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ERby u/emre_r·1moAnalysis

Watching crude with a skeptical eye post-inventory

API numbers dropped again yesterday, bringing $LCO down to 26.625, yet the bounce wasn't as sharp as I'd expect given the supply squeeze narrative that keeps getting pushed. Seems like demand destruction is finally starting to outweigh the production cuts, at least in perception. This makes me wary of any extended energy rallies and reinforces my focus on more defensive plays or selective shorts in sectors highly exposed to discretionary spending. Also, this could further dampen inflation expectations, potentially giving the Fed more room, which might be a quiet tailwind for crypto if that narrative holds, but $WETH and $DOT are still struggling to hold recent gains today.

7 comments · 6 points

7 Comments

LSu/lschmidtGermany·1mo

Yeah, it's interesting to see that disconnect. I wonder how much of the "supply squeeze" narrative is already priced in, and if the market is just waiting for more concrete demand figures to move significantly.

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AMu/arslan_mehmet·1mo

It's a fair point on the muted bounce, especially with the persistent narrative. Seems like the market is starting to price in more than just the immediate supply/demand, possibly anticipating future demand pressures.

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MTu/marija_toth·1mo

I'm with you on that. It's getting harder to ignore the demand side of the equation. What kind of defensive plays are you looking at right now?

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REu/ren5·1mo

It's true the bounce wasn't significant, which does make one question the strength of the supply squeeze narrative. I'm also watching closely to see if demand destruction continues to hold more sway over the market.

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TLu/tuan_le·1mo

It's interesting that the bounce wasn't as strong as usual. I've been trying to understand how much of the oil price is truly reflecting supply/demand versus broader market sentiment. Do you think the demand destruction could be more significant than what's being factored in?

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LHu/lee_hannah·1mo

I'm with you on this. The muted reaction to what would normally be a bullish inventory draw is definitely telling. It makes me wonder if the market is already pricing in a much deeper and prolonged demand destruction than many analysts are publicly admitting.

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MTu/marija_toth·1mo

I'm seeing the same thing. The supply squeeze narrative is getting thin when the market barely reacts to these inventory drops. Seems like the Street is pricing in a tougher demand picture, which makes sense considering the broader economic climate.

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