- Markets were whipsawed last week from a combination of the Fed and Omicron.
- But energy investors should focus on what's important and what they can control.
- In the case of the energy thesis, it's 1) demand, 2) investment in oil supply, and 3) spare capacity.
- Despite lagging jet fuel demand, other demand variables have pushed total oil demand in the US past 2019. This is a good sign and likely implies oil demand to surprise to the upside in 2022. Future oil supplies are constrained as US shale producers hold back capex despite higher prices.
- OPEC+ spare capacity is not what it seems. Saudi, UAE, and Kuwait are near-optimal export levels, while everyone else struggles.
For further details see:
Control What You Can Control When It Comes To Energy Investing