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imaginima The oil and ET thesis The thesis of this article is really simple: A) the current $75 oil price won’t last, and B) has created an entry point for Energy Transfer (NYSE: ET ) with an enormous margin of safety. The reasoning for part A has been detailed in my earlier articles, and the key is the low inventory and also the structural imbalance in our energy supply-demand dynamics, as reflected in the data in the two charts below. The first chart shows the U.S. strategic petroleum reserve (“SPR”), currently at 382 million barrels, after two rounds of releases to combat higher fuel prices since the Russian/Ukraine war broke out this year. As seen, the current level of SPR is near the lowest point in the past 4 decades, leaving little inventory for further releases. The second chart shows the imbalance caused by the structural underinvestment in our investment in our energy infrastructure over the years. And the problem is further exacerbated by the Russian/Ukraine war. As seen, the U.S. net imports of crude oil and petroleum products are currently not only at the lowest point in 5 decades, but also at a net negative of almost -1,600 […]
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