Sucking Diesel
In the dead of night I sent you the G7 release about releasing 100mn bbl. of Diesel from Strategic Reserves. Now I am attaching all those good intentions to the locomotive of oil markets.
Where does this leave us? With a deal that few understand. A deal that over time will result in higher diesel (and other refined product) prices.
Europe ends up at the wrong end of the risk spectrum with very vulnerable supply and already inadequate and unlawful levels of reserves.
The US has a simplified way of thinking about its new gotten diesel inventories: “We got more. So the Europeans got less. So we won, OK?” Well not quite!
The US diesel glut is likely to distort and damage the supply side of the US oil economy.
You will find me arrogant. But my perception is that this “Deal” is poorly understood by participants. And when it is, the perspective of the “Deal” is about plamasing President Trump rather than economic rational.
The QS Wealth Protection Portfolio is going to stay long refined petroleum products, Brent crude and Safe Haven Assets - like food.