Blue lacy Advisors, LLC - Market Commentary
Minneapolis, MN | September 14, 2022 | By: Steve Sinos, Blue Lacy Advisors, LLC
At the risk of sounding like a broken record, nothing has changed fundamentally. Volatility persists, but oil prices failed to break out of the recent range. In this volatility regime, speculative interest and financial market variables (e.g., currency fluctuations) remain among the top drivers of very short-term price changes. Looking beyond the weekly gyrations, spreads give us a lot of information. Oil prices should be comparatively weak versus refined products with maintenance ramping as expected, and slower-than-expected, crude imports into Asia and Europe, respectively. That relative weakness is seen in cracks that widened toward the top of the post-invasion range with diesel trading at a premium of $60 to WTI and Gasoil $45 above Brent. One would expect this to mean demand for crude into refineries will pick up as turnarounds are executed unless the pattern of slowing demand is beyond refinery intake, which would be observed in slowing product movements. That puts the focus on clean product traders out of places such as Belgium, Malaysia, and even Saudi Arabia. Recent headlines from OPEC+ (the “cartel”) traders can be ignored. Bulls and bears are twisting and folding the news to fit their narrative, but the headline change of 100 kbd is meaningless, especially considering the cartel has failed to meet its production promises. In the upcoming edition of our weekly commentary for clients, I will dive more deeply into crude and product flows to/from OPEC+ member states. We anticipate that the more volatile members, such as Libya, will account for the only material fluctuations in net trade from OPEC+.
A free summary 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!
*This summary is as of 9/4/2022
Meet the Author!
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.
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