Haymaker Daily
On oil draws and bulls
Hello, Subscribers:
Last week, commercial crude inventories in PADD 3 (aka the Gulf Coast region) dropped by a whopping 10 million barrels. This move marks the largest single-week decline since December 2023, and it erased nearly all of the inventory overhang that had been building since the Israel-Iran ceasefire back in June. That means we’ve gone from a 5% surplus versus the 10-year seasonal norm in early September to a 2% deficit in less than two months. That’s a 13-million-barrel swing in relative inventories and a pretty seismic shift for a region responsible for roughly half of America’s refining capacity.
Historically, outsized drawdowns like this one have signaled one of two things: an abrupt spike in export demand (notable, given the Brent-WTI spread remains wide), or an intentional pullback in imports; often to goose prices when sentiment is at a nadir. Either way, the implications are significant. As highlighted in our October 20th issue, speculative positioning in crude had collapsed to levels last seen during the depths of the 2015-16 bust. That kind of sentiment washout, combined with the largest inventory draw in nearly two years, could represent a classic contrarian buying signal. If the 2025 vintage of “the cure for low prices is low prices” plays out true to form, oil bulls may soon find themselves back in the saddle.
David “The Haymaker” Hay
IMPORTANT DISCLOSURES
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David Hay is a passive owner of Evergreen Gavekal (“Evergreen”), a registered investment adviser with the Securities and Exchange Commission. As of 03/31/2025 Mr. Hay has no involvement in the day to day operations of Evergreen, nor is he involved with any investment research, or investment management performed by Evergreen. The information herein reflects the personal views of David Hay as a seasoned investor in the financial markets and any recommendations noted may be materially different than the investment strategies that Evergreen manages on behalf of, or recommends to, its clients.
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