Blue Lacy Advisors, LLC - Crude Oil Commentary
Minneapolis, MN | August 23, 2022 | By: Steve Sinos, Blue Lacy Advisors, LLC
Speculative traders continue to drive volatility in crude oil and products markets, while spreads tell the story of the developing fundamental market. Since peaking above $30, much of the risk premium has been sucked out of the market, as prices have trended downward since late June. Further reflecting soft markets, geographic spreads are tighter, as international markets accommodate Russian barrels and observers accept that these volumes will find a home. Furthermore, various disruptions are being solved (e.g., Libya) and refineries are preparing for maintenance. In response, both Brent and WTI curves are flatter, though still backwardated. The upcoming three months look softer than the back of the curve, and, with the release of their monthly reports, OPEC, the EIA, and the IEA expressed expectations for tightness in 2023 without a recession. With crack spreads as the final piece of the spread puzzle, we can watch for weakness during the next few months as a possible sign that demand materializes more weakly than expected. For now, traders are preparing for the heating season in the face of low storage of distillates and the potential for disrupted supply chains.
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 weekly commentary for clients, which is based on a collection of models, research/analytical subscriptions, and bespoke work. Each week they explore how the various things they follow in these analyses might affect or be used in their clients' planning, budgeting, and execution of strategy. Call Blue Lacy Advisors, LLC to make an appointment to see how they can apply their process to support your work, as well.
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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