Editor's Note: Below is a note written by Hedgeye editor Eric Wallerstein and Junior Macro analyst Ryan Ricci. For more insights like this, sign up for our free Weekend Reading newsletter.
Crude Oil remains in a sticky situation, with WTI inflating roughly +10% year-to-date with inventories decelerating to -14.3% year-over-year (versus the prior -13.9%).
For context, inventories are a mere +0.16% above their 5-year low (this was a sequential acceleration from -0.4%, but brutally low nonetheless.)
Constrained supply, weaker dollar, and Coronavirus lockdown fatigue (Omicron just isn't that bad in terms of severity) = higher prices.
Adding fuel to the fire, the U.S. has the the largest appetite for oil by far, consuming ~18 million barrels per day (good for 20% of global consumption). For comparison, China comes in second at ~14 million barrels per day (14% of the world's total). 2019 #'s, per EIA.
And while we're pumping out crude at fairly normal levels, imports are sitting -2.7% below their 5-year low.
While OPEC & co. play a big role here, WTI looks stuck at higher levels (at least for now) until supply constraints resolve (along with myriad factors). We'll keep you posted intermittently as the situation develops.