Oil Price Analysis: Don’t Trust Brent Below $100 – Demand Isn’t Gone
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Is the oil market sending the wrong signal? What appears to be demand destruction might actually be a severe supply shock in disguise, with inventories draining at record speed and the world’s last energy reserves being pushed to their limits. Falling prices may only be the beginning of a bigger increase in the future.
The market is mislabeling a supply shock as demand destruction; the tell is the US redlining at 93% while the world tightens; genuine destruction is narrow (jet, petrochem); inventories are draining at a record pace toward a record OECD low by end-May. The pain trade on oil has been for the longs. It’s now for the shorts.