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, oil market experts Andrew Lebow and Jim Colburn discuss key fundamental forces driving oil prices in both the futures and options markets.
About Your Hosts
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.
This is Jim Colburn of commodity research group. I’m here with Andy Lebow also of commodity research group and we’re here with another edition of energy markets. To find out more about us, check out our website, commodity research group.com where we post our blog and our podcast. We’d like to thank our good friend Doug Stetzer of EKT interactive oil and gas training for hosting this podcast. You can check out his podcast and learning firstname.lastname@example.org this podcast should be construed as market commentary, merely observing economic, political, and market conditions, and is not intended to refer or endorse any particular trading system, strategy or recommendation. We are not responsible for trading decisions taken by anyone, especially those not intended to listen. Information is not guaranteed to be accurate. This is not an offer to buy or sell any derivative. Today is July 12th. Andy Lebow a lot has happened since our last podcast of nearly one month ago. Uh, where do you want to start?
Oh my goodness. Joe. A one hit after another every day. This, there’s another headline. I, you know, our last podcast was before the June 22nd OPEC Vidic la since then seemingly, um, you know, all heck is broken loose in these markets. Uh, although the, as we’ll discuss later, the volatility wouldn’t quite indicate that. Yeah, I think we might as well start with OPEC. I think that’s, you know, that’s usually a good place to start in the oil markets.
Can I pick a country like Iran? Do you want to start with
random ran? It would be a good country to start with. I think
La, last time we were talking, I think we were expecting maybe 500,000 barrels. That was kind of a consensus of, uh, of uh, exports lost due to a no Trump pulling out of the nuclear agreements. What do you, what are you thinking now?
Well that was yet another development over the last, uh, month because the administration had made clear that they want the exports to go to zero, uh, as a result of a US pulling out of pulling out of the deal and are really tracing a hard line saying that they may, uh, may not offer any waivers as the Obama administration. That although just yesterday, uh, secretary of State Pompei Oh, said that, well, you know, we, there may be some waivers offered. So does China need a waiver? They’re just going to China. China doesn’t really need a waiver and they’ll, they’ll probably just continue to, uh, continue to buy. India did apply for a last time out last time out and then there have, they have already reduced some of their, uh, some of their purchases from, uh, from Iran. China will be interesting to see what to see where they go.
They buy about 600,000 barrels a day of, uh, Iranian crude. And uh, could probably, we’ll probably replace that with a Saudi crude. Now, um, I know we’re jumping topics a little bit, but China has, has already said that due to the, due to the tariff, the trade war that we’re in with with them, that a u s crude refined products and possibly l and g, uh, could be on the list. So it won’t be American. It won’t be US crude. I think that that replaces a, around for uh, for China. Uh, but probably it would be Saudi crude. I would think the Saudis are trying to get the Chinese for to increase their market share with China. And of course, you know, what producer wouldn’t accept us bullet to the foot. Yeah. Bullet to the foot. Uh, so Iran, I I’m working with with about a million barrels a day.
I think that’s where the market is a of Iranian crude loss. Interestingly that they were down about 1.2 under the last sanction regime. But of course that was a, that was a different regime because that was a multilateral regime, a sanction usually if not a unilateral machine, uh, regime. So, so, you know, we’ll, we’ll, we’ll, we’ll see. I think the market is definitely ratcheted up. It’s estimate of a Iranian crude last from half a million to 2 million, then uh, you know, I think that it could be more, it could be less than that. Uncertain. There’s no way this stuff, somehow I went to Iraq and shows up as moms direct exports in Iraq. It’s just that doesn’t happen. Right. Well, it could happen. It could happen, but oh, definitely could happen. Yeah, definitely. It definitely didn’t, I mean there, there was a lot of, you know, even though we were down again, the last regime was a lot different than this, but even then there was, there was death, there was leakage out of, out of Harambe, even though we’re looking at a million, it could, there could be some leakage leakage of uh, you know, maybe a couple hundred thousand barrels or so.
Yeah, it could be. And then again, it could be more than that or less than that, depending on where we go with a, where we go with waivers. So, so let’s just, let’s just kind of concentrate on countries that are declining in production. What’s, what’s the latest on Venezuela? Venezuela is probably 1.4 and client 1.4 million barrels a day and it’s still on the way down. Last month, cy EAA had, you know, said that they’d be down 100,000, you know, they’d be done multiple hundred thousands by the end of the year and, uh, probably under a million by the first quarter of a, of 2019. So that it doesn’t look like, uh, that’s being arrested now. Venezuela did tell OPEC that they were going to increase production by 300,000 barrels a day at the last, uh, OPEC meeting. But, uh, I don’t think there was a lot of credibility to that, to that statement amongst the ministers. Right, right. Yeah, yeah, yeah.
Conoco Conocophillips has taken over the Caribbean assets of a pit of ACO. Is that correct?
Right, right. Does that restrict their exports? Yeah, it’s going to restrict their ability to, uh, to export at least out of that, out of that port. Uh, they’ve been redirecting a lot of their, um, tankers, um, you know, they can’t really, they can’t go there basically. And you know, there’s still so many big fundamental issues, uh, to Venezuela trying to increase their production, uh, from corruption, maintenance, labor, you know, and it doesn’t look as though that’s being arrested gym. Right,
right. So it can it look for a continued decline in Venezuela, like the market is definitely looking for continued decline in Inventus oil. And then, um, let’s just quickly move over to Libya. What’s, um, we, we it did on again off again.
Yeah. Olivia and that this is, this is easily the big, the biggest market factor, uh, at least as the last week. Um, not as the last, not since our last podcast, but you know, all of a sudden, not often. They declared force Visier on 850,000 barrels a day of, uh, of export. Trich as we know, is sweet crude and, and it’s a huge number. It’s a huge number, a dispute between, um, the government and the rebels. The rebels wanted the NOC east to export. They can under the UN, but now it looks like they resolved that for the time being. There was some damage to the US, to some of the storage terminals spot. The force reassure was lifted earlier this week. And uh, the market. Yeah, that was, that was, it was lifted yesterday. The market got hammered. Yes. Oh, absolutely. Hammered because you know that eight 50, yeah, that’s a big number.
Yeah. Yeah. 100,000 here, 100,000 there. You start talking about real numbers,
right? You started talking very real numbers. That’s a big number or rants, a big number. And Saudis a big number. But, uh, you know, I think the market is trying to grapple with Iran and Saudi. Okay. But all of a sudden this eight 50 Busick got Olivia, it’s like, oh my goodness. And that was on top of the Canadian, Syncrude problems, which was what, 350,000 a day, right? Canadian, Syncrude. Um, North Sea maintenance, um, and as well as a, a labor action going on in, in, uh, Norway. Um, you know, and they are those five or 600, it looks like Canada’s going to come back piecemeal. Uh, maybe a hundred by the end of this month, a hundred next month. And then, you know, the one 50 in September, something like that, but you know yet another yet another loss. Now getting back to OPEC gym, the Saudis, yeah. Yeah. I mean, once they’re not, no, they’re not was number.
Exactly. What’s their lover and this is the problem and trying to do all these balances, you know, you’re really not, you’re really not sure what their number, their number is. They said at the OPEC meeting, well, at the OPEC meeting on June 22nd they said, we’re going to increase production. There weren’t any numbers really. We’re going to go back to where we were to make 100% compliance, which was 10.6 million barrels a day. They were at like nine, nine to 10 million barrels a day. So that would be up 600,000 but then they told the market, well, we may be going up to 11 million, uh, sometime in the third quarter. So there’s a, there’s another 400,000 barrels a day. Unclear. I think they may 10, eight to 11 is going to be the number, but you know that that’s not set. And I would expect Kuwait and the UAE to go up between them, like three to 400,000 barrels a day.
So, um, an increase of, uh, let’s say 1.2 million barrels a day, which you know, could, should make up for Irfan, which is why Libya was so important. You throw in that eight 50 and it’s like, you know, now we’re talking offices and getting back to Libya. That’s not, you know, that looks like for now. That’s okay. But you know, things are alright for now. But you know, the, the, that’s also subject to change. And of course Nigeria, uh, is still this force for sure. I’m Bonny light. Uh, although there is unsold Nigerian, you know, there’s still some unsold Nigerian, but you know, and your, it could be problematic. So all this, um, the,
the IEA came out today with their monthly oil market report and it had a kind of a statement in the summary that they, they, you know, they just don’t see how, I don’t have it in front of me. I’m sorry. I was like, they don’t, they don’t see any help from supply. Basically. Go rifle it. Right. So it was a very bullish, some of this stuff’s temporary. However, going forward with increased demand when we had talked early on how we expected to see the fourth quarter tightening. Right, right, right. And, uh, the, the IEA seems to be underlining that point and I’m with all my years and in these market it training and in this oil market, I feel like it’s a, it’s a bear signal. It’s a contrary signal. Hasidic off you constantly go. But, but also, you know, is it, is it possible that we have all this bullish stuff going around that there’s maybe some better stuff out there that’s just hasn’t, it’s in the background that we’re not looking at.
Yeah. I mean, let’s look at the, on the demand side, Jim, you know, what is, what are, what are these tariffs gonna to, you know, what’s going to happen with these, uh, trade war, uh, you know, how is, how is it going to affect oil consumption? How’s it going to affect global growth? Uh, I heard an economist say yesterday that, uh, uh, she didn’t think it would be that significant. May Be like two tenths of 1% on, uh, on global GDP, but it could be five tenths of 1%. I’m thinking five tenths of 1% that’s big. Even two tenths is big. So, you know, that could be a factor. Higher, higher interest rates. How that affects a merchant, you know, how that affects the man. I mean, yeah, on the demand side, that could be some surprises. Well, there’s a, there was an economist,
some, I put it up on our blog that was saying that, uh, I think he said all recessions sessions are started by an inverted yield curve and higher, higher oil prices. So we’re, we’re pretty, you know, higher is, is objective, but we have, we do have higher oil prices and they, and they yield curve is flattening. Um, I think it’s, I think it’s for oil prices. I think it’s an eight out of the last 10 recessions where, uh, uh, uh, proceeded by a sharp increase in oil. So consumption, we’re going to take a look. I don’t want us, I guess we can switch into gasoline. Gasoline consumption in the u s is going to be flat this year.
Yeah. Gasoline consumption, it’s going to be flat, but petrochemical demand is roaring. And at the end, diesel demand. This been really good.
But when we say, well, we’re talking about theU s gas demand, the rest of the world, we’re, we’re exporting a lot now, right?
Yeah, yeah, yeah. Right. Our exports are our, um, our exports are strong. Again, we’ve talked about this too, you know, to Latin America and South America because their demand is growing, but they also have infrastructure issues. Gasoline demand globally will grow. Uh, probably not as much as diesel, but the big, the big growth is in petrochemical demand globally. It’s not so much on the, uh, you know, and the transport side, it is a, I shouldn’t say not so much, but I think on a percentage basis it’s going to be on petrochemicals. And there in lies a where,
uh, a slowing economy can, can really have an impact. Right, right. Um, just a little, uh, I want to bring up, um, yesterday, and I know this is a monthly podcast. We do. We don’t look at every single trade in the market place, but, um, I thought it was interesting yesterday. We had a sharp move down in the market and what you, it was like $3 and Wti, what you would expect to see in the options world is a lot of the front month stuff to trade, which we did. And then the biggest option was, um, I don’t know all these 70 put 23,000 trade, but with the August, uh, 68 to 72 puts and the 73 to 75 calls were the most active. So, so, you know, you see the movie, you see that activity, he say that’s normal. Um, however I looked at the, uh, the CME has this great tool, most active, um, strikes.
And um, I was looking at it ranked by open interest and there’s this, uh, yesterday moving into 14, up to 14th place was the DS, $100 call expires in 2020. And I was just, it was kind of shocked to see that now we have free for months. We’ve been talking about, you know, even before all this stuff happened in the last month, we’ve been talking about how people are positioning for a tighter fourth quarter of 2018 by buying calls and, and eight of the top 10 uh, open interest cause we’re in are still in DC team. So it was kind of, you know, little bit different than, than what we usually see is like a lot of the front month stuff, uh, being the most open interest. So now we have a DC 2020 $100 call showing up in the top 20. And um, I, I just thought that was interesting on a sharp down that. So, so I guess, you know, we, we always look at the, you know, the initiator as the buyer, but if you were to take, if you were thinking about buying one of those, um, what are the fundamentals behind that or what would you say somebody might do that if you are just looking for higher prices? I mean this is the, the,
we have the story of the tight, tighter
a fourth quarter, but that’s, you could buy DC teams for that. But this is, is this the, the commentary we hear about the underinvestment in crude oil? You think something like that? I think it could be, yeah. I mean, we know that the, uh, you know, the so called gap from where we didn’t really invest, where the oil industry did, didn’t invest because of low prices in 2014 and 2015, uh, that gap should be hitting us in 2019, 20, 20. You know, it’s been mass a little bit by the tremendous growth and, uh, in us, uh, tight oil. But, uh, yeah, I think there’s that, there’s certainly any kind of geo political upset could, could we be in a, uh, could person golf barrels the Strait of Hormuz be blocked. Yeah. Now, you know, given the, the entire GeoPoll given the entire geopolitical portrait, right? Yeah. You know, you can’t say it’s not impossible.
Right. So you’d rather be a buyer those in the cellar. Right. And that’s for sure.
Yeah. I had a law. Right. Who knows? Yeah. I don’t know.
Well, I always, I have to say, I have to always say, you know, we, we look at these things or why people buying those. But there’s also, you can’t, you can’t have an increased open interest unless there’s a seller to somebody selling it. Yeah. So I mean, so the number one option is the, uh, the d 80 call, 40,000 open interest. So that’s, that’s, you know, that’s been around for awhile. I mean, we’ve, we’ve been talking about that for awhile.
Yeah. I mean, I think we had, we, you know, I said I wasn’t so sure that, that that will go into money, but now you know, again, you look at what some of the things that are going on on in the market yet, it’s not impossible. I mean, we’ll, we’ll, we’ll certainly know, you know, when to said November 4th I think is when the sanctions are a do to get into play. So we’ll, we’ll have a better idea of what we’re going to lose her. Moran. The other thing is us, you know, US crude stocks are still got, they did, they just felt 13 billion barrels as unbelievable. Yeah. The market sold off anyway. But you know, I think we’re going to continue at least during July and August. You know, we, we still should have some pretty pretty sharp draws here. And uh, you know, Cushing is cruising towards there at Cushing where at 20, let’s see, 26 million barrels that Cushing, you know, the operator who knows, I’m not sure what the operational minimum is, but the last we were down here, uh, around these levels are lower. I think we were talking about eight to I think 18 million, right? The operational mil minimum, maybe something like that. 18 to 20. So you know, clearly stocks are low. Cushing, I think they’re going to keep drawing here the next few weeks.
No, these, uh, these spreads to a West Texas have to be blown out again, right?
They are, yeah. They’re like 15, 16 on there, uh, for, for uh, Midland to Wti. So, uh, yeah, that they are blowing up. Well though Midland that Euston it’s only like $2 solver, but they, uh, they, they’ve blown out.
So, yeah. And that’s supposed to ease up maybe next year, sometime a little bit. They take away capacity increases, presumably, presumably
prison, presumably around, um, second or third quarter. Uh, the should be the takeaway capacity should be, and it’ll be higher that that’s for sure. And Elise a lot by third or fourth quarter of, uh, of next year. But, uh, you know, ironically because of the, the steel tariffs, the, the pipeline companies are, uh, you know, having trouble, you know, having some, you know, at least they’re saying, you know, we can’t source the steel that we need to bill. It’s unbelievable.
Yeah. Economies such a complicated system. You, uh, I don’t think anybody really understands all of it is, especially when, you know, policies are made to do one thing and then there’s all these other unintended consequences. But, uh, yeah, it’s, it’s, um, it’s interesting. We’ll see. I, you know, get it. When you think about tariffs, you know, to me a lot of times it’s just the trade routes that will need rerouted, but that’s not how, you know, that takes time to work itself through the system. So if China says they don’t want to buy us crude oil while we will buy from someone else and we us crude oil, we’ll sell, it will show up in those places that you know, is not being supplied. You know, it was just right, but it may not be the most efficient, uh, trade route to those markets. So the seller of crew gets a little less than buyer of crude, pays a little more.
So it’s inefficient, but you still, you know, you, you move this stuff around and, but that’s not all, you know, when some of the steel is a little different, it’s not as easy to do that. You know, soybeans are, are collapsing and collapsing. Yeah, I know. And My, my initial thought was, well, okay, China doesn’t buy our soybeans. They buy it from Brazil and we supply, I don’t know, Europe or somebody like that. But I guess there’s a, there’s a few more soybeans than, uh, then there is demand and maybe they show up in us silos because of these terrorists. But it’s, again, it’s just complicated to see how this stuff works through the system. Um, let’s, let’s talk about oil prices. I know, I know we, you just gave me a very, uh, complicated supply demand structure going forward. Although I have to say if as an option person, it looks like you don’t see this market farm like the IAA, you don’t see this market falling apart, but there’s potential upside. Is it, is that,
yeah, there’s definitely potential upside. The, again, these balances are hard to, you know, are hard to figure out where that they’re never easy to figure out how it looks to me. Like third quarter I think we could be either side of, of draw, draw, build and fourth quarter to me looks like that I think will draw, you know, three to another, three to 500. Um, again, depending on how, where everything where everything falls out. Uh, and you know, where we are now is that we don’t have the inventory that we clearly we don’t have the inventory. We’re below five year average outright and on day supply. Uh, in the U s same thing. We’re, we’re below five year average. So there’s not a big cushion, you know, in case we’re, we’re pretty finely balanced so there’s not, there’s not a big cushion. It at least on an inventory basis.
Uh, there is the, there is the spr and uh, you know, the, there is the eye, the IEA reserves, uh, which, you know, I, I think the more, at least not in the u s those are to be drawn when this actually a shortfall. US, we’ll see. The SPR has been used for political purposes before and it might, it might again, depending on where gasoline prices are. But the, the other thing the IEA said today, which is, which is very bullish because as the more, the more the bigger increase in the Persian golf production cause that’s where the spare capacity is, the less spare capacity we really have. And you know, Saudi has never really produced the 12 mil. I think even the stay at 11 million, we’ll see if they could do a 12 million. They’ve never done right. So, you know, we don’t have this, this, no, there’s really no spare capacity. So there’s
cushion and stock levels and there’s no cushion in spare capacity. So that’s a very mixed it for a very interesting market. Now, do you feel like where we are now? I mean we just, we just sold off a few dollars. Yeah. We just, we just went from like, you know, 70
75 where are we? 69, 68 and WTI now. Yeah. So, um, the markets were said, so what do you see to that? They all. Dot. Hold on Libya just so we just, we just got 850 that we thought we lost. You know, I mean, we just got a huge amount of supply that we thought was lost. And also also, you know, you were talking earlier how funds had gotten long again, right? Oh my God. Yeah. In the last two weeks, they had the, they added a hundred and 130 hundred and 40,000 contracts of Wti, of Wti, um, 120 actually. So the, all that length that came into the market. Yes. Which by the way, that the CFTC report on that comes out Friday afternoons as of Tuesday, Tuesday’s trading. So it won’t have the liquidation of funds from Wednesday and Thursday in the next number. Right, right. Yeah.
So you could still see, we’ll see. We’ll see more. We’ll definitely see more. Yeah. More like the week after that will show up. It’ll show up. Right. So I think that what happened yesterday and today I’ve seen fall through is the market had to adjust for that extra, you know, eight for that excellence that Libyan supply and Saudi suppliers coming onto the market. So I think the market had to adjust downward and we’ll see where it, you know, we’re fine. Um, you know, some areas of support or equilibrium or whatever you want to call it. But you know, to me the second half still looks, you know, w with spare capacity falling, we don’t have a lot of cushion if something else goes wrong. Well, you know, in the uh, the uh, July short term energy outlook that they have put in a price range, they take the implied volatility and they put up a 95% confidence interval using that implied volatility.
That’s the, no, no, it’s like a standard deviation. Um, and they come up with a, for October futures they come up with a range of 56 to 87. So what, why don’t you narrow that a little bit? 87? Yes. Like Yo, but what’s, what’s your let’s say me a give gimme a range for the, for the next, well we’re already, we, we had a little higher range cause we didn’t know Libya was, was uh, was coming back. It looks, you know, I’m looking at the chart right now. We’ve done a lot of damage here in the last, the last two days. So I think for the next month. Well you, you’re giving me fundamental information and now you’re telling me we’ve done damage. You sound like a technician. I though, well that’s, you know more than anyone. Classic tech this, I know. That’s right. But you know, I don’t want anyone, I don’t want anyone, I don’t want anyone else to know that.
But just looking at the, uh, just looking at the chart, you know, we have done a lot of damage here and I think that, you know, if I was, if I was taking take arrange for the next month or so, it does look like it was something like 66 to maybe 71 72 maybe wider than that. That’s just for the next month. Could, could we see $80 Brent again? Yeah, I think we can, we can we see the $80 Wti? It’s not out of the realm. What about, what about $50 Wti? That would be December by December say, could it? Yeah, I mean, if the economy completely unravels, it could happen because, you know, it isn’t like you can’t really, you can’t really go anywhere and say, oh, we’re going to get this extra supply. Even the only place you could go with Saudi Arabia real, you know, and I don’t see them going from 11 to 12.
I just don’t, you know, I don’t see that because they know that they need the, they want the market around here, you know, plus or minus. I don’t see them saying, oh, we’re going to, we’re going to give another million to the market. They’re not going to, I don’t think, no. Let’s move on to a gasoline and diesel, diesel prices. What do you, when you think about gasoline, gasoline, let’s talk about gasoline because the fundamentals really are completely uninspiring there. However, in the last couple of weeks, in the last week or so, actually it’s been a lot of refineries. There’s been a lot of refinery problems and, um, you know, power problems all over the place. West Coast, Gulf coast. So, um, you know, when you would, gasoline could tighten up just a little bit. I don’t think it’s going to change its overall fundamental. So sorta neutral, the nowhere on, uh, you know, on, on gasoline we have plenty of inventory and we may try a little bit here but not enough to get, to really get tight.
And demand is certainly nothing to write home about. Uh, in the, uh, in the u s diesel we had a big build last week and you know, stocks are still tight but demand the last couple of weeks it’s been crappy. Actually. It’s been a, I don’t know if that’s the beginning of a, I don’t know if that’s the beginning of a trend or, or, or not. You know, I, we’ve been bullish on this, on diesel for most of the year still, you know, still supportive, so supportive on diesel but not, you know, we’ve been beginning, we, we need to rebuild diesel and we’re gone and we are, I mean we are, so maybe the fundamentals of turned from
You know, really bullish to still bullish, but you know, we’re rebuilding and we, and we need to in Europe is about to rebuild the lot. Uh, cause they’re getting a lot of diesel from Asia. Uh, so you know, some of that may or may make its way over here along with, uh, edit, edit gasoline. So products, you know, Le and runs global runs or are going to be a record. And then July and August, probably August. Uh, so, you know, I think globally products, stocks are probably going to build crude stocks are probably gonna are gonna draw. Um, so refining margins may be under some, you know, maybe under some pressure here. Yup, go ahead. Sorry. The, no, I think that’s, yeah, I think that’s it. Again, we’ll watch these refinery problems in the, uh, in the u s and of course, you know, where we are heading into, you know, we’re looking at hurricane season coming up. Uh, last year was a doozy. You know, that, that actually Harvey bailed out gasoline last year. This year is very similar to last year on gasoline, Jim. Uh, but the entire fundamental change with, uh, you know, with Harvey refiners all over the place. Yeah.
What would kind of wrap it up. Give me your, going forward. What’s your desert island indicator? What’s, what’s, uh, the, the one or two things that you’re going to be closely following? I know it’s, I know it’s all over the place. What is it going to be? You’re going to be watching Saudi production, um, demand. What are you, what are you watching?
Yeah, I think, um, you know, as we’ve talked about in this podcast, you know, these, it’s really us, it’s more, you know, I think the, the headline news is clearly supply driven. You know, the longer term may be, you know, I’ll also be watching, you know, have these demand numbers come in and the effects of, uh, the effects of terrorists, terrorists, and higher interest rates. But, you know, my, I guess the biggest unknown number is still going to be the effect of, of, of where we go with the ram, uh, not where we go, where the market goes and how much Moran is, is, uh, able to export, uh, what their, you know, what they’re going to negotiate with the Europeans. I think that’s, you know, that that’s uh, you know, that that’s the thing that, that I’ll be watching and that clearly the market’s going to be watching pretty carefully.
Related to that. Does anybody look at the, um, the oil futures contract? China based on the, uh, is trading right? Pretty good? Yeah. It’s trading. It’s got open interest. Um, yeah, it’s a trading pretty good. I wonder if that has any clues as to how much Iranian oil they’re going to take. So, you know, are they, if, if there’s a lot of Iranian oil coming in more than expected that thing trades at a discount. I have no idea, but I’m just throwing it out there,
so maybe take a look at that. Okay.
So the trading options on that thing that I don’t know. Yeah, it, it, it is definitely. It definitely is trading. Um, anything else you want to add Andy, before we wrap this up?
No, I don’t think so. Well, yeah, I, I just uh, some uh, shameless marketing plugs. Sure. You can find us on the website, on our website and a commodity, www, commodity research group.com. Jim’s been posting some, uh, really interesting stuff on the website just about, just about every day. Uh, if you want to reach me for questions, uh, a email@example.com. Uh, also, we are on a Linkedin, uh, for this website, for this podcast, and you, and also if you want to subscribe, you could do that through iTunes, which would be a, which would be awesome.
Okay. Very good. Thanks, Andy. Lebow see you next month.
And, uh, this is Jim Colburn commodity research group.com.