Oil Markets: Inflation is Dead, Long Live Inflation

There seems to be an ongoing dissonance in the oil or energy markets.

Bespoke Invest shows us that crude oil inventories “are now at their highest levels of the year”, while distillates and gasoline “both saw larger than expected draws in their stockpiles”.

Yet crude oil prices are approaching the April highs.

And as mentioned above it isn’t just crude oil, such dissonance is likewise extended to the gasoline markets (Gaso).

The obvious answer is that the recent actions don’t just reflect on the consumption pricing model but from the reservation pricing model.

As we previously pointed out, commodities are not just meant to be consumed (real fundamentals) but also meant to be stored (reservation demand) if the public sees the need for a monetary safehaven.

Thus, we seem to seeing inflation dynamics incrementally playing out in the commodity markets.

Meanwhile, there has also been a small recent pop in the natural gas market (NATGAS).

I’d be convinced of the deepening risks of the inflation cycle, when Natural Gas chimes in. So far, this hasn’t been so.

Yet the odd part is that mainstream says inflation hardly exist. I wonder what kind of world they seem to be living in.