The OPEC 7

Group moderates production again

Articles

• A.I Is wreaking havoc on global power systems

• Hedge Fund Positioning: Oil Bearish, Gas Bullish

• China’s Energy Efficiency Struggles

• Trump’s policies are driving down oil prices, will cost jobs, hurt the economy

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Macro

Flows on WTI remain light as a feather. On Thursday I had commented in the group discord to the guys that it wouldn't take much to push WTI +$2 up with thin ask volume sitting on the book. Within 30mins, oil indeed lifted $2 through very light volume to finish the electronic session testing key levels that we identified in last weeks reports- reference 'Trade' section chart.

My always flexible view is that Jerome Powell presented a stagflationary view on Wednesdays FOMC meeting. Higher forecast unemployment/ higher inflation. More on The VWAP Report ‘Stagflation Ahoy! He was cheery about it, pointing out that there are spots of hard data that remain strong, however he lost the room, mentioning that tariffs effects on inflation may be 'transitory'. This picture paints one that does not equal higher, stronger, faster oil demand in the US. Inventories at cushing are below the 10 year range. A pretty bullish picture in one way, however price has been 100% unresponsive to this all year as producers air on the side of caution in this hot to cold US administration

Source: Vortexa

The canadian picture is even worse with an on/off promise of heavy tariffs.

Source: Vortexa

Bull thesis- A longer run story

While the dynamics below point to a bullish pictuure, this is over a much longer run rather than anything we might see show up on price in Q1 or 2 2025. Low storage is in line with what the EIA is observing, as the industry bends to the growing shift in demand due to ‘transportation efficiency’. However, this steep drop in supplies must lead to an inflection point in higher prices at some point soon. As always, the question of when becomes most important for market participants. For now, drillers are drilling, refiners are slowing down and EV sales migrate to hybrid. This is what the start of a 25 year transiton looks like.