The Brent WTI spread is +2.00$ this Am as talk that gulf production increasing and that downturn in oil prices will have minimal impact on GOM crude according to EIA.

Image courtesy Agencia Petrobras

The spread is near 6m wides and signals to us what we believe is that the world is not as oversupplied in oil as the northern hemisphere.  Spread will be $18 by late summer in our view.

We see 2.2m bpd of demand growth and a market that may not be as oversupplied as expected.  China cutting rates doesn’t mean that Chinese oil demand is not increasing.

crudeoil March 3

Play the refiners and global integrated names who pay you to be patient with large divs:  TOT, RDS preferred.  We are sellers of BP with additional risks on their Russian business and litigation in the US.

 

 

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