Crude leading the pack.

Macro Perspectives: Tue 25 May 2021

In my note to end last week (Fridays Note ), I discussed the dip in the energy / oil and gas sector as a buy.

We started this week with oil prices leading the pack - up almost 4% on the day (the biggest mover in global markets).

Last year this time, heading into Memorial Day weekend, the national average price on gas was $1.87. Heading into this Memorial Day weekend, it's $3.04 and I suspect it will be higher by the time we get to the weekend.

The focus in the oil market has been all about future demand - meaning less demand, driven by the fantasy of rapid change to ubiquitous electric vehicles and wind farms. Thus, they have underestimated demand, and therefore they have underestimated the economic impact that is coming down the line from regulating away supply (from the climate activist movement).

Here we are, just getting to the point of a boom in economic activity, following the CDC's recent guidance changes, and oil prices are already back above pre-pandemic levels, and the estimates from the expert community on oil demand are just now being revised UP.

In my opinion, this "energy transformation" dynamic continues to plot the path toward another $100+ oil price environment.