Blue Lacy Advisors, LLC - Mid December Crude Oil Market Commentary
Minneapolis, MN | December 21, 2022 | By: Steve Sinos, Blue Lacy Advisors, LLC
Crude oil markets are now >30% down from their 2022 highs. WTI closed the week at $71.02, the lowest daily close of 2022, expanding its loss to $4.19/bbl compared to the 30 Dec 22 close of $75.21. More concerning for producers, though, are the messages contained in spreads and the curve. The NYMEX curve has inverted, trading in contango across all 12-forward months of 2023, while Brent trades in contango for the first 9 months of the strip. Brent’s premium to WTI has contracted from >$10 to just under $5. Brent trades at a premium to Dubai of ~$4.65; it’s worse for basins with constrained infrastructure (e.g., Canada). These are all signals that supply and demand were not as tight as feared. Analysts erroneously extrapolated demand growth coming out of the pandemic in ways that have not yet materialized, and now recession risk is priced into the forward curve.
*This summary is based off December 11, 2022
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!
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
Laura Klingelhutz, Marketing Generalist Intern
Check out our risk management services today!