I could go on. Yet, what the bears really missed is a generational bottom in oil. I wrote that after oil double bottomed at $26 that was like when oil double bottomed at $10. We are now in a new super cycle if you will on oil and we will try to have to rush to keep up with surging global oil demand. We said it was the bottom of a long- term cycle and the evidence is becoming clearer, that is exactly the case. History is repeating itself. Those that said that this time is different are now finding out it is not. Those that said that oil would never trade above $40, then $50, then $55, because of shale oil production better go back to the drawing board. Even with projection of a one million barrel increase next year will find it won’t be fast enough to keep up with growing global demand.
Oil products are on fire. Heating oil is surging as winter sinks its teeth into the United States and Europe. Many buyers are scrambling and under hedged because they believed a lot of the bearish arguments. The heating oil and gas oil spread versus the RBOB gas has soared as weather is going to keep the market supply tight. Shale oil output may fall as cold temperatures may shut in some wells. If the cold weather stays around we still have significant upside risk in distillate as supply is tight around the globe.
It's still not cold enough for natural gas, it is a war between record demand versus record U.S. production. That battle played out yesterday and so far, it seems like record production and new pipelines are giving the bears a bit of an edge, yet that may change as the U.S. draws will start to rise. Buy cheap calls.