The recent drop in oil prices is again a function of lower demand for paper oil, not lower demand for physical crude.
With a paper market almost 30x the size, a drop in financial demand can hit prices hard in the short-term.
But under the surface physical supply remains weak while demand is alive and well. Until production strengthens, demand destruction is the only way to stop physical markets from tightening further.
This stuff takes time.
Mar 17, 2022 • 5 tweets • 4 min read
WTI still went from 0-100 faster than Nikola’s electric truck..
Alright, this one’s for all of the price chasers out there that are wondering what’s been happening with the Energy industry.
Here’s the story.
🧵🪡
Let’s start in 2014.
After rising over 10% in the first half of the year, oversupply caused petroleum prices to slip in July. With growing production from both the Permian and abroad, the crude index continued to fall, down 51% by January 2015.
