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.
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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 to talk about energy markets.
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Today is June 17th and Andy, we had the big three, the EIA, the IEA and OPEC come out last month. And if you looked at least the EIA, it looks like their biggest revision was on prices. Prices rallied. We didn’t have that in our forecast. Why don’t you tell us what happened?
Well, good morning, Jim, and, uh, hello to our listeners. It’s been a very interesting months. I think Jim, since we last talked, the market has been on a, quite a run here, Brent reaching $75 and TEI reaching 73 or earlier in the week. And, uh, you know, I think, I think many traders and analysts believe that the, uh, the run isn’t, isn’t quite over the, you know, I think the impetus certainly has been, uh, the expectation of stock draws coming up, uh, while we’ve had stock draws right along since, uh, mid June last year, but it looks like the, those draws can accelerate in the second half as, uh, demand really ramps up. And we’ll talk about that. Certainly, secondly, you know, the market had been anticipating or, or some analysts and traders had been anticipating that, uh, Iranian barrels who’d be on the market, you know, as soon as July and, uh, with the recent talks, it looks like that is probably not gonna not going to happen. Uh, and those barrels may not come till, um, you know, may not come out till till October, um,
Uh, excuse me, that was in line with what you had been saying for awhile. Right, right,
Right. We, we, we didn’t see, we didn’t see them coming out and in July, I mean, there could be a last second, but given that the, uh, Iranian elections are coming up, you know, I don’t, it’s hard, it’s hard to foresee those barrels coming out before, before October. I think they will do the deal. I think they will come out. But in any event though, those people thought that they were coming out sooner, you know, it had to, uh, well either cover, you know, cover their shorts or, uh, you know, reassess where the market’s going. And, uh, you know, we’re seeing that actually just looking at this, uh, the, at the commitment of traders are, obviously we look at that all the time and, uh, you know, you, you look at what happened in WTI and the, the longs for short, when from, uh, let’s see a couple of weeks ago, uh, WTI was 10 to one on May 4th, it’s now 15 to one.
And, uh, you know, the net, the net length has really increased. So it’s, it’s also become a very popular trade being, uh, being long oil, uh, in line with, uh, some of the moves in, uh, in other commodities. But I think the, the main, you know, to us, Jim, you and I are funded, you know, were dyed in the wool fundamentalists and barrel counters, uh, you know, the market’s in deficit and it really looks like, uh, that deficit’s going to increase, you know, over the next couple of, uh, the next two quarters. So, you know, I, I happen to think this, this price, you know, it’s probably, it’s probably fair. You know, the question is how much has already been discounted and, uh, you know, that remains to be seen,
Right? And maybe we could go into the recent OPEC meeting and talk about what, what they’re seeing going ahead and, and their plans for increasing production to, to make up the deficit or, or
Right. Well, they have the same numbers as, uh, you know, as, as we do. I th I think they are demand. Estimates are, are probably a little, the OPEC plus plus, and OPEC. They both put out different numbers, but they’re more or less the same. Their, their demand estimates are more aggressive than ours. Are Jim not surprisingly because look what they look, what they produce. Yeah. They’re talking their book, but nevertheless, you know, they’re seeing, you know, if you looked at, uh, OPEX call for a OPEC crude in the second half of the year, you know, it’s pushing 29 and maybe it may be actually over 29 and they’re producing 25 5 now. So you know that they know that, uh, they’re gonna, they’re gonna need to provide the market with, uh, with more barrels. And let me look at what their call is. Yeah. I mean, it’s pushing 29 million barrels a day, uh, for the call for their crude. Uh, but they’re, they’re, you know, they’re going to increase by, uh, they’re going to go from 25 5 in may to 26, 3 in June, and then in July, um, they’re probably going to go, you know, they tell they’re going to 27 1, which is in the, the OPEC plus balances. And, uh, I think it’s part of their deal that they made last year. So they are increasing production, but it’s not going to be enough to meet the demand.
Um, the EIA came out last week and suggested that there would be enough that we do reach a balance in the second half of the year. So, um, you know, they’re looking at consumption up from, uh, the second quarter up 2.8 million barrels a day, and then production up 4.3 in the second half. And we’re drawing, they have draws at one and a half million barrels, uh, now. So I think that that yields a, a balanced supply demand balance in the second half of the year. Are your numbers coming up similarly? No. Um, I knew that I knew that, um,
Well, what, what the EIA did is that they cranked up OPEC production, right. Which could happen. Right. You know, I’m using my best case here. Uh, I mean, my best guess they could, you know, again, that’s going to be the will, that’s going to be priced directed and geopolitical directed. I mean, there’s, there’s a lot of, there’s a lot of things coming up for, for, uh, OPEC plus, uh, that, that, um, you know, w w we’ll we’ll see where they, where they come out just using their, they are numbers though. And then adding a fourth quarter increase from Iraq. You know, my numbers are, uh, uh, draws of about a one, you know, about 1 71, 8 for the second half of the year. And I’m on the low side from some of the other, you know, some of the other expectations for second half EIA, you know, they they’re, they have balanced cause they, they just said, well, OPEX is going to increase production because, you know, ABCD, the prices will be high and they might, you know, the AIA might be right.
There’s some big decisions coming up at this next OPEC meeting on, on, uh, where they’re going to go, uh, on, uh, production. They certainly got a break, not having ran on, on the market, but, but even if a ran was on the market in the third and fourth quarter, let’s say a ran provides an extra million and a half barrels a day. Okay. I have actually a half a for fourth quarter, but they’ve, they probably can come up quickly with a million barrels a day. Uh, if you throw storage in there, but, uh, it, you know, if that’s the case, you still, then the market would be more balanced than certainly prices would come off, but, you know, they, they might be able to live with that. So
You’re thinking say by 2022, we’re going to need those Iranian barrels
By 2022, we are going to need the uranium barrels. Yeah, we are, we are going to need them. And we’re going to need more supply from OPEC because demand is still going to grow, you know, three to 3 million barrels a day. So we are gonna, we are gonna need some, uh, extra supply from, uh, OPEC plus from Iran and from non-OPEC producers was interesting.
Um, from an option standpoint, the OPEC meeting, I think it lasted about 20 minutes, Ryan and, uh, you know, vowel was already, it was already trending lower into the meeting. We, I think we had been up around 37% and coming out, we continued to trade down to 30% or so. And it’s also the, you know, volatility doesn’t, I mean, it tends to go down and markets that go higher and the trading ranges are kind of, you know, more or less, it was less volatility in, in the, in the actual market as well. So that kind of pulled it down, but it was just interesting. I wish, you know, if someone had told me that the OPEC meeting was going to be 20 minutes long, someone who, uh, is not comfortable selling commodity volatility, uh, would have been all in on that one. But, um, yeah, it’s just, we don’t, we don’t, we don’t always know what’s going to happen.
But the other thing I’d say is that, you know, we yesterday actually we saw w w we’d been you and I have been talking, I think, I think it was the March, maybe the March, uh, podcast. We did, we started seeing a hundred dollars call buys in December of 2022, which was really unusual. And then, uh, recently, uh, I think it was wall street journal came up with an article. So last week about all the hundred dollar call buying. And most of it had taken place, you know, two or three months ago. But, um, you know, yesterday we start to, we, we saw some one 10 and one 20 calls being bought in December of 2022. So that a hundred dollar call is still the biggest open interest on the board, six 60,000 lots. So it’s still the biggest one, but what happened, would you say recently that might loosen, that could be one crazy trader doing that, but what, what would make somebody believe in 110 hundred and $20 oil say going forward? Well, I
Think that first of all, to CA can we get to one 10 or one 20, as we’ve said, many times anything’s, anything’s possible, you know, I didn’t really think a hundred was going to be in play. And I think that what’s happened is, well, I think a couple of things too, one is this idea that, you know, all the capital that’s going into green into green, you know, it’s not going into plaque, you know, it’s not going into, it’s not going to oil. And as a result, you know, some, some big projects may not get okay. And, and, and we know this depletion of three or 4% of every year. And as a result, you know, oil is just going to get tighter and tighter. So I think there’s, you know, there’s that idea. And then there’s the idea of, you know, the inflation inflation and the whole Supercycle.
And I, you know, I mentioned how the speculative money coming into, uh, into crude side, I think that there’s, that, you know, people believe that, um, you know, a crude may take maybe part into the, into the super cycle. And finally, well, not finally, there are a lot of factors, but, you know, let’s say the Iran deal, isn’t, you know, the, you know, Ron doesn’t come onto the market, you know, and there’s any kind of, any kind of geopolitical upset, uh, you know, we’re already in terms of inventories, we’re already on the tight side. So I’m well, below average, I get, well, we’re tight, actually, if you look at the curve, Jim, you know, yes. Right. So, yeah, I mean, we’re below average, we’re below I had us going into below normal by July, but we may well be there looking at what’s what’s happened to the, you know, what’s happened to the, the curve, so inventories are tight, so any kind of geopolitical upset that’s, uh, you know, that that’s a big problem. That could be a big problem. So it’s not, you know, we we’ve lived through 1 47 back. When was that? Oh eight. Yeah. I
Have 2008. Yeah. Which, which, uh, which to me was, you know, I, I had this as, you know, a long-term argument that, you know, maybe instead of looking at, uh, the economy under presidents, we should look at the, you know, whether it does well or not, uh, and give credit to a president, which we should be looking at oil prices or energy costs, because, you know, when you think about, uh, Gulf war one, when prices went up during, uh, George bushes, uh, seniors, uh, uh, tenure that the, we had a recession right after that. And then 2008, we had oil prices go up to 1 47 w in WTI, and we had a major recession after that. So it’s kind of like you can say about Jimmy Carter, he able, what we, we look back at that those economic days as being, uh, sort, uh, awful in, in, he was, uh, he was there during, uh, some huge spikes in energy costs. So I guess, I guess my question to you would be, are we at at $75 oil? Are we starting to set the seeds for the next decline in oil price? Or do we still have a way to go before we do that?
Well, that is an interesting question in, because I think what you’re really talking about Jeff is where’s the U S producer because we were the, you know, we’ve been the marginal. We had been the marginal producer, you know, we, we had the, over the last few years, you know, we’re the ones that, that, uh, you know, lent extra barrels to the, to the market. And, um, you know, at what point does the U S producer throw off, you know, they have, they have, I think as both of us discussed earlier, and many people have mentioned, you know, you and I have been dealing with the us producer, our whole, you know, 25, 30 years. Uh, and I think both of us were sort of shocked at how disciplined they’ve been. Well, even,
Even the EIS report, uh, made a comment that their models, uh, suggest that there is discipline going on. So they’re, they’re basically, we’re saying that at these current, as at current prices, I think they have a three to six month lag between price and rig counts. You’re seeing the recounts, even though they’ve come, I think they’re double off the low they’ve come back. They haven’t come back as fast as they would have expected in their models. Now that could be, you know, how money, how much experience do the models have. They could be, you know, uh, there could be problems with the models, but I’m just saying that there’s another piece that they’re, they’re showing more discipline. And I actually thought they would be, you know, scooping up these 50 and $60 puts in December and producing it, or, you know, out out a lot and just producing like crazy, but
It’s not happening. I mean, it may have started. I mean, if you look at last week’s weekly PR uh, EIA number, they were up to 11 to a big jump of 200, and that was onshore so that, you know, maybe, maybe it’s maybe it started, but there’s certainly a lot more room, obviously for us producers to start, uh, coming up with, uh, you know, it’s some with some more barrels and, um,
Interesting, Andy, you bring up the weekly number of production because, you know, we, you always talk about how the EIAs a weekly update is, is a one-week number and you can’t, you, you know, you’re, you’re better off looking at, say a four week average. And, but this week’s report had some really eye-popping numbers in that. I mean, I looked at it as a very, uh, bullish report. And, uh, another thing you said in this recently is how much is in the market and the market’s not reacting. I mean, it’s not collapsing, but it’s kind of moved sideways, I guess, from that report. What can you just kind of tell us what you look at when you look at these weeklies and what, what was interesting about this week’s report?
Well, this week’s report had the w yeah, I thought it was a really interesting report. The market has been, you know, looking at gasoline demand, which has, uh, this week’s was what was it? 9 3, 9 3. Yeah. Uh, you know, it had, uh, it had popped up from a poor week, four week, last week, but also, you know, th there’s another component, which is the production side. And, uh, we are producing, you know, the gasoline output is, is a little higher than I thought it would be for this week, but not all that much, actually, it’s the import number. That’s really been a, uh, you know, it’s something to, um, I’m looking at that actually, Jim also almost as carefully as everything else because of the imbalance in gasoline, which grew, it’s grown 9 million barrels now in the last couple of weeks, you know, and we’re just importing too much gasoline.
And then you think, you know, the way that I look at it is, you know, I try to protect the numbers going out and, you know, looking at where the production is, that’s growing a little too fast, but in port should gasoline and port should decline coming up. I mean, a lot of this is still from the spike that we saw, uh, as, as a result of the colonial Europe, Synthes, all this gasoline, it’s, it’s still gonna come my thing, but at a much lower rate and importantly, uh, we’re going to export more to, uh, south America. We are, we already are, there are refinery problems in Brazil and Mexico as demand is beginning to, uh, tick up. So, you know, I think the gasoline, I think gasoline is going to draw here, but you know, the other thing I look at is where are we on the, where are we relative to the five-year average we’re high?
And the five-year average I use is 15 tonight, 2015 to 2019, because last year was so off, of course. So out of control, you know, you gotta just, uh, uh, both supply and demand. You got to just throw it out. But gasoline just went in two weeks. It went from looking okay to looking, you know, somewhat worrisome, but, uh, more two days, two supply and day supplies, stocks divided by demand or today’s supply above the five-year average. Uh, we have been running like half a day to a day. So the last two weeks has done a lot of damage for gasoline and, and look what happened to the cracks. And they fell apart. It fell apart. Yeah, yeah.
Was Andy, I saw the run runs were up 412 to 16 three.
So why, well, not too high, not too high, much higher than where the EIA had it actually higher than what I thought it would be for, for this week too. And that’s, you know, margins are margins are we’re okay. Up until the last, you know, week or so, margins were good enough to run. It’s almost
You almost looking at, who’s doing a better job at managing supplies at the producers or the refiners. And it’s like the refiners, see, uh, they, they see good margins and they, and they come back and then all of a sudden the margin, they go away, like snap the fingers.
Right? Right. Well, they had been doing a pretty good job over the last, you know, year or so not year or so. Let’s say six months they’ve been doing, you know, a pretty good job. They got some help from the hurricanes and from, uh, they got, you know, the hurricanes and the big freeze, um, kept production lower than it ought have been else. They would have screwed this up months ago, I think, oh wait, no refiners. Right. They’d be like, all right. Well, the other thing is they’re expecting big demand to on gasoline.
Well, that’s, that’s, if you get back to that, uh, gasoline demand, number nine, three at that, for this time of year in a normal year, if that’s possible, that’s not a bad number. Right. I mean, as long as we keep going higher, yeah.
Nine three, the five-year average is, is 9 5, 5, 4, 9, 3 is not horrendous. And I think it, I think it’s going to keep going up. You know, some guys are looking at back at, you know, maybe the market getting the 2019 numbers, 9, 6, 9, 7 is low they’re at nine to, you know, the government is looking at nine to, for, um, June, July and August 9.2 million barrels a day. We’re, we’re closer to 9.4, but there are other guys who are looking 9, 6, 9, 7, maybe it’ll come in there. You know, April people want to drive. They won’t want to hit the road.
Yeah. I’m, I’m optimistic on, you know, that maybe listen, it’s a, as you say, it’s a one week number, but I think this is like the beginning of a pretty good gasoline season. And, um, my, I guess my question is there’s still excess capacity for refiners and, um, who’s, what’s, what’s going to happen first. Are we going to see a pop and gas demand or are we going to see refiners come back? You know, it’s just, uh, uh, I’m guessing that I think the refiners are gonna kinda come back to meet the demand. So I’m not, I guess what I’m trying to get at is there, is there a play in the gas crack or not, you know, it’s, as you mentioned, it’s it was, it was decent. It was good. And then it came off sharply and then do we, does it, is there enough gas demand out there to take it back to, you know, to bounce off of these levels?
Yeah. As I was saying, I think I fixed docs can draw from here. A big thing will be, you know, export demand really kicks in, you know, refiners want to send, you know, they prefer to send barrels out, you know, there’s the rinse, the administration’s working on the rinse issue. I’m sure they’d love to see that rinse come off because that’s also been holding them back. Uh, if it does come back though, you know, then they’ll crank, you know, then they’ll crack. So it’s kinda, it’s really, you know, gasoline should be pretty interesting coming up. And of course, you know, imports I think are going to, are also going to come off. So it could, it should inventory should dry think from these numbers, but you know, is gasoline going to get tight at, I dunno, you know, I’m not sure. I doubt I don’t less demand is like 9, 7, 9, 8. I don’t see it. So a lot
Of these, uh, numbers for the weeklies or estimate or backed into, but the stock levels are surveys. Correct. Is that those, the stock levels are usually right. They’re usually right. So, um, so going forward with all this noise in the marketplace, what kind of, what are you looking at? And it sounds like you’re looking at all of them, but is there any, any things that stick out that you’d be interested, you said gasoline imports you’d be watching
Gasoline imports will be important to watch this full it’s a, I’m watching the production cause it’s, it’s much too high, but demand is, you know, demand’s been solid for this. Let’s, you know, diesel demands from really solid and, um,
Ask anyone who’s been on the highway in the last few months. Oh man. It’s like trucks all over the place,
All over the place. I mean, it’s like a parade of trucks, you know, and I take, so, which is the reason D you know, diesel demand has been, uh, has been good. And we know that the it’s been good, even, even with the, um, all the supply chains messed up. Um, so I think that’ll, that’ll continue. Uh, interestingly dislet they supply as 34, uh, right now in the five-year average is 34 and a half. So we’re, we’re, you know, we’re in good, we’re in pretty good shape on this let’s, but certainly the number there’s fair swatching and, uh, total demand, we are running the four week average is 19.35 million barrels today. Uh, the five-year average is like 20.24. So we’re still 900,000 barrels a day below average. And a lot that is a function of gasoline demand, not where it could be in jet fuel demand is still running 400,000 barrels a day below average. And, um, you know, I, that, that should, I think that’ll improve.
What, um, what was the demand number this week or PR as they call it product supply?
It was over 20 million barrels a day. It was good.
Yeah, it was good. Yeah.
For one week number, it was, it was, uh, it was pretty good. I mean, it wasn’t the 21 that we’ve seen, but it was good, you know, it was good. It was good across, it was good across the board
Before we get into talking about prices going forward. Uh, any, any other things that you wanna, that you want to talk about as related to a fundamentals? Well, I, I, you know, I think
It’d be interesting to see. Uh, one thing we can talk about is, uh, whether or not, uh, the administration, you know, where at what point, you know, is higher gasoline prices, a problem, uh, you know, a political problem. I don’t, I don’t think we’re there yet. And the other thing related Jim is, is what’s the demand effect, you know, is there going to be a demand effective prices start, you know, moving up to a three, you know, $4 a gallon or 3 75, you know, so somewhere in there, I mean, two to four is usually unacceptable. Right. Um, California. Yeah. Well, right. So the California, but I mean, you know, for the, for the rest of us,
Right? Yes. And I
Think even in California, you know, and, and do you think there’s going to be a price, uh, price effect there where people just, you know, it doesn’t matter?
Well, it’s, uh, there is, uh, there’s also the income effect. So people, obviously not everyone, but there’s a, um, if you look at the economy as a whole, there’s more sort of more income and people’s, uh, uh, people saved a lot of money last year, the ones that could, and so that tends to have a countervailing effect on, on the price. I think we, I think we saw that, you know, in previous, uh, moves hot, moves up in gasoline prices, as long as people’s income keeps going up. So that, so that might be an offset. Plus you have a wild card is the pent up demand. I mean, anecdotally, we, we seem to know people and see it on the highways that people are wanting to get heck out of their houses and you know, it, and I think people who can work remotely or looking at Airbnb type situations where they can work from places that aren’t at home, you know, they can go on a trip and still work. Right. And we, you know, we still haven’t seen the kids out of school yet. So I think there’s, uh, anecdotally I think the parks are full, you know, in terms of, uh, trying to, trying to, uh, get a reservation. I, you can, I don’t think you can. And, and, um, so I, so I think that, you know, I, I’m kind of optimistic on this, uh, gasoline demand. Uh, I don’t want to say it at any price, but for where we are now, you know,
See, yeah. It doesn’t matter where the, where the prices are as long as the, not for, as long as those that have a four handle. Yeah. I don’t think it will. I mean, could, oh, I shouldn’t say that. I mean, it could anything anything’s possible, you know, and whether or not, you know, the administrative w whether the administration gets involved in the oil pricing on, I don’t know. I mean, they’re working on the rims issue and that, that may bring more supply, you know, whether they go, you know, as far as, as putting some pressure on the Saudis, uh, you know, I don’t know if they’re up for that right now. Yeah.
We haven’t, we haven’t talked about China. You want to mention,
Right. We didn’t talk about China. So, yeah. Which is a big, which is a, obviously a really big deal being that they’re the second biggest, you know, second biggest consumer of, of, uh, of petroleum. And, you know, th there, uh, it looks like from their parent, disappearances is doing very well, you know, way, way ahead of last year. But of course, last year in the first quarter, uh, they had, they had their outbreak, they had their virus outbreak. And, um, you know, it looks like they’re up over a million a day. I think, um, you know, some of the estimates for Chinese demand is going to be, you know, it could be close to a million a day, you know, I’m working with around seven to 800,000 a day growth, and, you know, their, their imports, it looks like in, you know, they, they did great last year because they bought, you know, what you’re supposed to do. They bought like when the market was really on its, on its heels, you know, down around, you know, T I T I, and from zero to 20 and Brent from zero to 20, you know, they bought the hell out of the market and, uh, they built up inventories and it allowed them to draw down inventories in, in April or may, you know, it looks like they may continue to draw inventories or, you know, are they going to get squeezed with prices up here? They usually don’t. Yeah. I guess
We always wonder if, if it’s, when they, when they’re buying crude, whether it’s crude to consumer crude to store and you know what these prices it’s, it’s consumption, not an option, right? Yeah.
They’re certainly not going to overbuy. Um, you know, they may, they may work off, they may work off some of the inventories that they, some more of the inventories that they, uh, you know, that they built. So I, uh, yeah, that’s a tough one, but it does look like their demand is picking up. What’s really important, I think, is to watch, you know, are they buying up here? Cause obviously that’s great.
Right. Right. And they, and they certainly are. Uh, I remember from my grain days, they’re a savvy, uh, savvy traders. Um, like you just mentioned, um, what about India? Are we seeing a big collapse in demand in India or are now because we were,
Yes. I mean, if it’s well demand, this is definitely softening, obviously. Um, you know, they were expected to grow by over, from last year by over, um, some, some people had them up a million barrels a day on, on demand up from four or five to five, five. Think of the, the OPEC took that down the 500 a day growth. So, you know, they took off 500 a day, which is a lot. And that is, you know, we’ve, we’ve got them at around 4, 8, 4, 9 this year. So, you know, is this still demands? Okay. I mean, it’s not, uh, uh, it’s not
The worst case scenario that’s playing out. Yeah,
Exactly. Thank you, Joe. Yeah. Thank you. So
Let’s, uh, let’s, let’s talk, wrap it up with, uh, like prices going forward, you know, just like a month or two out. It’s a
Tough, yeah. Yeah. It’s a tough call in our last monthly. We had WTI at 73 50, uh, for the next month or two and Brent that like 75 50, which just about, you know, we’re just about there can the market appreciate, yeah, I think this, there’s still some room for the market to, to move up. I mean, this is a lot going to go this a lot. That’s going to go on here in July, you know, this whole pack meeting, you know, where they go on on, uh, supply, uh, the Iranian election, you know, is, is going to be a big deal. The talks are going to be, uh, a big deal. And, you know, those are going to start telling the tale as is any kind of price, you know, any price effect to that from these, uh, from these higher oil prices. You know, I think there’s a, there’s some more upside, but you know, you start getting an eight handle ahead of Brent and, uh, you know, I think that’s, that’s sorta toppy up there, particularly the other thing, the watch is going to be these us producers, you know, and some of the, and, and some of the chat coming out from, um, you know, I I’d watch what Scott Sheffield has to say, uh, of the next month or so, you know, cause he’s family, he’s been the leader on the discipline, you know, we’re disciplined.
But as we said in the, in the past, you know, these guys are, you know, they’re into the exploration and production, their producers. So, you know, let’s, let’s start watching the chat and the actions from some of these us producers, if you start seeing open interest really started spiking, you know, in the, in the, um, you know, some of the puts you mentioned Jim, or, you know, some of the, uh, outer months, you know, I w I, that, that could, that also is Farish. Right, right.
And what about products, gasoline? We expect to do what
I think that the, um, I actually liked the cracks, so I had a little, you know, I’m not sure I’m ready to buy them right here, but, um, yeah, I th I think gasoline is, is gonna, again, you know, you start to see, we’ll, we’ll see where these demand numbers come in and what, what refiners, you know, where, how they produce w where we’ve come out of turnarounds. So, uh, you know, though those are over, but yet we’re also seeing, um, with, with the spike in, uh, power price in with the spike in heat, uh, where, you know, Texas is having issues again, right now we’ve got hurricane season coming up. So, you know, global warming or climate change or whatever you want to call it, you know, it’s definitely having an effect on supply and demand of refined products. Uh, diesel diesel has been, um, I think these will still do okay. And I think margins which have come off, I think they’re going to stabilize and, uh, should start coming, you know, drifting back up.
All right. So I have to tell you that, um, I agree with everything you said.
All right. Any, anything else? Just the two of us. I know, I know we’ll be looking to, uh, get a special guest coming on. Who can, uh, you know, argue, argue the other side or agree with
Us. Yeah, I think, uh, uh, th it’s amazing how, when you read one of these monthly reports, including your own within weeks, you, you know, like, uh, I think this, this, this time over the month was how, how much prices moved up. But also since the, since beginning of these reports, the cracks have fallen apart. So it’s kind of like, something always happens, always happens. Yeah. Which is which it makes me,
Let’s not forget, you know, we still have this, you know, this virus throughout the world. Right. Uh, and you know, some of these variants, so let’s, you know, let’s not forget that. I mean, yeah. We, you know, looks like we’ve come to the, you know, the light at the end of the tunnel is we’re just about there, here in the U S but you know, there are other countries that are well behind us. Yeah. Yes.
Very good. Okay, Andy, thank you very much. Anything else you want to wrap up?
Uh, you know, if you want to get a hold of us, you can get a hold of me at firstname.lastname@example.org and our website www.commodityresearchgroup.com.
And you can find me on, uh, the best way to get in touch with me is on LinkedIn. Just look me up.
Yeah. I’m on there too on LinkedIn.
Okay. Thanks, Andy.
All right. Thank you, Jim.