Actionable insights — the most unbalanced oil market ever

1. Measure a reroute by its incremental exports, not its nameplate capacity

1. When a bypass route is said to "offset" a lost chokepoint, start with its nameplate capacity, then subtract what it already carried before the disruption.
2. Confirm the result with the change in net exports at the bypass terminal (pre-disruption versus now), not with pipeline capacity.
3. Check whether some of the "recovered" chokepoint flow is the same producer's volume switching back between routes. That is reshuffling, not new supply.

• Yanbu / Saudi West Coast loadings as the East-West restart (3–5 weeks by Saudi's estimate) progresses, and whether Saudi Gulf loadings fall back when it does.

2. Check a flow number's window and what is driving it

1. Before accepting a headline flow figure, ask which window it covers (7-day average? a 48-hour burst?).
2. Separate one-off releases (captive cargoes leaving at once) from what fresh loadings can sustain. Leave the one-off out of your comparisons.
3. Judge an official claim against what was flowing on the date it was made. Hitting the number later does not make it true at the time.

• A gap opening between transit counts and fresh regional loadings. Transits running ahead of loadings mean a stock release, not recovery.

3. Estimate a price ceiling from how much demand has to disappear

1. Take the gross supply loss and subtract every known offset (reroutes, strategic-reserve releases). What remains is the demand that price has to destroy.
2. Compare that gap with the deficits behind earlier price peaks and the prices those peaks reached.
3. If the gap is several times larger than any earlier one, the price needed to destroy that demand is well above past peaks. Then decide whether crude or refined products will do the rationing, because product prices are what actually cut demand.

• Whether round two gets the same large, discretionary offset (a Chinese import cut or reserve draw). If not, the price threshold applies again.

4. Test "demand destruction" against end-use activity, product by product

1. When a large importer's apparent demand collapses, first strip out what is simply the mirror image of lost exports from its suppliers.
2. Compare it with peers on the same supply shock. If they recover and it keeps falling, the move is a choice, not a shortage.
3. Build a balance for each product and set each one against its end-use activity data (jet vs flights; diesel vs road freight, ~70% of diesel use).
4. When activity rises while apparent demand falls sharply, the gap is an unseen inventory draw. That draw is finite, so it predicts a return to buying.

• Chinese crude imports rising back toward pre-war levels, and higher diesel export quotas for the teapot refiners.

5. A smaller deficit is still a deficit — follow inventories, not the change

1. Separate the sign of the balance from its day-to-day change. While it is negative, stocks keep falling.
2. Check physical benchmarks against futures (Dated Brent vs prompt futures) for how tight the physical market really is.
3. Expect tightening to continue until the balance actually turns to surplus, then expect a sharp repricing toward the surplus level.

• The Dated-to-futures spread narrowing, and the first confirmed month of global stock builds.

6. Follow an export ban through to its second-order effects

1. Size the exports the ban removes against the size of that product's market, not the whole oil market (diesel is ~1/4–1/5 of crude, so the impact is 4–5x larger in proportion).
2. Trace what happens at home: the barrels that can no longer leave build up in storage, local prices and cracks collapse, refiners cut runs, and output of other products falls.
3. Name who loses indirectly: suppliers whose main buyers are the refiners that will cut runs.
4. Check the political timing: a measure meant to help before an election must land early enough to show up in pump prices.

• Congressional or White House statements on product export restrictions (Thune's first public openness came this week), and USGC diesel inventories and runs.

7. Read speculative positioning as a skew in risk, not a forecast

1. Each week, pull CFTC Commitments of Traders across all the major contracts for a commodity (for crude: ICE and CME Brent, WTI, Dubai), not just one.
2. Scale net speculative position as a % of open interest so readings compare across time.
3. High longs with low shorts means little buying power left and a lot to liquidate: expect sharper drops than rallies, whatever the fundamentals say.
4. Expect the drop to need a trigger (any fundamental headline). The flush resets positioning, and then the fundamental trend can resume.
5. Near political pain levels ($110-ish Brent), expect jawboning to add to downside volatility.

• Friday's COT release that includes last Thursday's East-West rally, and net-spec as a % of OI rolling over from the high.