Hard week for oil, Fundamentals remains strong!!Economic contraction remains the biggest headwind for oil price but still have lots of mitigating factors for that risk. Lets look at why I believe fundamentals remain strong.
1) Economic head winds will obviously cause a drop in demand but Opec has pre emp a soft landing with the cut in production to offset loss demand.
2) interest rate increase has slowed with latest increase being smaller and plan to hold at other upcoming central bank meetings.
3) SPR release is mostly done, even if it comes back it will be a bad idea to drain it more because by the time it gets out and into our tanks we will be heading back to summer peak driving season.
4) drop in Russian exports for now, will promote some commericak inventories draw.
5) China was a big drag on 2022 but opening up already started and like every government they need people to feel good. My guess the opening is staring now just in time for Chinese new years which is huge.
6) For Canada we inch closer to TMX completion opening us for more exports to international markets.
7) Inventory for crude continues to draw, build in c product inventory but product are still below 5 year average thus far. SPR is down nearly 200M barrels and all commerical inventories are below 5 year average mark, in a year less demand and 9 months into interest rate increase.
8) India demand is outpacing 2019 levels and expected to keep increasing in 2023.
We have been hearing recession for months now the data will speak, good thing about CJ is the dividend and yield is great. They have room to pivot 2023 budget if needed to keep paying divy and past news release puts protection at the 55 barrels range but I believe that's now 60 given the increase budgets. Good luck to all and hoping to get some great post from others and now those news headlines some give without any thought.