Commodity Research Group (CRG) is an independent research consultancy specializing in base and precious metals, as well energy products. The Group provides research and general price analysis for these markets, along with advice to companies seeking to construct hedging strategies.
In this podcast, Andrew Lebow and Jim Colburn discuss the latest economic trends and supply and demand factors affecting oil prices.
About the Experts
Andrew Lebow has been involved in the energy derivative area since 1980. He began his career with Shearson Lehman Brothers where he worked in the initial formulation and marketing of the NYMEX WTI crude contract in 1983 as well as the NYMEX gasoline contract in 1985.
Mr. Lebow has appeared before the State Government of Alaska as well as the State Department of Defense to discuss hedging techniques. Mr. Lebow is also well known as a market analyst and is quoted frequently in the financial press. He has appeared on television on CNBC, NBC, CNN, CBS, and PBS. Mr. Lebow holds a BA from Lafayette College and an MBA from the Kellogg School of Management at Northwestern University.
Jim Colburn is a futures and options professional with 30 years of wide ranging experience in commodity markets. For much of his career, at Man Financial (1989-2011) and Jefferies LLC (2012-2013), Mr. Colburn worked with major integrated oil companies, hedge funds, pension funds and other entities to develop market hedging and trading strategies.
He has conducted trading, hedging and risk management workshops in energy markets worldwide.
Mr. Colburn is a published author on options trading, hedging, market making and risk management. In 1986, while at the New York Mercantile Exchange, Mr. Colburn helped develop new markets in energy option contracts by educating the oil industry, banks, floor traders and brokers, worldwide.
Speaker 1: (00:01)
Good morning. 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 along with Ed Meir. Andy and I founded commodity research group, which consults on various aspects of commodity markets. Check out our website of the research group.com where we post our monthly commodity reports, our blog and our podcasts. We’d also like to thank our good friend Doug Stetzer of EKT interactive oil and gas training for hosting this podcast. You can check out his daily newsletter, podcast and learning email@example.com. This podcast should be construed as market commentary, merely observing economic, political and market conditions and is not intended to refer to any particular trading strategies or systems. You’re not responsible for any trading decisions taken by anyone, not intended to listen. Information is not guaranteed accurate. This is not an offer to buy or sell any to rebut it. Today is September
Speaker 2: (01:11)
Speaker 1: (01:16)
Good morning, Andy. Good morning, Jim.
Speaker 3: (01:19)
Uh, we’re a lot happened since our last podcast. Uh, we’ll put a name on it, Harvey. And, um, why don’t we start off by talking to me about, um, the impact of Harvey, uh, as seen through the weekly, uh, Eia numbers, which I, which I know you have some problems with. So I just want to go down some of the categories and, and uh, and explain what they have and you tell me and you comment on each one, so, okay. Okay. Okay. So, uh, we know a bunch of refineries were, were, were damaged and, and if I look at the crude oil and put two refineries, I see it’s around 14 million, 78,000. This, this would be a, this most recent report as of September 8th, uh, down 394,000 barrels from last week. A number of, um, what do you want to say about that number in particular, but also a, what’s going on with the refineries coming back?
Speaker 4: (02:24)
Well that number, uh, most of the numbers on the reporter or not accurate, uh, and through no fault really of the AIA or, um, the, the people that were that report, obviously there, they were under a lot of duress. Yeah. That’s the last couple of weeks know I think reporting accurate data to the IEA is probably the last thing on their, on their minds. So I think you have to take a lot of this data with, with a grain of salt and certainly the, um, you know, that, that run number that, that that’s not right. Um, you know, runs, I think the big picture for runs are that they’re coming back. And I think unlike Katrina, um, you know, they’re coming back, uh, probably a little bit quicker than what the market may have originally forecast. Um, and then we could see that in risk in the price response because of market crude came off pretty quickly during Harvey.
Speaker 4: (03:32)
Uh, and now has, has rallied back going to the fact that I think these refineries, um, we’ll, we’ll be coming back. I don’t think there’s been any long lasting, um, any, any major damage. Um, you know, it’ll, it’ll take through through October, uh, for them to probably get back to, uh, probably get back to full capacity. But, uh, I think the industry is doing a pretty good job of getting these refineries back up, but that, that 14.0 8 million barrels a day number that, that that’s not right. I mean it’s probably over 15 on its way to a, on its way to 16, um, over the next couple of weeks. And then probably on its way on, I know it’s certainly not going to get to 17. The 17 seven was where we started, but, um,
Speaker 3: (04:23)
I was going to ask you that now also, if, um, would you just talk about the, uh, refinery turnaround process that’s at its peak
Speaker 4: (04:33)
Tobar yeah, that makes an October and that’s another, um, you know, I think that’s going to be an important factor, uh, because some of these turnarounds may be delayed from a October. Uh, that’s already been a, a number of refiners that have announced that they’re going to take turnarounds in the spring rather than the fall. Uh, and so runs actually could be pretty strong as we head into a stronger than than we might’ve already thought, um, as we head into October and November.
Speaker 3: (05:08)
Now normally you’d say that would kill, uh, the crack spread. But, um, we do have this issue with the Mexican refinery. I mean, that seems to be, I mean it’s, it’s in the news, but it seems to be buried a little bit. Um, talk about that for a second.
Speaker 4: (05:24)
Yeah. The Mexico, they really had a hard time with, they’re a west coast for five west coast for finery. Uh, Salina Cruz. They had a flood earlier in the year, uh, and now they had hurricane damage. And on the east coast Kotch it caused some damage to refinery capacity. So Mexico’s refinery capacity is, is going to be cut again over the next, uh, over the next few weeks, if not longer than that. And, uh, that, that, that’s actually been a pretty big swing in the global markets, uh, all the way to the, to the brand market. Uh, and I think it’s one of the reasons why the brand market has been so strong is that the supply that Latin America would normally get from us refiners isn’t calming cause us refiners can, the Gulf coast can’t export. Right now I’m going to damage to the, uh, export facilities plus the refineries are down.
Speaker 4: (06:28)
So as a result, uh, we’re seeing runs in Europe pretty, pretty strong. And I think it’s, I think it’s one of the main reasons or one of the reasons of background reasons why, uh, the bread market has been so strong. So it’s unbelievable how, uh, the storm can have unanticipated effects, um, cause ripples throughout the world. Yeah. Ripples throughout throughout the world. Exactly. Um, you know, you mentioned the, uh, uh, the Brent market is, is it just strong in the front end? Are you starting to see a backwardation? Well, it, it, it’s pretty strong. The, the front end is definitely strong. If you look at the back of the curve, it’s not quite as strong as Wti, which is something that we will, uh, we’ll talk about. But a, the front of the curve has been, um, it’s been really strong. You look at 40 switch is a physical barrel.
Speaker 4: (07:29)
Uh, forties has been trading like a dollar over, over, uh, over the screen. So it’s like the highest and two years. Uh, and the no vd sprint, uh, at least as of now is in the twenties or thirties. And what we’re seeing it at least on the brand side is, uh, some of this floating storage is dissipating. So, um, demand the incredibly also a demand for brand, not only for refiner runs a for crude runs. Uh, but we, it’s been decent, decent export demand for brand even though Dubai is much cheaper than, than brand. So, um, you know, the North Sea is definitely, uh, tightening up and we’re seeing that in the, um, you know, we’re definitely seeing that in the, in the spreads. The other, the other thing that’s happened of course is that, um, Wti met us. Domestic crudes would have, are so much cheaper than Brent. You would think that that exports would be fairly significant, um, from us. And of course, we can’t export because of the, because of the hurricane. Right, right. Again, a lot of fun in a lot of unanticipated, uh, a lot of unanticipated things from the front of the storm. Well, you know, just, just on your, it
Speaker 3: (08:56)
makes me want to talk about three different things. One is, um, there’s, there’s also a, behind the scenes were, were uh, the, this week we’ll get into that later, but the IEA bumped up its demand, uh, by a hundred thousand barrels a day for this year. Is that correct? Yes. So, so there’s, uh, you know, and that’s sort of outside of the, uh, the hurricane issue. There’s, there’s something going on in rest of world and you see that with the, uh, you know, the IMF I think has a three and a half percent growth for the world and that’s finding its way into energy demand it seems.
Speaker 4: (09:32)
Yeah, no question. These demand numbers, I think, uh, you know, Jim, we had spoken about this earlier, um, offline. How, you know, sometimes the IEA report has just completely, no, it’s really paying attention to the IEA report this week. It was like, it was, it was headline news. I mean, it was, it was boldface dues.
Speaker 3: (09:56)
I know it’s, I always look at it as a, as a contrary indicator. I think a while back they were talking about how the world was a, a Washington crude and, and um, it was so bearish and, and that would be within a day that was the bottom of the market. So I mean, again, they’re, they’re looking at the previous month and so, um, that, that’s a lot of times that stuff’s already in the market. But this time I think you’re right, it, they came out with a bullish, a revision and the market acted that way, which know we’d always get to see the market react, what we would call I guess logically. Okay.
Speaker 4: (10:32)
I know I, and I think that the, in each headline here, the, you saw the, uh, the IEA was mentioned as a, as a, uh, you know, as, as a factor. But yeah,
Speaker 3: (10:45)
Speaker 4: (10:46)
if they’re right, uh, it’s that it’s clearly supportive. Uh, they had some big numbers. They said that the second quarter demand was rip roaring. It was up like 2.3 million barrels a day over a over a year ago. Right. I think if you look at the, at the macro and certainly, um, you know, as you mentioned, the 3.5% growth this year, would they have for next year, like three seconds
Speaker 3: (11:12)
about yeah. But in three, six I think yet. Yeah. But still, you know, like, uh, all of these countries that had been, uh, like I think Brazil is going to be, I’m actually have a plus, uh, GDP and there’s all the, all the pms are looking good, so yeah, the world’s energy demand is, is, is bright I guess. So going over the next year or so. Um, also let’s, let’s talk about domestic production in the u s um, the weekly number was up $572,000 a day to a 9.35, three. Um, and they, they come back that quickly. No,
Speaker 4: (11:52)
that dot. Burt is,
Speaker 3: (11:54)
can’t be right. I don’t think, um, however that it is going to it. I think that those numbers over the next couple of weeks, and this is the other important thing, oh, but these will all normalize over the next couple of weeks where we’ll get a better idea of where a, of where inventories really are. Uh, I don’t think that that number is not not right. And, and as a matter of fact, you know, you have to wonder about the weeklies anyway. Uh, and this, this is an important point because the EIA continues to, to revise downward on the monthly’s. Um, the EIA puts out weekly reports and of course they also put out, uh, the, the monthly reports and the monthly reports are looked back at reality of where, where the numbers really were. These weeklies are just weekly estimates and the monthly Sir are more or less, uh, a better view of, of uh, where we are in production.
Speaker 3: (12:55)
And the Eia just made a big downward revision to the June numbers by, I think it was like 150 to 200,000 barrels a day. Um, so you, you have to wonder about these, uh, these weeklies. Anyway, the, um, you know, the, the AIA, uh, the numbers, the numbers may be lower than what, what we’re reporting. And of course, what’s unbelievable is how the market is so laser focused on these, on these weekly numbers. And um, you know, they could, they, they could be wrong. Certainly this one, clearly this week’s is wrong. So here’s a lot, here’s some bed. You know, it could be a incomplete data then it’s really causing a lot of, uh, can cause a lot of hand wringing in the market on a, on a week to week or, you know, in a week to week basis. Well, I think, I think the energy, uh, economists and analysts that try to predict these weekly numbers have been humbled enough to know that, you know, it’s, it’s really, it’s a really hard to, to, uh, figure out what they’re going to show from one week to the next.
Speaker 3: (14:03)
And I’m not sure the, uh, the other economists, uh, you know, when, when they miss a, an economic number, um, by 0.1, that’s it. It seems to, uh, send everyone into a tizzy, even though I don’t think they can call it that accurately either. But that’s a something else. Um, let’s talk about, uh, gas demand. I mean, we’re, we’re going to lose, I mean, you see all those, uh, cars under water and now with Irma, we’re going to lose some gasoline demand. Um, the way that we track that on a weekly basis is through the product supply measure. Could you just talk about what, what that’s showing? Well, certainly gasoline. I show nine, 9.619, which was up four and 56,000
Speaker 4: (14:52)
from last week. Um, can you just comment on, on gasoline demand? And you can almost say you can almost, um, go with, and the reason is apparent disappearance is movement from primary, from primary to secondary sources. So that that’s basically moving from refiners and big dealers and wholesalers to, um, secondary and tertiary sources. So if you think that that week had the Florida evacuation, uh, it’s possible that, that there was, um, somewhat of a demand spike again. Um, that’s an imputed number. So it’s for, it’s never accurate. It’s never completely accurate, but, um, you know, I, I can almost go with that. Uh, so, so, so basically you’re saying people were topping off their gas tanks and gas stations were getting empty. So that, right. That’s a big movement of, and we saw that, I mean, gasoline move to Florida and then was consumed right now, um, you know, as you, as you mentioned Jim, I, I think that, uh, gasoline demand is at least from Florida’s, is that definitely going to have to be, um, it’s going to be lower.
Speaker 4: (16:17)
Uh, the, they, they demand about half a million barrels a day of gasoline. So, uh, for the state. So one would have to think that, I don’t know, a hundred, 200 maybe, maybe caught. Um, but you know, there’s going to be some spikes and resupply and Euston too, cause it has lost some, uh, has lost some demand. But to counterbalance that, uh, production, gasoline, um, production is going to be lower. Gasoline exports are going to be low. Or even though the IEA said they weren’t, they have to be because they, the, they weren’t exporting. Um, so, you know, I, I what, what we, what I see anyway is I guess lean stocks have drawn by, I think over the last couple of the last two weeks by 10, 11 million barrels. I think this going to be, I think over the next three or four weeks, I think it’s going to even out.
Speaker 4: (17:17)
I think this is going to be a little more of a draw, but then, then we’ll probably just start be balancing out. Um, but the thing on gasoline is that you, you know, even though we’re saying that the refineries are doing a good job of restarting this, this still dislocation, they’re not all up and, uh, you know, there, there’s still going to be markets that are going to, are going to have some, uh, have some issues. So, uh, you know, uh, I think gasoline is, is this something to be watching very carefully over the next few weeks to see how it is to see how it behaves. You know, all is not all, it’s not 100% by any means.
Speaker 3: (17:57)
Right. The other thing is if we lose a little gasoline demand, does that spill into this split demand or is it, do you think there’s more trucks moving around now, you know, cutting down trees and getting into those areas that, you know, they’re hauling all the damaged housing materials and bringing him, uh, you know, people that rebuild. I mean, is that you think that’s enough to show up and we see that in the numbers?
Speaker 4: (18:27)
Yeah, I think we will. It may not be, you know, it might not be October, but it might be November, December. We have some pretty strong, um, pretty decent diesel demand. So that’s a great point. You know, we may loose gasoline demand where we pick up, we pick up diesel demand and as a result, uh, total demand is, um, you know, is going to be the same or maybe a or maybe a little bit lower. And again, I think, you know, as we were saying earlier, um, and what the market’s been telling us this week is, it’s looking at, at the hurricane is as, as has really transitory transitory event that’s really not going to change the, uh, the overall narrative of, uh, of the energy markets of at least the oil markets.
Speaker 3: (19:17)
Well, I was gonna, uh, that’s a good segue into the other information that came out is we have our big three reports, the EIA, OPEC and the IEA all pronounce their supply demand estimates. And no, we had talked about the IEA is bump up in a demand of 100,000 barrels a day for this year. Um, did you see anything else in those numbers that kind of caught your interest?
Speaker 4: (19:47)
Yeah, I saw that, uh, I did actually on the OPEC report that they raise their a call on OPEC crude, uh, for this year and next year because there were some quarterly increases by three or 400,000 barrels a day to the, uh, to the upside. And they to that, that’s due to some downward revisions on um, non OPEC production and upward revisions on demand. It seems that, um, the all three have the same sort of, you know, the theme is, is the same. That demand is growing a little bit faster then, uh, they had, uh, they had originally anticipated. Uh, but if, if you look at the big, if you look at the big three, you know, and you do this call on OPEC crude, which is a good number to look at it. It’s basically what OPEC needs to, to produce, to keep the market balanced. And for the, for the second half, uh, the call is just about right write about what they’re producing. It’s 30 to eight, 30 to nine. Um, and I think that probably jives with, with what we’re seeing in the, in the market. That would probably mean mean a balance to a slight draw mark, a slight draw on the market, uh, where they’re going to have some issues is uh, in the, in the first half, uh, where it looks like the call is, is uh, closer to 32 million barrels a day. Then the closer to 32 million barrels a day, uh, which would lead to a rising stocks in the first half of next year.
Speaker 3: (21:28)
So your theme has been, we will probably be, um, stocks we’ll probably put for this year. Stocks will probably be coming down, but there’s still a lot out there. So it kind of led you to it a trading range market, which I think was a pretty good and may have bumped, bumped out of the lower end of your range a little bit. But um, uh, do you still think that’s the case going forward? We going to balance too, maybe drawing and then I guess you said next year we, we could even build a little bit. So it was going to be plus or minus on this, a balanced market with still lots of stocks looming in the background.
Speaker 4: (22:08)
Yeah. Unfortunately it doesn’t really look like things are going to be changed all that much as we head into, uh, into 2018, uh, you know, we’ll see what OPEC does with their, uh, with their Dli that, you know, they’re were good through march. They’re giving indications that they want to extend it, which I think would be, uh, you know, I think that would be prudent for them. Uh, and it does look like, um, we’re going to be in a, still a pretty broad trading range. I mean, you may want to add or subtract a few dollars to the upper or, or downside, but, uh, unfortunately that we’re still working through inventory. Now, one, one really positive bit of data that came out of the, uh, AIAA is on product stocks where they said that they had OACD product stocks only 35 million above the five year average and they thought it could dip below the five year average in the fourth quarter. And, um, you know, they’re, they’re expecting forth because of that. They think margins are going to stay strong and that crude runs will increase. Uh, I think the record there, they’re looking at a record, fourth quarter crude runs, which is going to keep the market steady. But alternatively, total inventories are still 200 million above the five year average. So we’re still, you know, there’s still a lot of the crude stocks are still, um, still on the high side. Right. And I,
Speaker 3: (23:46)
you know, the, the only thing is, uh, when you are increased, if stocks remain the same levels and you’re increasing demand from it from a day supply, uh, measure, it starts to look better. It’s better meaning tighter or more bullish I guess. But I’m still, you can’t, you can’t trade off of that all the time.
Speaker 4: (24:08)
Yeah. Yeah, you can. Um, uh, so, you know, unless we have, and it’s hard to trace a big change in the market for a 18, unless there’s some, you know, some type of event. Um, right. You know, that really gets you out of a, if you want to put a 40 to 55 big time range on it, you know, it’s hard to, it’s really hard to get Trey something to get to get us out of that range, you know, plus or minus $2, something like that.
Speaker 3: (24:41)
Well before we, uh, since you brought, brought up range, before we talk about the prices, I just want to mention, uh, options. Um, the, uh, our Bob, the gasoline volatility peaked settlement vile I 45.3 on August 31st it was a trading around 27, 28 before that and it’s that it’s back down to around 30. And what was interesting is the crude, uh, didn’t move. It was, it was trading 29, 27 and um, when the day that, uh, are Bob peaked crude oil foul was 27.5. So you know, crudes looking just for I to me that, that just says what you were just saying is we’ve got this range out there and even a hurricane and obviously the, it’s the cross effects of a hurricane. It takes up production. But it also takes up a finding capacity, um, keeps it a somewhat balanced. And, um, the, the options is I used to use, um, hurricanes as a reason to look at why someone might buy a straddle in natural gas and crude, but it, that doesn’t work anymore.
Speaker 3: (25:50)
We have so much production, uh, you know, that’s not in the, in the Gulf. Um, okay. So let’s, I have to say this Auntie, because the last two podcasts, a two podcasts ago, we were breaking out of the downside of the rain price range that you liked and you, and you stood up and said, you know, we’re coming into a really high demand part of the, uh, a year and you just didn’t see it. Uh, the market collapsing and it did and they weren’t back into the trading range. And then, uh, during the last podcast, uh, I think we were talking about weaker gas prices, but what you said, don’t, don’t sell gasoline or gasoline crack cracks because we’re going to hurricane season. Right. So the Cagey veteran, you know that,
Speaker 4: (26:36)
so that’s a bad thing to do, to sell cracks in August.
Speaker 3: (26:40)
Yeah, we have to get a list, like the top 10 things. You don’t do like the, I guess you would call them the um, uh, the widow maker trade so he could get,
Speaker 4: (26:51)
yeah, it looks so obvious and they’re not
Speaker 3: (26:55)
and they’re not. Yeah. Um, so let’s, let’s talk about crude oil now. I’m going to bring in options just to get your view. The um, the d 60 call has a 61,700 open interest. That’s, that’s the number one option. These options had been around a long time. That’s part of the reason. But, uh, everybody, not everybody, many people thought that we would be up around $60 coming out of this year. And, um, so we only have a few months to go. Um, what do you think about that $60 a call? Is that, does that have a shot to go into money or cause you, you have been, I’ve been trying to get you to say, you know, yeah, you have to belong that thing. But you, you always said you always, you kind of faded. You just say, ah, I don’t think it’s gonna make it there. What do you think for the next three months? Is that thing is I think gonna have an afterlife as a futures contract or is it dead?
Speaker 4: (27:52)
I really have to say, I don’t see it getting up there. It’s going to be really, the market’s really good after have to be hard pressed to, uh, to get there. I, you know, given where we are on a given where we are and inventories, uh, even with the, even with an improving demand picture, um, you know, we’re, we’re still, I think as, as we look into the fourth quarter, yeah, we may draw some stocks and some more inventory, but I just don’t think it’s going to be enough to get it through through 60, you know, get, unless it’s a less, it’s event driven. I mean, you’re looking at, I think it’s pretty, you seeing brands and we’re talking Wti of course on the 60 calls. I mean, Brent has been really strong here. Um, but you know, does it have another leg up? Probably not. I mean as soon as, as soon as we can start exploring some of the domestic crude, you know, the, that’ll probably tamp down some of the brand strength. So, um, Jim, I just don’t see it.
Speaker 3: (28:58)
Right. And then speaking of that, we have cargoes, lion, crude oil cargoes lined up to come into the golf that haven’t been able to get in. Now those, those, those are going to be diverted because of that spread.
Speaker 4: (29:10)
Yeah. Yeah. I think they will be, uh, I don’t, uh, you know, if you look at crude stocks, I, they’ll probably be another bill coming up over the next few weeks. But there was some bank saying that, uh, inventories, crude inventories, we’re going to build 40 million barrels during September and I don’t, I really have no idea what they were talking about. That’s just not going to happen. I mean, we by numbers, so like fit 15 to 20 maybe, and we’ve, we’ve already had, um, you know, 10 so maybe there’s another 10 to go, but not nothing dirty.
Speaker 3: (29:46)
Right, right. So what is your, uh, let’s, let’s just take it up going forward. Short term, maybe, maybe the next quarter. What’s your Wti price expectations that you would, that you’re working with or that you, that you see? I don’t, I think this 45, maybe 52 or 42 52 I think that’s, you know, for now that looks like a range. I know it’s, I know it’s really boring, but, uh, the market’s fighting through a lot. There’s a lot for the market to fight through. Right. You know, we’re just, we’re just not quite there yet. There, there’s some definitely some good things happening in the market. Um, but you know, alternatively the, there, you know, there, there are plenty of headwinds now least of which is, you know, as the market rallies in the back, you know, we, we still start seeing these, um, domestic producers hatching, right. And 18 and 19 are doing pretty well. In fact,
Speaker 4: (30:51)
these 18, these 19 unstructure went backward dated, uh, probably cause has been so much, you know, there’s been selling in the 19th and you know, in talking to some of the dealers, you know, a lot of the
Speaker 3: (31:04)
producers think all right, maybe there’s another dollar or two up there, but you know, if it gets to 51 or 52 or you know, technical target could even be 53 and like the cal 19th, you don’t, I’m selling everything I can so that should help us. That would help backwardation a little bit or right. You know, right in front end if they don’t, if they’ve already done the selling. So, um, uh, well what about, what about cracks can be a gas, gasoline prices just going to keep shopping around.
Speaker 4: (31:39)
That’s it. I think that’s a big chop and cracks have already come off pretty good. You know, they spiked obviously during the hurricane and um, you know, gasoline and diesel are down. I think they spike well over 40 and now they’re, you know, in the 1920 range and then headed lower. Uh, but they are too, you know, you got to look for, um, uh, as I was saying before, if there’s dislocation, you know, they can, they can really chop, I mean, not chop, they could, they could be pretty volatile coming up over the next, uh, next few weeks. So, so, you know, this certainly I think there’s some continued opportunity there. Uh, I think the cracks are going to be pretty, there’ll be pretty volatile. And I think gasoline is a chance to have a pretty volatile in diesel too.
Speaker 3: (32:26)
What numbers are you going to be looking at? Clothes very closely going forward. I mean it, so many cross currents. I mean, is it everything or,
Speaker 4: (32:39)
I think it’s everything. I think the, uh, you know, we’ll see where we’re runs to settle out and if there are any refineries that are down pass, you know, right now I think the market is thinking, uh, you know, by, by mid October, late October, all this should all be balanced out, but maybe it won’t be. Um, and you know, and we’ll be looking at, I think I’ll be looking at every number. Um, and the, and the continuing data that, that, uh, that comes in obviously from, uh, from the big three, we’ll see where OPEC production is and, and, um, you know, obviously we’re going to see where OPEC goes on there a deal, you know, there, there, there, there has been some talk about them trying to incorporate exports into their, uh, into their deal, which I don’t see how that’s going to happen. Um, and obviously the, and then we’ll be watching Libya and Nigeria, uh, to see if, if they’re continued to, um, if they’re successful in continuing to increase production. I get the sense they’re a pretty close to capacity right now. So I’m not sure there’s much, much more to come out of those two producers.
Speaker 3: (33:55)
And I guess we have to keep one of our many eyes on Venezuela as well. Right. Of course. Yeah. Right. Yeah. Okay. Um, I’m going to end with one more question. You talked to reporters, you, you’re on TV in Canada. What, what, uh, what are reporters asking you these days? What do they want to know?
Speaker 4: (34:15)
Well, surprisingly, or maybe not surprisingly, because it’s so in the news, is the impact on a of autonomous vehicles and electric cars, uh, uh, on demand, uh, uh, you know, so, so that, that’s really still a big, uh, a big headline news. And, uh, and I think for now that that’s what it is, had, you know, it’s headlines and something will be watching, uh, over the next 20 or 30 years. If I did one interview, I said, I said, really? You know, refiners a, you know, it’s, it’s right on top of their radar. You know, we’re talking about, you know, how, how they’re going to adapt to that. But you know, the key for refiners right now, um, at least today is getting their plants ups, is getting their plants to restart safely. Right? That’s, you know, but definitely be, you know, the way the future is, um, at least from electric cars is still very much, our report is minds. Right? And it doesn’t, it doesn’t help you if you’re short d 60 calls, you’re not going to get bailed out by, yeah. The cars, 55 calls that expire today today. Right. That’s awesome. It’s not going to help. Yeah, that options
Speaker 1: (35:38)
got good open interest, but if it’s been given up for dead, so, okay, Andy, this, that’s great. Let’s wrap it up. This is commodity. Jim Colburn with Andy Lebow commodity research group.com.