Loading ...“Approaching Unheard Of Inventory Levels”: Exxon, Chevron Issue Apocalyptic Warning About What Happens Next To Oil
Just about two months ago, JPMorgan did the math on “How Long Before The World Hits Crude Oil Operational Minimum.” The punchline was that while the market can hold hundreds of millions of barrels, it would still become fragile once working stocks fell too low. Like blood pressure in the human body, the issue is circulation.
Long story short (and the long story can be found here), OECD commercial stocks could fall to operational stress levels by June, and then hit the global operational floor by September if the Strait of Hormuz remains closed, assuming demand destruction stabilized at 5.5 mbd (with oil prices paradoxically dropping since the last JPM article, demand destruction has actually slowed).
“The buffers and the shock absorbers are being steadily drawn down, and the ability for the market to absorb this imbalance is drastically diminished today versus where we started,” “Over the next few weeks, we’re likely to see those pressures flow through more directly to physical prices and there’s more upwards pressure that I would expect as we get into June and certainly into July.”
A good example of FGC’s hysterics………..
Exxon, Chevron execs: Oil prices just a few weeks from spiking
https://www.ogj.com/general-interest/economics-markets/news/55380509/exxon-and-chevron-execs-oil-prices-are-just-a-few-weeks-from-spiking
SO IF TRUE WHY IS OIL IN BACKWARDATION ? THE FURTHER OUT THE FUTURES GO THE LOWER THE PRICE
I’ve no doubt that you read the article and the detailed analysis/reasoning that these two companies provided for their expectations. Perhaps they are both totally wrong in their assumptions — or maybe the current price is an anomoly impacted by the US SPR drawdowns (several articles on this yesterday) but that shouldn’t hold into the future as the SPR is already severly drawn down — one would think the analysts employed by these companies would understand their own marketplace and it’s unlikely that they will stay employed if not — as for average citizen (ie: me) — we will all surely find out if they are correct or horribly wrong by 4Q/26.
There was also an eye-opening article yesterday on the impact of the closing of the Strait of Hormuz on INDIA. Unfortunately, I can find it again or remember where I saw it — but it was quite the expose. If anyone else runs across it, please post it. Very detailed economic analysis!
Also — I don’t know if this is relevant — some EW experts are suggesting that oil price should continue to decline into mid-3Q based on cycle theory and then spike higher into YE. I’ve never really understood how such theory could possibly tie into the impact of geopolitical events now underway. It’s a new field and I don’t yet understand all the rules but somehow it seems to work. Again — this probably isn’t relevant but it is interesting!