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    • May 23
    • 1 min read

Update: On Taking the Under and the Over

Same commodity, different risks in early innings in new commodity cycle



May 23, 2024


Key Observations:


  • DOE data thru May 17 show solid demand for U.S. oil through both domestic and export channels.

  • Flash U.S. PMIs (May-24) reported today by S&P Global show strong services activity and a factory rebound after last month’s mild deceleration.

  • But oil supply risks remain uneven as shoulder season transitions to summer. Cash crudes in Kansas and Colorado are back at $65 to slow the rate of local upstream capex, even as WTI fetches +$12 higher on the Gulf Coast as a beneficiary of the seasonal and cyclical demand upswings.

  • Given near-term risks, we continue to like the idea of owning ICE gasoil cracks (long gasoil, short Brent) and NYM WTI timespreads (e.g., long N4, short Q4).




Source: S&P Global, Plains, Bloomberg, Blacklight Research. Note: this note updates two charts first published in On taking the under and the over (7-Mar-2024).

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