Since the June bottom, crude oil, uranium, sugar and orange juice are up 20-30%. Is the risk of a second wave increasing?
Source: The Macro Guy
This chart from Bloomberg shows the massive supply shortfall oil markets will face next quarter
OPEC expects a supply shortfall of more than 3 million barrels per day. If OPEC is correct, it would result in the biggest inventory drawdown since 2007. Voluntary production cuts by OPEC members are removing 1.3 million additional barrels of oil supply every day. Higher oil prices are back and the US reserves are at record lows. Source: Bloomberg, The Kobeissi Letter
What powered the world in 2022
Source: Elements
OIL PANIC?
As shown on the chart below (courtesy of TME), big golden crosses can lead to much bigger outsized oil moves than what we are seeing now… This is becoming problematic for equity markets. As explained by Goldman, "rallying rates and commodities are derailing the goldilocks soft landing scenario. The uncomfortable combination of rallying oil and US long end breaking up is disrupting this equilibrium and triggering a rotation into the “persisting inflation & sticky rates” narrative, adding pressure on equities and valuations". (GS sales desk)
With a supply deficit of more than 2.5mn barrels a day through Q4, it is probable that Biden administration will not draw on the SPR so far ahead of the actual election date
Especially given the fact that SPR (Strategic Petroleum Reserve) are already running low. It seems more plausible that Joe Biden will concentrate the SPR ammunition around Q2-Q4 next year. This creates another supply risk in the short-run for the oil market Source: Andreas Steno
Is oil once again becoming a political commodity: Russia and Saudi Arabia are cutting oil production at the worst time for the Biden administration (hint: next year is an election year in the US)
Source: Bloomberg, HolgerZ
An important chart
Source: J-C Parets
An immediate consequence of soaring oil prices mean -> Soaring gas prices in the US
Now at their highest for this time of year since 2012 (and 2nd highest ever)... not great for headline inflation and consumer purchasing power Source: Bloomberg, www.zerohedge.com
