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[https://adventuresincapitalism.com/2022/01/18/oil-is-the-wrecking-ball-that-we-all-deserve/]


Nothing like the a raging oil bull opining to boost the confirmation biases….


The forward curve is still in deep backwardation, which totally defies what’s unfolding in the real world.

Based on the fundamentals, most would expect the forward curve to flatten, specifically by the long end moving up,  but he’s now even jawboning the prospect of contango(!)


One must always be careful not to drink too much of the Kool Aid but it’s a relative easy picture to see:


On the Supply-side:

1.)  OPEC has limited spare capacity (for several months OPEC members have been failing to meet production quotas)

2.)  ESG-led politicians and activism outside of OPEC forcing supply constraints in the OECD


On the Demand-side:

1.)  Developing country demand growth continues to be underestimated

2.)  Governments of wealthy countries - with their new-found populist mandates to spend, spend, spend - are effectively underwriting demand through subsidies.


SUPPLY CURVE BEING FORCED TO THE LEFT,

while

DEMAND CURVE CONTINUES TO MOVE TO THE RIGHT


There is only one way this gets resolved and that is through the market clearing at higher prices.

.