Summary
- US oil demand is bottoming.
- Couple that with the recent OPEC+ cut and the SPR announcement, and we have ourselves a nice floor for oil going forward.
- Energy stock valuations, as a result, should gradually rerate higher as generalists underwrite E&Ps using $70/bbl WTI.
- Macro worries will continue to keep a ceiling on crude ($125), but the fundamentals have now set a solid floor.
- Once SPR ends, the global oil deficit that has taken place this year will become that much more obvious.
For further details see:
Oil - If It Wasn't Obvious Before, It Is Obvious Now