top of page

A Year After Making Highs, Crude Oil Prices May Have Found Support

Minneapolis, MN | September 5, 2023 | By: Steve Sinos, Blue Lacy Advisors, LLC

Now that supply chains have adjusted, we should be able to observe whether fundamentals are supportive of crude oil prices.

Three Things

  1. Last year’s Bulls missed the mark. Prices are still high, but with lower volatility, downside risks may be lower.

  2. A year on, we can see how supply chains have adjusted, enabling sanctioned barrels to make it to market and identifying the real constraints.

  3. Fundamentals look more supportive this year than last, with refineries running hard to capture wide cracks.

Prices are Already High (Still), but Downside Risk Looks Lower

One of the reasons we thought last year’s forecasts were unrealistic for the average expected outcome was the amount of risk premia already baked into prices. More importantly, volatility was reaching record highs. The Brent prompt contract’s daily close exceeded $100 on average for five consecutive months from March 2022 through July 2022. This hadn’t happened since 2014, which was a materially different regime (lower rates, different term structure, lower volatility, and no US exports). Also, from a purely mathematical standpoint, the forecasts took a high price and tried to forecast a future price, which means they were baking in a ton of bias. We wrote about both of these things previously:

*This summary is based off August 27, 2023

A free excerpt, such as this one, will be published on a delay periodically. This is an excerpt from Blue Lacy Advisors, LLC's (“Blue Lacy”) weekly commentary for clients, which is based on a collection of models, research/analytical subscriptions, and bespoke work. Each week Blue Lacy explores how market drivers included in these analyses might affect or be used in clients' planning, budgeting, and execution of strategy. Call Blue Lacy to make an appointment today!


Meet the Author!

Phone: +1-832-413-3124

Steve has spent his career in strategy, risk, trading, and investment. He works with investors to source investments in opportunistic or high growth sectors, with particular interest in early-stage companies solving clearly defined problems.

He is currently a Managing Partner with Blue Lacy Advisors LLC, giving management teams and investors confidence in their decision making by supporting strategic planning and execution, risk management, commodity trading, and market analysis.

HedgeStar Media Contact:

Megan Roth, Marketing Manager

Office: 952-746-6056

Laura Klingelhutz, Marketing Generalist Intern


Check out our risk management services today!



Join our mailing list for HedgeTalk!

Never miss an update


bottom of page