production

Refiners do not see the post-pandemic recovery as optimistically as bullish analysts and comparative inventory suggests that markets have reimposed the same $5 – $8 discount that existed for much of 2021.

It now seems increasingly unlikely that WTI prices will return to the $80+ level for awhile because market sentiment has turned negative. That too will pass because WTI is under-priced.

The November price collapse was not because of Omicron although it was a late factor. Something more fundamental is going on with oil markets, and inflation and the state of the global economy are central.

Those who say that markets over-reacted do not understand the mechanics of price formation. Omicron is a factor but price, spreads and Cushing capacity began changing before the new variant was discovered.

I anticipate a  recovery back into the $82-range possibly followed by another downward correction.  Prices may return to $84 levels before year-end but not for long. This rally is in its final phase.