The Disconnect Between Oil Markets and Reality Is Widening

There’s a disconnect in the market right now between reality and narrative. 

I won’t point fingers here, but I’m sure the veteran members of our investment community can guess. It’s not the first time that crude oil has felt like a screaming buy for us, and it certainly won’t be the last. 

Last week, we talked about one of those disconnects being China. While the narrative throughout the media last year pushed for China’s economic collapse and its growing oil consumption tumbling alongside it, that turned out to not be the case at all. In fact, China imported more oil than ever before, while its petrochemical demand surged higher. 

Remember, we’re at the point of the year when oil prices should be at their weakest. This is a time to build supply and prepare for the next summer driving season, when demand is at its greatest. 

Yet, 2024 may turn out to be a year chock-full of disruptions — all of which threaten a potential price spike. 

Except this time, there’s nobody left to come to the rescue. 

And with WTI prices barely holding on to the $70/bbl mark right now, this year is going to be far more profitable than you might first think.

Winter Storms Reveal Hard Truths

Over the last week, the bitterly cold weather around the world has revealed a lot of hard truths over the reality of our energy situation. 

Not only have severe winter storms pummelled much of Europe, Russia, and the Nordic countries recently, but I’ll bet you’ve experienced that harsh winter bite yourself in the last few days here in the U.S. and Canada. 

Thanks to these frigid temperatures, more than half of North Dakota’s oil production has been shut-in. 

For the record, that’s roughly 650,0000 barrels per day that are offline right now!

In Texas, the arctic weather is curtailing operations at oil refineries, such as TotalEnergies’ 238,000 bbl/d facility in Port Arthur and Flint Hills Resources’ 343,000  bbl/d refinery in Corpus Christie. 

Believe me, the list of troubles goes on and on from Exxon to Valero. Nobody is spared from the cold. 

I’ll bet more than a few of them are getting a little déjà vu from 2021 when record-low temperatures in Texas led to blackouts across the state’s power grid and left millions in the dark without electricity. 

As apocalyptic as it may feel for people in Chicago where it’s -30℉, these weather disruptions will pass just as they did in 2021.  

Other disruptions, however, are just gearing up. 

If you were of the mind that the geopolitical volatility in the Red Sea was going to fizzle out as U.S. and UK warships entered the region, then you’re probably changing your tune right about now. 

The fact that the Houthi’s were brazen enough this week to fire a missile at a U.S.-owned ship less than 24 hours after firing on an American destroyer should be enough to tell you that this won’t end well for anyone. 

Things aren’t settling down, they’re escalating. 

And one of the more peculiar aspects to these events is that oil prices remained subdued. 

The disconnect is real, folks.

The oil storm has been brewing for more than a year, and this is the only way to prepare for it.

Until next time,

Keith Kohl

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A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.

For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.

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