They're All Talking About It

I want to take an opportunity to opine. There seems to be much debate over when and / or how the U.S. will open again, and rightfully so. I do think though that this needs to happen much more quickly. Let’s look at this realistically. The world may have to resolve themselves to the idea that Covid-19 could be around for a very long time. Think about it. There is no cure for the common cold, there is no vaccine for aids and other communicable diseases. The “how” is most critical. Until common sense becomes a downloadable app. We must rely on our own. Typically not something career politicians are capable of.

The Crude Reality

Well I never saw this in all my years. WTI Crude falls overnight 35% in the May contract, which expires today, posting a low of 10.77. This is being driven buy The U.S. Oil Fund hitting the nearby hard as they roll out of their May into deferred months. They account for 25% of outstanding May futures.

The near-term depletion in demand creates excess inventory and storage capacity is nil. Again, I point out “near term.” As you look further out the pricing increases exponentially. June is $11.00 above may, July $5.00 above that, at the time this was written. Those incremental increases tell me that the markets are looking for this condition to be short lived as the U.S. Economy gets back on track. But stay cautious, New York Fed President Williams and St Louis Fed President Ballard both had pessimistic economic outlooks and OPEC indicated a drop in demand by as much as 20 Million Barrels per day in an announcement Thursday.