Brian Kersmanc

Maersk themselves talked about not necessarily changing their plans and sending ships back in.

So there is a delay.

There is a lag.

And I think it will be a long time before there is a true return to normalcy.

So then the next question is, well, why is oil sitting at the price that it is right now?

I think that's a really interesting one because with everything that's going on, you would expect you're taking almost a fifth of the world's energy out of capacity, so to speak, and locked in the straight that energy prices should be substantially higher.

Yet here we are sitting in the 70s, almost $80 a barrel in terms of energy.

And what I think you're seeing is two things.

Number one, you've offset a decent amount of that supply or that lack of supply through inventory drop.

It's been well publicized, but what's interesting is even last week we had a 17 million barrel draw off of both US inventories and the SPR.

So you're getting sort of subsidized barrels, so to speak, that are working their way through the system.

I was on top of, I believe it was 16 million barrels the week before, maybe 15 the week before that.

So you're seeing this consistently coming through this level and magnitude that's offsetting whatever you would have gotten out of the street in that sense.

Uh, you've also seen China tap the brakes a little bit.

Um, they have massive oil reserves on their side, so they've slowed down on their imports, uh, and they've drawn down their own finished products, uh, inventory.

So I think that's causing that price to, to be a little bit lower that you combine with the fact that the shipping costs of going out there and sending this stuff through is so expensive that everybody's just kind of sitting on their hands and they're saying, okay, everybody keeps telling me this thing is going to be over in the next six weeks, next eight weeks, another month or two.

Um,

So I'm going to wait for the price to be a little bit lower so I can go and refill those inventories and I'm just going to wait and draw them down in the meantime.

It's kind of like that transitory argument and or the variable mortgage rate argument that people used to have in the day where I'm going to take the mortgage at the lower price now even though it's variable because I believe the rate's going to go down later.

Well, that works unless it happens.