The severity of the oil decline caught everyone by surprise, so much so that big energy companies are still running old ads on CNBC touting their exploration efforts in this time of tight supplies. Trying to catch the falling knife has only resulted in bloodied hands, so far. So could we actually be at a bottom?
Oil analyst Gregor McDonald offers an interesting tid-bit that suggests we might be:
The profit-margin for a refiner to turn a barrel of Brent oil into GASOIL is soaring. GASOIL has always been my favourite global tell on worldwide demand for Diesel. Considering that a 15.00 to 25.00 dollar profit margin was very attractive when Brent was at 130.00 dollars per barrel, that we are seeing 13.00-17.00 dollar profit margins with Brent at 40.00 is eye-opening.
Here is what we can conclude from this development: the supply/demand balance in Europe and Asia is being restored. It’s not just that oil supply is tightening. Demand for diesel is rising. Read the whole thing >
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