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 with Andy Lebow, also of Commodity Research Group, and we’re here to talk about energy markets.
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This podcast should be construed as market commentary, merely observing economic, political and market conditions and is not intended to refer or endorsed any particular trading system strategy or recommendation. We are not responsible for any trading decisions taken by anyone. Information is not guaranteed to be accurate. This is not an offer to buy or sell any derivative. Today is February 11th.
Good morning, Andy Lebow.
Good morning. Jim Colburn.
How’s it going?
It’s going pretty good.
Let’s get right into this. One of the main drivers or the main driver is still the virus.
Yeah, no question that the virus continues to be a big factor in all the markets. I think that what has bins so surprising obviously in the, in the petroleum markets has been this rally, despite some of the worst, what had been really worsening conditions, uh, on, uh, infections and hospitalizations, but, um, you know, thankfully in many areas in the world, those have gone down and the vaccine is, is at least beginning to be more widely distributed. So that’s all been, you know, I guess that’s all been supportive for the, uh, for the petroleum markets,
But we’re, I mean, take the U S for example, we we’ve seen, uh, uh, many people getting vaccinated, many, many people getting infected, but are you seeing it show up in, in demand numbers like gasoline demand, jet fuel demand, things like that.
And, and, and there in lies the, the big point, Jim, uh, yeah, things, things are improving, but we’re nowhere near, uh, where we were nowhere near normal on, uh, on demand. The IEA just, uh, revised downward again, first quarter demand and, uh, second quarter demand, uh, and look forward to, uh, uh, the very strong second half of demand and what we’ve seen in the U S so far, you know, the demand numbers are getting a little bit better. Gasoline demand still, frankly, stinks. This slit demand is, is, is improve, is Def is improving. Uh, no doubt about that. I mean, we’re seeing, um, w th this lit demand is running ahead of four or five-year averages, so that that’s been good on the diesel side jet fuel demand. We saw one week where, uh, jet fuel demand was, uh, was pretty good the bow, but, you know, I, I dunno if that’s just a one-off gym, right. Um, you know, th there’s improvement, I suspect it’s just a one off and also it’s Chet Cara demands. So Carroll demand, uh, obviously has been helped by the, the colder weather and in terms, and this also propane demand has been, uh, has also been pretty strong. So, you know, w w we’re seeing, we’re seeing improvement, but, uh, again, questionable in the jet fuel demand and gasoline demand, as I said, um, is still pretty poor.
So bringing up gasoline demand, I probably would, didn’t want to get into this right away, but the gasoline cracks were sort of confounding. They kept going higher for a while and without demands. So is it just that the refineries are, you know, able to sort of, uh, uh, cut back on production and, and able to manage the decline that we’ve seen in demand?
Yeah. Uh, the refiners have done a pretty good job of keeping gasoline supplies, uh, under wraps. The, you know, I think a key factor there, the, the cracks have been, they’ve been strong pad one, uh, you know, we’ve lost a lot of our refinery capacity in, in pad one. So, um, you know, PA pad one can from time to time, get a, get a little bit, uh, get a little bit tight, but that that’s going to stop because the, um, first of all, refiners have begun, uh, to start moving towards making more gasoline. And second of all, the arbitrage between Europe and New York Harbor is way high. So, you know, I would suspect that, uh, we’re going to start seeing, you know, we’ll be seeing a, I don’t want to say it’s an Armada, but the there’ll be a lot of supply coming in from, uh, from Europe and we’ve seen it.
And now the cracks of it have turned over, right? The gasoline cracks have turned over. So, you know, I, I think that was a short-term, uh, short-term phenomenon, you know, gasoline demand getting the, getting back the, the, looking at the four week average it’s 7.9 million barrels a day versus, uh, the five-year average of 8.8 million barrels a day. So it’s still running a million barrels a day, right behind normal. And the EIA is, is saying, well, gasoline demand is gonna improve dramatically as we head into the, into the second half, but chip that’s it. And it might, it may be higher than what the EIA says. They have demand getting up, you know, almost a million barrels a day for one of the months in the, in the second half from where we are now. But, you know, that’s still going to be dependent on, on a lot of different factors.
Right. And, and, um, again, with this, you know, if I think about the people who have been vaccinated recently, it’s the, um, you know, the health workers, the first responders and, and, uh, the, the elderly. And, um, it’s not like they’re jumping on planes or driving cross country, but w what kind of, what kind of indicators are you looking at going forward to kind of give you a sense that, uh, uh, of green shoots or, or that the, the part of the economy that’s been whacked pretty hard as is starting to come back?
Well, uh, you know, this all, first of all, is all the miles traveled, which is sort of a lap lagging indicator, but at least it will be nice to start seeing that beginning to move up in the right direction. And there’s all kinds of, uh, you know, mobility, indexes that, you know, you can, you can look at whether it’s a Tom Tom numbers or any, or any, any type of numbers, you know, the, the ones that I think will, you know, tell the tale, uh, is you just start looking, you know, let’s keep watching these apparent disappearance numbers, you know, these weekly numbers, let’s start seeing them at least trending in a better direction. Right. And, um, you know, and also lot’s going to be the, you know, the w what’s it going to be dependent on, all right, we need jobs, right? People have to drive to their jobs.
So, you know, where the stimulus package goes, you know, is going to be important and how that helps the economy is going to be, you know, critical, you know, to get a baseline gasoline demand, to begin, to get somewhat closer, you know, at least to start growing. And then in the summer and the fall, you know, it’ll be the, then there’ll be, you know, we’re Americans are going to go, right. Where are we going to try? You know, are we going to be, are we going to get on planes? Are we going to drive more? You know, and, and I guess some of that too is going to be how the distribution of vaccine is, and, uh, you know, where the distribution is and how confident people feel about herd immunity. I mean, there’s all kinds of, um, obviously things that we’ll all be watching,
Right. Which, and it gets back, uh, one of the things that you’ve common thread you’ve been saying since the beginning of this, uh, event, is that how hard it is to keep a supply demand balances, uh, up to date their chain. You change them all the time, but you, you had a really good call early on that, uh, demand was not going to be good relative to what the big three, the IEA OPEC and the EIA were saying in their monthly reports. Have they caught up to you or you still got, yeah.
So I think they’re pretty much caught up to me. Uh, there’s still the, one of the, uh, OPEC report just came out, uh, as we’re doing this. So I really haven’t been able to study that, but I think we’re there. They have finally caught up with me. I mean, some of their numbers, you know, you just knew that they were, they were just way too high. There was no, there was just no way that, uh, you know, give, given where we were and given the, the restrictions, you know, the travel restrictions, their first quarter, second quarter demand was just way too high, even fourth quarter demands. I actually, I think fourth quarter demand may have come in a little bit higher than, uh, than what, you know, what I was looking for. But yeah, I think, I think they, they finally, I think they finally caught up to it caught up to me and I’m just me, you know, they’ve got reams of analysts. So I feel pretty good about that one. Yeah.
If you take their, all their reams of analysts, you, you probably have more years of experience.
That is, unfortunately, that is probably correct.
So, um, so you, you’re a little surprised at the price move. Why don’t we talk about that? Let’s talk about that. What’s going on. It’s in, in not only the outright price, but the structure is, is much it’s we’re backwardated now. Yeah.
I mean, they’re, they’re certainly related, um, to, to a certain extent, uh, not, not completely. I mean, we’ve been in backwardated markets where the market’s gone, the other thing, you know, has gone South. Right. Um, but you know, I think that clearly the market has reacted to drawing inventory. The [inaudible] report today had astound and second half of, uh, 20 of 2020 by like 2 million barrels a day. Uh, and th they see a good draw in the second half, somewhat of a draw in the, in the first half. But, you know, you look just looking at my, uh, my own numbers. You know, we we’ve drawn hundreds of millions of barrels from, I’ve got 1.8 million barrels a day draw in the second half. I think I might ramp ratchet that up a little bit. And in the first half, I have 900,000 barrels a day, which one of the banks also came, you know, had the same amount.
So we’re drawing stocks. Right. And, um, you know, that, that usually is bullish. And, um, you know, the market has, has reacted to, to that, you know, and I think as well as some, um, you know, some broader trends in, in the commodity markets, Jim, you know, this whole reflation trade may, you know, there may be something, you know, that may have contributed some to it, to our rally, but, you know, I, you know, me, I like to describe it more like the fun, the battle picture, which has improved, you know, when you draw that much inventory that’s improved. And when, you know, when, um, you see the, the structure get, you know, get, get more backward dated, you know, that that’s usually bullish as well. Um, and that, and that to me, you know, we’re seeing floating one thing you could look at right away, you know, 0.2 right away is floating storage. Right. You know, floating storage alone is down like over a hundred million barrels over the last, over the last few months, you know, and you see that in the brand market, right. That’s, that’s right there in the Brent market, you know, and that’s really gotten, you know, the, the M one M two it’s like 50 cents, I think, and the year to year is, is like 45 to 50, 40 to 50 cents a month. But you know, the front is, is, has gotten tighter.
Yeah. So, um, if you think about fund activity in this market, they’re obviously long, but doesn’t seem like they’re at capacity. Is it w what’s your take on, I mean, there, and I tend to buy the front months in row,
Right. So I think that’s right. I think there’s, there’s probably some more bullets, you know, some more bullets to be shocked by the funds and who knows, you know, last week the, the WTI was up by 10th, 10,000 contracts, which is pretty good. I thought it would be up by 20,000 contracts given what the price move had spent, you know, but, but I think as you, you know, you point out that’s only through Tuesday, so this rally last night, last Tuesday, right. So, you know, when surprised me that over the next last five days, you know, another 10 or another 15,000 has come in, you know, the funds are there. You know, there’s definitely a lot of bullish sentiment around not only on, um, you know, on our markets, but other commodity markets, but definitely on oil. There’s, there’s plenty of bullish sentiment.
Well, there’s this thing to the, uh, extreme bullish sentiment on EVs. Right.
Don’t get me started. I know I
Had, so I’ve mentioned it to get you started. Yeah,
Well, yeah. I mean, there’s a lot of bullets set of it out EVs and, you know, rightly so, but, you know, w we’re, this is 2021 and, you know, th that’s that’s a few years, hence that’s EVs are not having a significant impact yet on gasoline consumption, you know, on, on, it’s not going to be the difference between all gas, hasn’t gotten back to normal yet because of EVs, right. In 20, 21 or 2022, you know, that maybe once we get to 23, four and five. Yeah. Yup. You’re not this, you know, not this year. Yeah.
I try to figure out the speed of adopting new technologies. And I was looking at, uh, w uh, the, um, adoption of the three-point shot in the NBA. That was something, it was really, you know, there was nothing, no barrier to shooting more threes in it. And it took you think about the ABA started it, and, and now, uh, it’s like more teams than ever taking, I don’t know, 40% of their shots, some, some crazy numbers, but you can track how many, how many, three point shots were taken. And that was just, all you had to do is figure out arithmetic to figure out that this was a good idea. And it took a long time for teams to, to adopt and, and, um, you know, the EVs, I don’t have to, I have to line up the charts and see which ones, you know, they’re, they’re getting mandates from, from, uh, you know, municipalities and States and maybe, uh, beginning federal as well to buy, uh, fleets and, and infrastructure is being built. So I’m wondering if it’s, if it’s a quicker, uh, adoption and then like, you know, you, you’re, you’re talking about a worldwide event. So, um, uh, I, I, the other thing I always think about is, you know, that idea is not going to help your March contract, right? If your trip, if you’re trading the next few months out, that’s, that’s something down the road, maybe, maybe that’s affects you buying the equity, the oil stock, rather than the, uh, uh, the futures that we, that we’re involved in. So,
Right. I mean, uh, yeah, we, we’ve got to look a couple of years from now to really get into this more serious Evie discussion on its effect on demand, because it’s, it’s right now, it’s not, it’s not major. Yeah. The other thing that, um, you know, talking about the price rally, obviously, you know, uh, why have we been trying stocks? And, uh, even though demand is saw, you know, demand this week, you know, that’s, that’s the big question. And the answer is that OPEC plus, uh, has done an unbelievably, surprisingly shockingly good job of, of managing this market. And, uh, you know, the market was not looking for the Saudi, um, production cut. You know, we, we were, uh, looking for production to be up by 500,000 barrels a month, 500,000 barrels a day, each month, uh, in the first quarter. And, um, you know, the, the decision to the Saudis made the decision while we’re going to reduce, you know, we’re going to match demand, uh, by cutting output. And, um, you know, they’ve actually gotten the demand has been good enough, obviously looking at the price and, um, you know, th the expectations for first quarter, uh, demand this from good enough to still, to still draw stocks. Um,
That’s, that’s an intro when the Saudis came out with that, it was, it was almost like, okay, we should be buying this market, but then there was this other part, did they really do that? Is that, did that just happen? You know, it was really, that was really surprised. I mean, I think it took people to a couple of days before it’s settled in and said, they’re actually going to do this.
Yeah, it was, it was, you know, it was obviously for them, you know, it’s worked out and now the question is, you know, what’s next, right? What, you know, they have a plan to increase output every month, right. Um, that they made last year, but that was last year’s plan, you know, so, and they’re, there have obviously proven, given what they did in first quarter here, that they’re going to be flexible. And the next meeting is March 3rd. And obviously, uh, March, I might not be the right day, but it’s early March. So obviously that’s the next big market-making market moving, um, event. And I guess the question, you know, where, where are they going to go?
Right. It’s, it’s, um, they’re, they’re getting to the price. They just way away from the volume. I mean, that’s, that’s the, all of the oil industry you’re, you’re getting, you know, you, you’re getting to areas that are reasonable. Like, I think you were what you were saying earlier. Uh, in a previous conversation, we had that the, uh, 20, 22 prices around $52 for WTI WTI. So, you know, that’s, that’s an, that’s not a bad price to, uh, you know, w you know, lock up Naty, but th but you need more volume. I mean, they need to be selling more volume.
And how do you manage that? Obviously, this is the problem, right?
How do you manage that? And that’s, um, you know, I think the market is clearly looking for them to provide more volume. Uh, we’re going to need it, because if, if they, you know, if they stay here, you know, then there’s going to be, if it’s a stay at these numbers, you know, at this production number, you know, we’re, we’re, we’ll be trawling stocks at a much more rapid pace than what the market is looking for, and that would be, you know, extraordinarily bullish.
Right. Right. And, um, let’s, since we’re talking about OPEC, what’s, uh, what’s Libya doing, are they, it’s the labeled, uh, we were worried about them being able to produce, you know, at a million little over a million consistently in some Ben Benson problems.
Yeah. I mean, there’s been, there’s definitely been some, uh, export problems. They were at one, three, I think they lost the 200,000 barrels a day, uh, on, um, uh, you know, they had, they had some problems with the, with the guards. Um, there, there always seems to be some ongoing, you know, some ongoing dispute with Libya. I mean, you, you can’t really say that they’ve, they’re a, uh, you know, obviously not a reliable producer,
But he’s not getting paid. Yeah.
So, yeah. I mean, that’s probably one of what it comes down to, whether that, I don’t think that’s, you know, they should work it out or they won’t work it out yet, or they won’t work it out. And, you know, we’ll start seeing, you know, we’ll, we’ll see Libya, you know, Libyan production, um, you know, we’ll loose Libyan that will, that will mean that, you know, OPEC is going to have to increase production. And again, you know, we we’ve, we had this discussion, what, what, you know, what’s, uh, what price do they want? You know, what’s that they, the fifties is good for OPEC because, you know, it might not bring all that much added, added, marginal production onto the market. You know, you start getting into the sixties and close to 70, you’re bringing up, you know, no matter what your brand, you are bringing on added barrels from the U S in my opinion.
Right. Right. Uh, even with the new, uh, administration,
Even with, well, yeah. Even with the new administration, you’re going to be 70, I think you’ll be getting, uh, you know, you’ll be getting significant, significant numbers, despite what, you know, the producers may say, uh, about, you know, capital discipline, et cetera. Oh, why would you be disciplined at 70? Right. There’s no reason to be disciplined. If the market goes to 70 year, you get me in
Yup. And producers want to produce, that’s what they do,
Right. Producers want to produce. And, uh, you know, we’re not saying, I’m not saying, Hey, the market’s going to 70. I’m just saying if OPEC doesn’t increase reduction, the market will go to 70.
Let’s, let’s talk about China for a second here. Uh, I think the, I think the AIA has them, uh, increasing demand like 800,000 barrels over last year. Right. And, um, they’ve been a good buyer in January. What, w what, can you kind of describe what’s going on in China?
I think the, um, well, Chang their important numbers were, were excellent in January. They’re crude important numbers, but that’s because December was a little bit, it was low because some of the, you know, some, some of the refiners didn’t have their, um, you know, didn’t have the permits for the end of year. I think ran out, uh, the, their import exceptions. So they had to roll it into, you know, roll some barrels into January, but February looks pretty strong, too. So it looks as though demand from, uh, from China, uh, is, is still, is still strong. You know, I think they ran off some inventory in November and December, but they still, they, they built a lot of inventory last year. Uh, so it puts them that they’re really in good shape because they don’t have to buy, you know, I think they have been buying.
And we’ll see, you know, now that Brent is in the sixties, you know, where, where the, if they continue, you know, at the pace that they, the pace for January and February, if they continue into March and April now for end user demand is it’s probably pretty good. Let’s remember they have, so they have new capacity coming on this year. So, you know, demand for crude is definitely going to increase, uh, or should it should increase. Uh, and that will probably lead to, um, stronger export demand. And I think, uh, you know, I think end user demand should be, um, you know, should be pretty strong. 800 is pretty, the 800 is, I dunno, that’s a pretty healthy number. I’m not, I’m not sure it’s going to be that, but, you know, their, their end users demand should be good and their, you know, exports could be strong.
The thing to watch about China is, you know, let’s, we’ve got, gotta be all over their buying patterns. But as I said, you know, they’re really in good shape, uh, because what they did is really what you’re supposed to do, I guess, you know, when the market was on its market was on its haunches back last year, you know, near its lows, they just loaded, kept loading and loading and loading. And they, you know, so they built up domestic inventory, they built up strategic inventory, you know, and that’s that, you know, per textbook really. Right,
Right, right. Moving to, uh, another topic and the, um, something we don’t talk about too much are HDLs. And, and, um, I noticed, uh, that, you know, back in 2010, we were a net importer. These would be, uh, you know, propane ethane, butanes natural gasoline, stuff like that. And in 2020 we exported 2 million barrels and then 221 were expected to be over 2 million barrels of exports. Um, that’s a, that’s a nice, you know, that’s kinda like, I wouldn’t say it’s immune to what is going on in the rest of the world, but that, that continues to, uh, shine in terms of, uh, uh, for, for, for the oil industry. Right?
Yeah. And there’s a certain extent that the natural gas industry, because, you know, the, uh, associated gas, but, or the natural gas liquids sweater is what they are. Um, the, and a lot of that export demand, this propane has been, you know, one of the shining stars, uh, this year, so far because of the colder weather, you know, the propane, I think I mentioned propane demand has been strong and propane export demand obviously has been, uh, has also been a very, very strong, uh, ethane demand as well, you know, which, uh, which, um, you know, petrochemical demand globally did. Okay. Last year that wasn’t the, that wasn’t the real problem. The problem was in the transport fields and petrochemical demand is going to continue to grow that that’s, you know, that’s one of the bright lights for the, uh, you know, for the, for the, um, fossil fuel industry is, uh, petrochemical demand should be, should be strong, you know, for the next, for the next few years. And we’re seeing all these crackers being built globally. So yeah, that, that’s, uh, you know, that’s a good news for, um, you know, for the fossil fuel industry. Maybe not so good for the environmentalist, but, you know, plastic is, is, you know, is still very strong global demand for plastic and for petrochemicals,
I think it was last month. I don’t go back and listen to what, what we say, but, um, no, I don’t. Uh, and, uh, you had talked about you wouldn’t be surprised to see prices rally, but you thought that I think it would be around 52, 50, $3. You kind of thought they would stick around that level. Um, we’ve bumped up some, and like I said, it wasn’t, it wasn’t like you said it can’t happen, but, um, what, what are you looking for with say the next couple months and with WTI prices and, and I assume Brent,
Well, we set in our, we set in our last monthly that, uh, we thought momentum could get, could get WTI to 60 and Brent into like 62, 63. Right. Um, you know, something was something like that. And, uh, you know, we’re, we’re just to use your analogy, Jim, we’re like a three-point shot away from, uh, you know, WTI getting the, getting the 60. It could go, it could it go pass? So, yeah, I mean, the, the funds may, you know, as we all, as you also mentioned, Jim, this capacity for the funds to come in, so yeah. There could be even more upside, but then, you know, we’re coming right against yeah. We’re coming right against that OPEC meeting. And, uh, you know, uh, very soon people are, you know, that’s going to be the focus in the market, you know, what what’s, you know, what Saudi going to do, what, you know, production, you know, how much has production going to, uh, increase. And also, you know, there, there are a lot of demand traps all over the place. Right. Um,
I like that phrase, demand traps. I like that I’ll steal that. Thank you.
I used it in our monthly, which is available if anybody would like, uh, just hit us up on our, uh, our website or, uh, you know, a firstname.lastname@example.org. But yeah, I mean, they’re there demand traps everywhere. So, you know, I think a lot of the, a lot of it’s been interesting over the last week, or so a lot of the like merchant traders, uh, some of the big merchant traders have said that they think, you know, the prices may, may be ahead of it. You know, might’ve gotten ahead of themselves. And, you know, I, I tend to great, I think prices are, you know, have gotten ahead of themselves. So it wouldn’t wouldn’t surprise us. I mean, we said in the monthly that we thought, you know, the market was better, really. I hate these better valued, but, you know, I was thinking mid, mid fifties for WTI, you know, maybe a little bit higher is where the market, you know, I think it’s the right price, but there’s never any right price. It’s what the, what the market price is. Right. Jeff,
Correct. That’s definitely, there’s no, uh, there’s no new normal because there was never an old, normal,
Right. Right. And the price is what it is on any given day. So if it’s 65 and 65, but there’s definitely a lot of bullish, you know, there’s obviously a lot of bullish momentum, uh, in the, in this market
And, um, gasoline prices,
Gasoline prices, uh, it’s hard to be particularly bullish on gasoline prices. Um, the, uh, you know, we S we see inventories building Europe is, uh, you know, Europe can easily supply us. The refiners are, you know, returns to gasoline was way more than what refiners, uh, probably had hoped, you know, had expected. So I, I, you know, I’m not that bullish on gasoline diesel, diesel inventories, how have built here then, but that may be a slightly better story. Obviously, you know, we’re getting some cold weather that’s, that’s certainly gonna, that’s certainly gonna help. So these Lil cracks may, may hang in there.
I still see the delivery trucks on my street daily.
You just took the words out of my mouth. Sorry. I was just going to say the same thing. It’s going to say these Amazon trucks are like all still all over the place. And yeah, the manufacturing sector has been good then manufacturing and distribution. So, you know, there’s still a good, you know, diesel is still a much better story than, uh, than gasoline.
So going forward, we’re going to look at these, uh, I look at this site called world O meter and it updates the, um, you know, the viruses and, and, uh, new infections. And, um, the trend is it’s down, it’s coming down from a very high number, but it’s at least it’s going in the right direction. Now we have this OPEC meeting March 3rd. Um, and then I guess, uh, we’ll be looking at the weekly, uh, DOE numbers for any kind of a bump up in, in, uh, disappearance, I guess, in, in gasoline or jet fueled all the demand, uh, uh, they, they call it product supplied, but, uh, in those areas, what, what, what, uh, what are you looking at, Andy?
Well, you also, Jim, you were looking at the TSA numbers.
Oh yeah. Right. I look at the TSA numbers for, and, and I, and I also look at the turnstile numbers. Somebody puts out for New York city and, uh, both of those numbers are showing no, no green shoots, so to speak, uh, as of yet. But, um, I’ll continue to be optimistic that some time down the road we’ll have people, uh, uh, flying again and traveling on the subway, but
Let’s all follow. I don’t, I don’t, I think business travel is, you know, Chad is probably, and everybody, you know, this has been the big threes. We talked about it. And all the bank reports we’ve talked about, Chad fuel still being, you know, you’re 22 or 29. We won’t get back to normal by 22 or 23, um, gasoline demand to, you know, the, the EIA doesn’t have us anywhere near normal, you know, until 22 or 20 there, while they’ve only put out through 22. But, um,
Yeah, I mean, my personal anecdotal ideas, once I get my vaccination, which is supposed to be in March, I’ll probably do a major driving trip before I fly. I’m not, you know, I’m not sure yet, but that’s, that’s, I think there are some serious, uh, driving miles in my future, in my near future. And then maybe down, you know, down the road, I’ll fly somewhere. But, uh, I think, uh, we might see a delayed, delayed, but intensive driving season as we, uh, come out of the summer.
I think you may be right. I mean, people may not want an a, you know, still may be low to get on a, to get on an airplane, but, you know, they definitely have I’m B who, who doesn’t have cabin fever. So, um, yeah, I mean, we may see as we, you know, as they get to the mythical herd immunity, you know, which I guess some of the models have by July or August, you know? Yeah. People may be maybe just take to the roads. It’s like, get me outta here.
And one final thing, Andy, um, uh, for me is, you know, in the, when we had the floor trading up, I was thinking about this, uh, was it called game game stop where people went crazy, they buying it up and, and the shorts had to cover, you know, aggressively as it did. We used to call these locals. Right. They would go with the locals are buying and they hit stops and the stops go crazy. And, you know, I, I dunno, it seems like a different, same idea running, running stops or running, uh,
Right. The market’s just getting completely out of control. I apologize to my local friends go, go, you know, right. Look at 2008, when we got up to 147, Oh boy. You know, one of the, all time I know, great squeeze.
We had people calling for over 200 bucks. Yeah.
Yeah. That’s what, that’s what got the 200, right?
Yep. Anything else you want to add? Any, any, uh, this is again, there’s a lot of uncertainty in this marketplace. Uh, stocks coming down, it’s hard to get too short on this thing, but we have, uh, uh, yeah, a lot of uncertainty going forward.
We have a lot going forward. You know, we need the, the w we’ll see where, what, you know, what the supply side is going to look like. We’ll see, you know, where us producers come in, the IIA in the short term, energy outlook actually reduced their, um, expectation for, for production by, I don’t know, 50,000 barrels. I think they’re too low. I think it’s going to, I think it’s going to come in higher, uh, for, you know, they, they, they basically have 11 million barrels a day all the way out till fourth quarter. Right. I think it’s going to be higher than that.
Yeah. Well, it’s, you, you, uh, are a little skeptical of, uh, the discipline that producers might have. Right.
It’s hard not to be after all these years in the oil business.
They’re, they’re, they’re really optimistic folk. We ask them, they really are really fun. Fun to work with. Yeah. Great to work with. Yep. Okay, great, Andy, I’ll talk to you next next month. Okay.
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