Here’s the reality:
-Brent Oil is well above $60
-Fuel crack spreads are massively rewarding to refiners as products draw further
-SPR is drawn to generational lows
-Commercial inventories have drawn during what is supposed to be a build period
-From mid March thru mid Sept, all inventories of crude and products will draw
-Diesel is in massive shortage and is a pure inflation pass thru to other goods/services
-Russian crude exports total 4MMbpd and Russian products exports total 2MMbpd (nothing, and nobody can replace that)
-Lockdowns exacerbate nat gas usage (dual heating/cooling of residential/commercial)
-Lockdowns exacerbate diesel usage (e-commerce)
-Wars exacerbate jet fuel usage (military vehicles run on JP8)
-Banned airspace exacerbates jet fuel usage (routes have to bypass entire continents)
-Gasoline usage continues to increase in the USA
-Reducing energy density increases materials intensity (ESG = more metals and mining, more plastics)
-Every oil company has plenty of free cash flow to buy back their own shares, which they are doing
I’m accumulating more XOM.
Cheers!