Some thinking out load notes:
I've been maintaining lately that there was a potential for a speculator/hedge fund washout of energy longs. They have really crowded into this trade.
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In fact it's part of the plan of the powers to be, to accomplish a measure of spec liquidation. Consider it a gift if it unfolds in a significant way, and doubt if it will last long.
In the real world, note that US petro imports are already off the charts .
beacon1.rjf.com
I submit that OPEC has been sending us everything they can already. Of course there's always the mysterious off-shore Saudi inventories, and we will see if that's real? As tanker rates are also moving off the charts already , (see RJ report) it is I think problematic to lower oil from $40 to $36, if you end up adding $2 back in higher tanker rates. So they have a two fold problem IMO: transport cost management and actual supply. If they actually have the extra supply, why just markdown your price, and transfer the extra profit to tanker outfits?
The refining comments are enlightening. RJ says, "power outages caused some refinery downtime over past six weeks." We will see if that continues as we see the kinds of power generation issues we've all been alluding unfold in the hot weather. It's also the beginning of the GOM hurricane season. This Simmons report on hurricane impacts is worth a read.
simmonsco-intl.com
Gasoline: inventories are supposed to go up this time of year. Instead they've been flat, see RJ gasoline inventories chart. RJ talks about gasoline demand not falling with higher prices. The problem (like electricity for residential)
Message 20192110
is structural, a fleet of gas guzzlers.
beacon1.rjf.com
Meantime, heating oil and residual fuel inventories are being neglected, they should be going up, not down now, see RJ charts.
Finally, we have the coal issue,
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the hydro issue;
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and the Andy Weissman scenario on NG.
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Now all that's required for the Train Wreck is a normal summer, and so far that's what we've gotten.
Message 20191750
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I see Bastardi is calling for a hot south in June. |
