As I talked about in several previous reports to date, we have entered into an energy timeline that terminates in September. The cracks will become critical in roughly 4 weeks from today. This is elegantly drawn out by J.P. Morgans Natasha Kaneva in a private client letter last week titled ‘The illusion of plenty’. To summarize, the world holds 8.4 billion barrels of oil in storage. Only 0.8 billion of those are actually drawable, and at the current pace of withdrawal, OECD commercial stocks reach operational stress in June and the operational floor by September.
Oil Price Analysis: The Deadline That Could Break Crude Markets
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The oil market is facing tighter conditions due to declining inventories and ongoing geopolitical risks. However, current prices are not fully reflecting these ongoing pressures. This next cycle will greatly influence price stability and its impact on the wider global economy. But probably not for the better.
