Namzes Cycles
Hurst Cycle & Technical Analyst, Commodities/Crypto/Equity Indices, Risk Management Background
Crude oil's 4 million-barrel-a-day global inventory draw despite weaker exports and refinery demand signals physical tightness. Chinese exports and refinery demand in Russia and China are each down a few million barrels a day, yet Brent is at a more than four-year high. Bessent says Persian Gulf exports exceed prewar levels, but cash and dated Brent trade well above front-month futures. Rising backwardation and inventory draws leave smaller buffers if escalation continues. x.com x.com
Crude oil's continuing inventory drains make prices below $100 look unsustainable. Rory Johnston reports that US commercial petroleum stocks fell 13.4 million barrels in a week, the largest weekly draw since April; the draw is roughly 2 million barrels a day, despite the EIA's oil-glut narrative. More than 2 billion barrels of inventory draws have been needed to keep oil under $100. x.com x.com
Crude oil's last cushion is gone as recovering demand squeezes constrained Middle East supply. Barclays puts China imports near pre-war levels at 10.5m b/d, India up 600,000 b/d year on year and Middle East flows at 84% of pre-war levels; US demand is recovering. After more than 500m barrels of inventory were drawn down, buyers are paying a $13/bbl premium for next-week cargoes over the front-month contract, versus under $4 a week into the war. x.com
The widening gap between physical and futures oil prices points to a tighter crude market and little relief at the pump. LSEG's chart shows Dated Brent near $150 a barrel against Brent futures near $105; proposed additions to product supply look marginal against the tightening market. x.com
US crude and Chevron face a potential domestic glut: supertanker export costs are said to have risen from $8 million to $80 million, pushing Asian and European buyers toward Saudi and South American oil. Limited US refining capacity could leave the surplus unused and bankrupt smaller producers, though the author still says earlier exports caused a shortage. x.com x.com x.com
Crude oil's safety buffer is draining at a record pace, so the next supply shock will hit a market with far less protection. The Iran war and near-closure of the Strait of Hormuz have removed over 1 billion barrels of supply, and Morgan Stanley estimates stockpiles fell about 4.8 million barrels a day from March 1 to April 25, a record. A record 400 million barrels of emergency reserves have been pledged, and inventories are near 2018 lows. Even if Hormuz reopens, restocking will add demand. … Show more
Crude oil's supply damage would persist even if the wars in Russia and Iran ended, because infrastructure is destroyed and tankers are damaged. Diesel has broken resistance alongside US 30-year yields; without a collapse in diesel driven by a severe stock-market drop and unemployment, both are expected to keep rising, setting up a harsher eventual downturn. x.com
Crude oil now has more room to fall on a deal headline than to rise on the status quo, as Trump's rejection of Iran's seven-day Hormuz plan looks like a negotiating position, with negotiators due back this week and the Saudi foreign minister in Washington. The closed Strait put Brent back at $108 with Nov–Dec backwardation near $8. Speculators added shorts three weeks running, squeeze fuel above $100 if talks fail; a deal would leave about 101,828 contracts of net length as supply. x.com x.com
Crude oil's forward curve is too complacent, because record refining margins show fuels are genuinely tight. Washington has drained the SPR to 305 million barrels to hold crude down, but there is no diesel reserve, so products clear at real prices; the 3-2-1 crack spread hit a record above $70 versus a pre-war norm in the low $20s. Spot Brent is in the high $80s while the EIA forecasts $65, a bet that the war ends soon. Per Sam Kovacs, the Strait of Hormuz has been shut for months. x.com
Crude oil's war-time drop reflects a temporary buyers' strike by China that is now reversing. China imported about 7mn barrels a day in June, a 10-year low, down 41.3% year over year and about 35% below its 2020-25 run rate of 11mn. Vortexa has July imports snapping back to about 9.5mn barrels a day, a 2.5mn-barrel swing from the marginal buyer that changes the whole supply-demand picture. The market priced June; July is a different equation. x.com x.com
The oil trade is over because crude can no longer make higher highs, even with Middle East crude exports back near their peaks. Oil is trading around its average price of the last eight months and set a lower high in September, so it is only a matter of time before the market gives up. Crude looks about to fall through the floor, with rates following and high-beta stocks then going vertical as every dip gets bought. x.com x.com x.com
Physical crude demand remains stronger than headlines suggest. The benchmark for most of the world's oil grades rose despite coordinated G7 efforts to suppress prices all morning, while Vitol and other traders bought whatever they could in the North Sea window, even as the WSJ reported that oil fell. x.com
