volatile.

I have trader friends that say, why would I hold on to a bullish position when it seems like it always goes against me within the first hour or so, right? It's a very high risk reward type of situation.

And on the physical side, well, back to the supply equals demand.

If you look at physical prices for Brent to buy actual physical barrel, there's a significant premium and look at the product prices, right? Those are all screaming, we have an energy crisis.

And the one thing I will say on the road, the one word that kept on coming up was complacency.

The market is somewhat complacent.

Just throwing hands out.

Yeah.