Commodity Research Group (CRG) is an independent research consultancy specializing in base and precious metals, as well energy products. The Group provides research and general price analysis for these markets, along with advice to companies seeking to construct hedging strategies.
In this podcast, Andrew Lebow and Jim Colburn discuss the latest economic trends and supply and demand factors affecting oil prices.
About the Experts
Andrew Lebow has been involved in the energy derivative area since 1980. He began his career with Shearson Lehman Brothers where he worked in the initial formulation and marketing of the NYMEX WTI crude contract in 1983 as well as the NYMEX gasoline contract in 1985.
Mr. Lebow has appeared before the State Government of Alaska as well as the State Department of Defense to discuss hedging techniques. Mr. Lebow is also well known as a market analyst and is quoted frequently in the financial press. He has appeared on television on CNBC, NBC, CNN, CBS, and PBS. Mr. Lebow holds a BA from Lafayette College and an MBA from the Kellogg School of Management at Northwestern University.
Jim Colburn is a futures and options professional with 30 years of wide ranging experience in commodity markets. For much of his career, at Man Financial (1989-2011) and Jefferies LLC (2012-2013), Mr. Colburn worked with major integrated oil companies, hedge funds, pension funds and other entities to develop market hedging and trading strategies.
He has conducted trading, hedging and risk management workshops in energy markets worldwide.
Mr. Colburn is a published author on options trading, hedging, market making and risk management. In 1986, while at the New York Mercantile Exchange, Mr. Colburn helped develop new markets in energy option contracts by educating the oil industry, banks, floor traders and brokers, worldwide.
Speaker 1: (00:06)
Good morning. This is Jim Colburn of commodity research group and I’m here with Andy Lebow also of commodity research group and we’re here to talk about energy markets along with Ed Meir. Andy and I founded commodity research group which consults on various aspects of commodity markets. Check out our website, commodity research group.com where we post our monthly commodity reports, our daily metals reports, our blog and our podcast. We’d like to thank our friend Doug Stetzer of EKT interactive oil and gas training for hosting this podcast. You can check out his daily newsletter, podcast and learning firstname.lastname@example.org and for a disclaimer. This podcast should be construed as market commentary, merely observing economic, political, and market conditions, and is not intended to refer to any particular trades or trading systems. You’re not responsible for any redistribution or trading decisions taken by anyone, not intended to. Elicit information is not guaranteed to be accurate. We try. This is not a an offer to buy or sell any derivative. Today is Tuesday,
Speaker 2: (01:24)
Speaker 1: (01:29)
morning. Andy. Good morning, Jim, how are you today? Good. It’s been a month since our last podcast and, uh, a lot has happened. I think we want to say we anticipated, but we were concerned last month that the future’s speculators had gotten a little ahead of themselves. And, um, you know, we, although we were looking at a trading range market, um, we thought there could be some weakness and you, um, do you want to start at that point and talk about what’s happened and, um,
Speaker 3: (02:04)
uh, uh, why don’t we start there? Okay. March was, it was an interesting month. Uh, and as you pointed out, Jim, we really didn’t see, um, the broad weakness in both, uh, Wti and Brent during, during March, but we were worried that, um, the overhang of length as reported by the CFTC, uh, could be a real bearish factor in the market as, as some of that length gets get got liquidated and a, that’s exactly what happened during the month. Uh, we saw a broad liquidation and both WTI and Brent and it took both of them out of their, uh, out of their trading ranges, um, with WTI getting as low as $47 Wti. Now is, I’m almost back to normal in terms of the commitment of traders, you know, down to a three, three to one, four to one relative to the nine to 10 to one length to uh, to shorts.
Speaker 3: (03:10)
So, um, uh, that liquidation, um, took place, took the market down to $47 for the market, held it, held it held nicely, and has since come back to that back to over $50. And, uh, I think we’ve got a really good solid seasonal rally on their way and they do think that the market has a chance to, uh, to move higher from these, from these levels. Uh, the other real bearish force that we were worried about and have been worried about, the market’s been worried about for, um, uh, months, years now is the overhang in crude stocks. And that, that quite hasn’t gone. That has not gone away, particularly in Wti. Uh, we’re still long a relative to four year averages and long relative to last year after stocks built to a, to a record level. But at least now it looks as though on Wti, uh, we’ll be going in the right direction and I think we’re going to see some, uh, some nice draws coming up here over the next few weeks.
Speaker 1: (04:22)
Andy Up, just a quick question on when you look at the Wti stock levels in the u s it looks like seasonally they still have a couple more weeks to build. Is that, is that, I mean obviously nothing works the same year to year, but is it possible that we’ll see a couple more weeks of builds in Wti even though after those two weeks we see sharp
Speaker 3: (04:47)
draws? Yeah, I mean we may see a, we may see another week or two of bills, but I think they’re going to be modest. Uh, this week I’m, I’m looking for a draw. We’ll see. We’ll see what happens tomorrow. The key on Wti is going to be on the net imports. Uh, we took in a lot of barrels from, uh, on long haul crude here over the last, you know, eight to 10 weeks, uh, that, that was from the OPEC over production in November and December. You know, those barrels are hitting hit us in January, February and into march. That’s going to stop, uh, you know, our, our import levels are going to go, uh, are going to go down significantly here of during April and may owing to a OPEC production compliance, which we’ll talk about, uh, in, in a moment. The other thing is Wti got real cheap to Brent Wti, got to minus three to Brent, which makes it very attractive for, uh, for exports.
Speaker 3: (05:51)
And um, the key thing that’s happening is that Asian refiners are now able to, it’s cheap enough, light crude us crew. It’s a cheap enough where there’s good demand for uh, US crudes and, and that, that could be a game changer as Asian demand picks up. Uh, the, so net imports a are going to be a significantly lower here, um, during the, during the next few, few weeks and on into the a, on, into the summer and there’ll be, so it doesn’t really matter what us production numbers are going to be because the net imports will be low enough to counterbalance any growth we see in a, in production. And that means one thing, we’re going to be drawing stocks.
Speaker 1: (06:43)
I noticed the IEA last month had Kutu stock draws of 1.9 million a day, which is a huge number. Um, do you kind of agree with that? Are you, are you that a bullish on the draw down as they are
Speaker 3: (07:01)
Kutu I think for, for uh, Q three, uh, what I like to do is average average the uh, IEA OPEC and the Eia numbers and that usually quick gives you a good number. Um, that’s pretty, I’ve found over time that by averaging the three you get a pretty accurate, uh, accurate read because one tends to be too high, one too low. Uh, I think second hoarder, uh, the three of them have an average of 32.2 million barrels per day call on OPEC crude, uh, or the or what the market would demand. Uh, for OPEC crude they’re producing around 32. So that, that really only is a point too. But the real key to the market, uh, is going to be third and fourth quarter numbers. Uh, again, if you take the average, uh, it’s 33.3 for the third quarter and fourth quarter, 33.1 call for OPEC crude opex producing 32.0, they’re compliance has been really outstanding, uh, much much better than I had had that I had an or anyone in the market had ever anticipated. And um, you know, if we’re looking at, uh, a third quarter call of 33.3 versus a 32 production, that that’s a draw. I mean, that’s a 1.3 billion barrel. They draw and into the fourth quarter, you know, another million barrels a day. So you take those two together and you looking at, you know, that you’re getting 180 million barrels drawn, you know, which gets us a lot closer to rebounds,
Speaker 1: (08:38)
right. And your demand numbers are increasing along the way. So if you look at day supply, it’s really looking good.
Speaker 3: (08:47)
Yeah, it really, it does. Look, it does look pretty constructive. Again, you know, the market’s still has to work through the work, through the overhang was still, you know, it was still at that 300 million barrel surplus relative to a relative to average. But you know, it does look like we’re going to get there. The key, the key of course is going to be the, uh, whether or not OPEC, um, rolls over their agreement at the, at the May 25th meeting. Um, because if they don’t, obviously the, you know, the draws that we’re looking for, um, you know, they’re not going to take place, but yeah, they go go away. They go away. I think, um, I had a long discussion with, uh, with a trader, um, this week about whether our, um, whether he thought that the rollover was priced in or what he, what we thought the roll over, um, what the odds were for rollover.
Speaker 3: (09:48)
And both of us agreed that it wasn’t quite priced. Then. I thought it was like two thirds price then, and he thought it was even lower than that. Um, but you know, to me the key on rollovers going to be rush what Russia does, uh, and Russia, um, has already reduced production by a hundred. They’re probably going to get down another hundred sometime during April. And if they can get down to 300 a day, which is what they pledged, you know, it’ll, it’ll lead to towards a, an easier time of it for, for OPEC to roll the, the agreement over. So, and then that, um, profitability of a rollover will increase the probably 75 80%. And you know, that, that’s clearly bullish.
Speaker 1: (10:36)
The response from us producers, um, last month the EIA raised, it’s a production numbers in the US by what, a couple hundred thousand barrels a day. Right. Do you see a similar, um, they’re, they’re coming out with next week think a with their numbers and, and, uh, I was just wondering if you, if you felt the US response was going to be, what do you think that US response to this scenario will be?
Speaker 3: (11:03)
Well, I think we’re going to continue to see a higher production numbers as some of these drilled but uncompleted wells. Um, are completed on the, I think the EIA has a scanning up to nine, 9.5 or 9.6 by the, by the end of the year. And that certainly that’s certainly possible. You know, one thing Jim, that I found really, uh, interesting, uh, during march was the notion that, uh, producers had only hedge 27% of their, um, production for, for 2017. Don’t you think that, I mean, that seems a little low to me.
Speaker 1: (11:41)
It seems low. You know, I, I think, um, these guys are eternal optimists. You know, they, they, they might see the, uh, the scenario, like a lot of us seeing that, you know, maybe maybe not a raging bull market, but we’re not going to collapse in price. So maybe, so maybe that’s what that’s about because when you, when you hedge, it tends to cost money. So, you know, I, I guess I could understand that maybe the worst is behind us.
Speaker 3: (12:11)
Yeah. I thought the number would be more like 40 or 50%, you know, a little bit higher for, for 2017. Um, so it’s still means that there’s a lot of, you know, there’s a lot of bullets to, to be placed on the, on the short side, you know, for the, for the second half of the year. And I think that leads us to our next discussion of market structure and backwardation. Uh,
Speaker 1: (12:36)
yes. Um, I’ll bring some option send to this because we yesterday, uh, or I should say Friday, we saw a very large, uh, play take place in the spread options though the one one first month, second month spread options, um, out in July through September. So that’ll be July, August, all the steps set back. Uh, it looked like a rolling, you never know exactly what’s going on unless you talk to the traders directly. But, um, it looked like people were getting out of the minus 50 put and getting into the minus 25 puts. So presumably a seller of the minus 50 put, uh, rolling up into the minus 25 put is saying that, you know, we’re looking for a backwardation or you know, uh, a firmer, uh, structure back in that range. And then that particular trade looked like it got even more aggressive in Oxford. So, um, you know, significant volume, um, kind of looks like people are saying, you know, backwardation it’s coming and um, or, or will be the structure is, is firming up, especially in the second half of the year.
Speaker 3: (13:49)
And that makes sense if you think that, well, I mean it all made, it definitely does make sense. If we trust stocks, that’s usually an indication that the market should go back or dated. If, if hedgers still have more to sell in the second half, you know, the fourth quarter, first quarter, you know, as the market moves up, the back of the curve is going to get some cell pressure in it. And as a result, you know, we said we should start seeing a steepening backwardation the market had anticipated this a few months ago, but it was wrong because stock scalp kept building. But now as we get closer to to what looks like a supply demand imbalance in favor of a drawing stocks, I think that the market is going to go further. Backwardated and we’re certainly seeing that, um, in, you know, what one spread that everybody watches is the [inaudible] the difference between these 17 and 18, and, uh, um, both Brent and Wti have moved into, into backwardation, uh, after being, at least on Tsi, it was sort of slight contango than it went backward dated back ticket back to us. Like contango now it looks like it’s a really stiffening up. Um, and I think as Jim you mentioned, you know, the option flow, the flow in general, uh, I think is going to be more more towards a, a backwardated market. Yeah,
Speaker 1: (15:16)
yeah, definitely a supporting that idea. And then once you get backward dated a storage facilities lose a lot of their value. So if you’re sitting there with a, uh, a lot of storage, um, and you are expecting this thing to go backward dated year, you’re doing, you’re selling these, uh, minus 50, minus 25 puts and maybe even buying me a flap calls in a big way because you’re the value of your assets about to go down, uh, in backwardated markets. So that’s a consistent with, with the paper flow that we’re saying for sure. Um, what else do we want to talk about it in, in a crude oil? I still want to get back to that. Seasonally. You look at these five year averages, the, um, we are crude oil is, is about to take a sharp decline and like you said, if, if, uh, if all this stuff falls into play, I, I don’t think it’s in the market.
Speaker 1: (16:16)
And you know, when I, when I look at the, um, um, when I look at the option plays, we’ve, we’ve talked about this before, but the $60 call in June and December have the most open interest and it’s 50, like 56,000 in June, 50,000 and ds. So, so there’s some people out there that are still expecting this market to, uh, uh, obviously the buyers, the buy side of that is expecting it to, uh, to get up to those levels and, and, um, you know, the scenario of, of sharper, sharper declines, then what’s built into the market I think is, uh, is, has shown up in these, uh, in the option markets as well. So, um, so just to have a clue.
Speaker 3: (17:00)
Yeah, I think, yeah, and sentiment seems to be a little more, a little more bullish. Of course it is. You know, we are talking about seasonality, this market, this good time for, um, you know, mark for see seasonal plays here, particularly in, uh, in gasoline. And I think we want to, you know, one thing that, um, has really been, has really changed the fundamentals have been in the light products. You know, particularly in the u s um, we went in in just four or five weeks time, you know, we went from a potential disaster area and, uh, and gasoline and you LSD and diesel to what looks like, you know, market is, is proved so much. Um, you know, we’ve seen some serious straws in inventories, strong 20 million barrels since it’s top down in February and diesel Strawn 15 million barrels. So, um, they’re, they’re both still a little bit long, uh, in terms of averages and in terms of inventories, but, uh, that they are looking so much better. And particularly gasoline, which, uh, you know, it looked as though we were going to have a replay of last year, um, disastrous gasoline season and, um, you know, and now we’re now we’re actually looking like we could have a decent, a decent summer and a gasoline has, uh, been aided by a good demand for March after, you know, unbelievably poor. And I put unbelievably in, uh, in bald because I never, I didn’t believe demand was that bad. But, uh,
Speaker 1: (18:40)
I have to say you had a good call on that because a lot of people were saying, you know, the, uh, sit dominoes pizza. Netflix trade was a, it was killing gasoline demand. In other words, people are not leaving their houses and, and you know, mall activity was down. And so people were, some people were believing that number. And you kind of steadfast sang economies too good. And you just didn’t believe, uh, you know, in the, in that different, sure enough that like you said, demand has come roaring back. And I don’t know if he looked at this, you look at that are Bob Chart looks it looks kind of bullish to me. I mean that thing looks like it’s trying to break out to the upside. Yeah, it looks really bullish to me of all the three of you take a, you know, crude oil, uh, gasoline and diesel heating oil. It looks that looks the best that has the best look and chart are
Speaker 3: (19:30)
so right. And you also obviously have a seasonality going for, uh, for gasoline. But, uh, you know, if you want something to lead in, uh, you know, in, in April, it’s gasoline, gasoline performing well in April. Um, you know, the other thing that happened is we’re a little bit short on, uh, on some respect, gasoline, uh, in the, in the northeast. Um, in fact, you know, you look at structure for a, our Bob futures, they went from big contango to backwardated. So our Bob has gone, has gone backward dated, which is a, another bullish bullish factor. Uh, and Europe drew as well. Um, you know, not only us as strong, but Europe had some really big draws that they’ve been exporting. Uh, you know, they’ve seen exports, not necessarily to us, but exports have, uh, have moved east from, uh, from Europe and demand for Europe or demand to gasoline has been, has been good.
Speaker 3: (20:34)
You know, European economy is, has been, uh, you know, it’s been, it’s been pretty good. So, uh, that’s another thing Atlantic basin stocks have drawn. So, uh, you know, that that too a is a good sign and a US exports weren’t quite as strong as I thought they’d be, but I think as we head into April and May, we, we should start seeing, um, more gasoline exports. The question is really like where, where’s the resupply going to come for summer? Great Gasoline into pad one. And, um, you know what, it could actually come from pad one refiners possible. We could see a decent, uh, you know, that they may have a decent April or may for the beleaguered much beleaguered, uh, pad one refiner. So that, that would be, that would be something good to see. Um, and the other thing that’s going on, of course, this is with rinse and, um, you know, this whole point of obligation, um, the whole point of an obligation, um, development, uh, which is still unfolding but rinse avow have rallied from, um, from the 30 cents into the mid fifties. And I’m in talking to, uh, some of the, um, you know, some of the downstream guys. Um, they seem to think that this point of obligation is, is going to move down from the refiners to the, um, you know, more towards the, the end users. But, um, we’ll see on that. But if it does that, that should help to further support, um, that may lend a little bit more support to the, to rinse. We’ll see.
Speaker 1: (22:17)
Yeah. I think, uh, also gas demand increasing should, should help with, uh, you know, you need more, uh, ethanol to blend. Right. So the issue, I think we’ve got to look into a lot of problems when gasoline demand was declining and the mandate was to use a certain amount of ethanol and, and so, you know, if we can get gas demand sort of roaring again or at least increasing by a certain amount and then, you know, perhaps the, uh, uh, problem is, is a dated some, but, um, that’s something to to follow.
Speaker 3: (22:54)
Right. And just, you know, the other light product diesel, um, has seen a decent pickup in demand in March and one, um, economic indicator that, uh, I picked up for the mark I, the market’s been talking about, but my mining and manufacturing is, uh, is doing very well. Um, last month the, the um, fed reported that, uh, mining demand was off, I think it was 2.7% in February and manufacturing demand was up 0.5%. And those are two really big factors in overall diesel demand. Um, US these demand, well global diesel demand. And, uh, of course, uh, we also had a cold, a little bit cold. We had a colder than normal march after a Balmy January and February, so that, that all help demand, but looking forward into April, May and June, um, planted acreage as reported by the USDA is a little lower than last year. But, um, you know, we’ll, we’ll also be seeing an agricultural pickup in demand from the u s Midwest. So, um, yeah, that’s, that’s going to be a, I think diesel demand is going to be, is going to be pretty good in April or May and um, you know, that, that’s who, you know, that’s constructive.
Speaker 1: (24:15)
Yeah. I think, uh, I’d also point out the, some of the economists are raising their world economic demand estimates. Um, and I was, I was focused on South America. I was looking at one of them that had, um, Brazil growing positively, GDP growth this year, slightly positive compared to, you know, a negative number last year. And the same thing for Argentina. So that, so, uh, um, you know, if you can get kind of the world demand growth, uh, going in a plus direction for, from where these larger countries, like you’ll see a heating oil demand increase. I mean, I have to say I’m trying to not get too excited here, but I feel like I’m, uh, I’m getting bullish on some of these commodities that I haven’t been bullish on for awhile.
Speaker 3: (25:07)
Yeah. I think, uh, I mean, one thing that, uh, is interesting you and I have talked about is how, um, you know, you look at, you look at petroleum and we seem to be trading on our, our own fundamentals. You know, that doesn’t seem to be some of the noise that we’re were major factors, uh, over the previous years. Like where the dollar was. You know, that was the number one factor, right? Well, it’s, yes, in the press I had died mother feelings about that, but that’s was like wherever the dollar was this year is that it’s not been the, you know, it’s really not been the case. Equities also are a big factor, you know, and we’ve made during this quarter we’ve made new highs and
Speaker 1: (25:59)
uh, yeah, you know, you’re, if you’re buying, if you’re a financial entity, like a pension fund and you’re in, you’re buying a basket of commodities like the a GSC I index, um, you want those correlations to be a low with, with other assets like the, like the stock market because it gives you, gives you that diversification benefit would, you know, after 2008, um, you lost a lot of, especially with crude, it became a highly correlated with, uh, with the financial markets. And, um, so let’s talk about your price expectations throughout the year. I mean, we talked about a 51 55 range, I’m assuming that was Wti, right? Yeah. Is that, and 54 58 for Brent is a kind of, that’s where you are.
Speaker 3: (26:55)
Well, that’s where I think the market is going to get to during know, during April or during the second quarter. Uh, you know, I think we’re going to get back into those, into those ranges. Um, obviously, you know, as we look at the second half of the year, we’re going to see if whether these straws, uh, come to pass or not much will depend on the May 25th meeting. So, um, you know, as long as there’s uncertainty over the roll out over the rollover, I think it’s going to be a hard, at least until the, until the OPEC meeting for the market to really sustain, um, you know, sustain a lot of upside, uh, you know, sustain towards $60. Um, could we get to 60, you know, we’ve talked about this. Yeah, I think we could get to 60 some point in the, in the second half of the year. Is it going to be able to sustain much anywhere above that that, that, that may be difficult because we are going to see, you know, as the market moves up, you know, we are going to see some, some increase in cell hedging, no doubt. You know, particularly if we’re only at 27% for 17. I don’t remember what the 18 number is lower than that. So that’s going to be, that’s going to be problematic because as we move, as we move higher.
Speaker 1: (28:18)
Right. And I bet you were saying before that that would help the spread because they’re selling, they’re selling deferred months. Right, right. I think, I think the, um, you know, I think the backwardation play, um, you know, that that looks like it. Um, you know, that should be, that should perform pretty well, I would think this year. So, um, the seasonals in prices gasoline’s tends to peak out random may, right. End of May, Memorial Day.
Speaker 3: (28:54)
I’ll see what the, you know, at the summer has, um, diesel also has a pretty good, you know, has a pretty good seasonal right around now. Uh, you know, mostly as, as planting demand begins to, um, uh, accelerate, you know, and to make, you know, it’s April, may is the second, it’s a second quarter. So, um, and um, you know, again, like products, there’s still, there’s still long, you know, there’s still a inventories are still are still high, but they’re in, uh, you know, you’re in way better shape than they were in January and February, March much. Barry March really was a, uh, what’s the turnaround turnaround? Um, you know, they are, at least in the US, um, you know, they’re, they’re going to come to completion, um, right around now, you know, we might have a few, a few more. Uh, Asia still has some big turnarounds in April or May, um, you know, again within that and that could inhibit, um, that can inhibit the crude market. Um, Asian product demand in Asia, product supply, little, a little long too, but that, that’s going to products that are going to products we’ll draw in, uh, in Asia. So, so it looks like actually, you know, as we go through this Javad look, it looks like, you know, refining margins should be okay in the second and maybe into the, into the third quarter.
Speaker 1: (30:23)
Um, so let’s, uh, kind of wrap this up. I just want to ask you about what would, what would kill this price expectations going forward? So, you know, you talking about the OPEC meeting, if they, if it’s a bad meeting, um, Lydia, even Canada has a supply issue. Uh, and I’m thinking, I’m thinking more of a Venezuela. I think that’s a big a threat out there, but it seems WBC to somebody always mentioned Venezuela as a friend that’s out there, but, um, what, what would keep you, what do you think is, are the risks to this forecasts either on the downside or the upside?
Speaker 3: (31:04)
Well, certainly the number one risk is that I’ll pick, doesn’t roll off, roll the, uh, agreement over that. That’s, you know, that, that’s easily the, the, uh, the number one risk number two, risk is a, if us production a rise as much more than a much more than the next dictation’s, you know, that may, that may hurt market sentiment. Uh, although I do, I still think with, with us net net imports, uh, lower than a we’re, we’re, we’re going to draw it, but if we don’t, you know, that that obviously is a, uh, is a major factor. Um, if the market starts focusing outside its own fundamentals and, uh, you know, start looking at a stronger dollar or a stock market correction arc or big stock market correction, you know, I think, I think that those are factors and as you mentioned, Jim, you know, if the global economy starts to sputter a little bit, you know, obviously demand is going to, petroleum demand is going to be heard and that’s clearly a, you know, that’s clearly a, a risk. And, uh, and to the upside, obviously, you know, Geo Geo political risks and I think Jim and Jim is, we’ve often discussed over the last 30 years. You look at, you know, you try to forecast where it’s going to be possible. It’s impossible and then where you think it’s going to be, you know, it’s somewhere else. Right, right. And finally, you know, in any infrastructure, Rick, risks and those are, those are impossible to, uh, to forecast. Last year we had this Canadian wildfires, right? Who would have that?
Speaker 1: (33:00)
Yes. Well, we have it. We do have a sin fuel. What do you got? Syncrude issue right now, Canada. So maybe there’s a, another Canadian thing down the road as well, but, um, excellent. Uh, I think that’s what, what I’m, what I’m taking away from me is that there’s a lot of, uh, potentially bullish things about to happen unfold in the, uh, in the market that would affect the structure that’s not totally built in, not built into the, uh, market structure yet. So we could see if this thing doesn’t followed, uh, we could see higher prices, we could see a move towards further towards a firming up of the structure that backward moving from a contango to backwardation, uh, situation. Um, does that kind of what, what we’re, what we want to leave with.
Speaker 3: (33:57)
Yeah. And I think in terms of cracks, um, I think that they also, um, they could perform, I think there, we wrote the monthly that, that we thought they would, both gasoline and diesel cracks would move, uh, irregularly higher. So, um, you know, as we, as we played the seasonals here.
Speaker 1: (34:19)
Excellent. I’ll just, just because we always touch on options we had in March, it was good volume. It was on, on this collapse in the price or the move down. Um, but it wasn’t terrific, wasn’t, it was like 223,000 a day. And then consider we did about 182,000 a day last year. So, so it’s, you know, it’s a good number but not, not great, which might kind of correspond with your 27%, um, producer, hedge number, um, and then the, the volatility, it’s around 26% right now, which is below average of the long term average of 33. So, um, you know, just the, just the,
Speaker 4: (35:05)
that’s that’s where we are. Anything else Sandy, you want to add? We covered it. We covered it. Sounds great. Let’s, uh, why don’t we stop it here and we’ll see what unfolds over the next month and we’ll see you, uh, sometime in early May. Okay, great. Okay.