00:00You've read the news. You've seen the headlines. Is it a nothing burger or the real deal? Real signs
00:04of progress? Yeah, I suppose it's progress, but we really do have to take it into with a grain of
00:11salt. Keeping in mind that the futures market can reprice instantly. They can reprice as fast as a
00:16trader can hit the sell button on their keyboard. So to paraphrase Ronald Reagan, futures markets
00:23trade on trust. The physical market trades on verification. So yes, we do have this headline,
00:29but the physical market has to see more than just a social media post. So vessels that have been
00:35diverted away from the Persian Gulf are going to remain diverted. Refiners who are now buying because
00:39we're entering the peak season, buying crude oil, are going to continue to buy at high prices.
00:44So we are looking at higher prices longer, regardless of what we're seeing in the futures
00:49market now. So the point being here now is that, yes, this is potentially good news, but hey,
00:56we've been down this road before. We've seen these spikes both up and down in the future markets
01:01before. But what we're seeing in the physical market, what you're seeing in the spreads,
01:05whether it's Dubai, Brent, Brent WTI, Brent versus Houston, the physical market has an extreme pull
01:12on the market and prices are going to remain higher, certainly as we kick off the summer driving
01:18season. Thank you for that dose of reality, Stephen. When it comes to the inventories globally,
01:23where are we? How tight is this market?
01:27Yeah, it's not, well, no, it's really interesting. So it's not necessarily about
01:32barrels per se or supply. It's about logistics. So regardless of how much supply, and for instance,
01:39here in the United States, we are at multi-year highs when it comes to crude oil. And this is
01:44what's happening. The vessels are coming to, as the president in your clip before said,
01:48people are learning to buy U.S. oil. This is true. So what happens? Empty vessels are leaving
01:55lower inventory markets to come to the United States to load up, which leads to a lag time
02:01of longer transit times, which will keep the market short of oil. So not necessarily because of the
02:06supply, but it's because of the vessel economics or the lack of vessels. And this is where the market
02:12has dodged a bullet up until this point. That is to say, this conflict began back in late February,
02:17early March, when demand for crude oil is at its weakest. Then we went through March, April,
02:22when refineries are in their turnaround season, their maintenance season. They are buying fewer
02:27barrels of oil, getting ready for the summer. Well, guess what? The summer is here, or it's about
02:32to be here. Refiners are coming out of their maintenance season. They have to buy these barrels,
02:37and therefore that is keeping the bid in the market. And that is most likely kind of the impetus
02:42of the White House to push this narrative that a peace deal is almost afoot because the hammer is
02:48about to hit the market. The demand, the one variable that's been missing from the market
02:53has now returned. It's going to return with a vengeance in the weeks ahead.
02:57Also, it comes, as Jonathan has been saying, U.S. gasoline is above $4.50 a gallon,
03:02the highest we've seen since 2022. Could we get to $5 in the next few weeks?
03:08Not likely. So what we've seen here, and the Federal Reserve has a study that's called
03:12rockets and feathers when it comes to retail gasoline prices. When we see a disruption in
03:17the flow of oil, prices at the pump will take off like a rocket. But then when we see some
03:23sort
03:23of resolution to whatever disruption it is, prices fall back to earth like a feather. So there will
03:29be a lag. Now, retail gasoline prices on average, where you're looking at the EIA or AAA, are about $4
03:36.55.
03:37On a national average. They're going to remain there for the next few weeks. Can we get to $5?
03:44At this point, I do think it is unlikely, given where wholesale gasoline prices are trading in
03:49the United States. So if we are not at the peak of retail gasoline prices currently, we are going
03:55to near that price. We're going to near that level within the next few weeks. But that's not to say
04:01we're going to see a continued pullback. Because keep in mind, in three weeks, four weeks, it's the
04:06Memorial Day holiday. So now prices will begin to remain high. So that feather aspect will remain
04:13high. Prospects of $5 gasoline, looking at 10 years worth of regression, is very limited up also at this point.
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