Oil Futures Are Not Telling the Same Story As the Physical...

Oil Futures Are Not Telling the Same Story As the Physical Market.PDF

Nice post as usual, Moonshine. I appreciate your work and enjoy reading your long posts on Woodside and other companies we both follow.

I am attaching an article I just read this evening which I found interesting. It makes a similar point to one made by Madamswer in one of her excellent posts recently. Namely, that "in the battle between sentiment/traders and reality/supply & demand, 'reality' is undefeated".

Apparently the real market, for real oil supply and delivery today is very tight, as we suspect. What's happening with the hedge fund traders on a minute to minute basis may be divorced from what's actually happening on the ground.

I sold a third of my overweight holding in WPL and FUEL a couple of months ago for $31.00 and $5.85 as part of an overall effort to de-risk my equities exposure and increase dry powder. What surprises me isn't WDS' fall from $34+ (reached after I sold my one third) it's how resilient Woodside has been against the super-majors (FUEL ETF) which have taken a battering. For two years it was the other way around. We've got the reporting in $US (weak $AU), spot gas price exposure, and a big dividend holding up the share price this time; plus the advantage of the US listing. Hopefully it continues.

I can't believe we've got embargoes on Venezuelan, Iranian and Russian oil, OPEC is at capacity, strikes in Norway, coal prices through the roof (oil is a substitutable product), minimal industry CAPEX, yet oil prices are now at pre-invasion levels. The strong bull and strong bear cases seem to raise their heads every few days taking the energy sector share prices with it.

https://markets.*.com/news/commodities/oil-prices-market-futures-brent-demand-recession-soaring-dislocation-2022-7