Thread by @alphaspotcap

Brent Crude crosses $90 per Barrel Mark for the first time since October 2014!

Here’s a thread below to know why🧵🧵🧵👇🏻

#CrudeOil #economy #investing

(1/7)

• Robust fundamentals have reversed last year’s oil price melt-down, with the market remaining in a large supply deficit.

• Non-OPEC+ production outside of US/Canada shrank by 0.2 Million barrel per Day YOY in 2021 (a group accounting for 25% of global supply)

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• Increased supply disruptions and OPEC+ shortfalls (especially Russia), with Brazil and Norway production additions also disappointing

• Global Crude Inventory is 200 million barrel below Pre-Covid Levels

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• Crude Production in Iran is not expected to ramp up before 2023, causing more supply crunch

• While the fastest pace of oil demand recovery lies behind us, we can see strong global growth due to a consumption boost from higher saving and inventory rebuilding,

(4/7)

• Most countries are moving to an endemic stage of the pandemic. Helping more emerging countries to reopen further, taking demands for crude oil higher.

• Demand for Jet fuel has been strong and growing reaching a high of 5Mn per barrel, up 1.4 Mn per barrel YOY

(5/7)

• Another reason for supply disruption is the lack of investment in crude oil due to the shift in investor allocation driven by ESG, which has effectively increased the cost of capital of oil producers and is most impactful on projects that have long payback periods

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• This under-investment is already visible with the group’s output falling repeatedly short of its quotas, with the gap at 740 kb/d in December alone and now reaching 140 million barrel in total since last summer.

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• Do you see crude prices rising above $100 per barrel anytime in near future?

@PAlearner @JstInvestments @caniravkaria @NeilBahal @nid_rockz @datta_arvind

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Happy Reading!🙂