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Authored by Nick Cunningham of Oilprice.com,

Oil prices continue to rise on the prospect of a rebound in fuel demand as economies begin to reopen.  But there is a large difference between oil demand rising from recent lows and actually growing relative to pre-COVID-19 trends. In other words, demand destruction on the order of nearly 30 million barrels per day (mb/d) may have been brief, but we are a long way from a 100-mb/d oil market. 

In fact, some are wondering whether the world will ever get back to 100 mb/d of oil demand. Even oil executives have their doubts. Royal Dutch Shell’s CEO Ben van Beurden recently suggested that a rebound is unlikely, even looking out beyond 2020. “We do not expect a recovery of oil prices or demand for our products in the medium term,” he said.

“We basically have a crisis of uncertainty. Uncertainty about demand, about prices,” van Beurden said in a video address when presenting first quarter results at the end of April.

“Maybe even uncertainty about the viability of some of our assets given all of the logistical issues we have.”

BP’s CEO Bernard Looney largely admitted the same thing. The COVID-19 pandemic could entrench certain societal changes – more teleworking, less commuting, less flying – that could permanently erode a portion of consumption. “It’s not going to make oil more in demand. It’s gotten more likely [oil will] be less in demand,” Looney said in an interview with the FT. 

“I don’t think we know how this is going to play out. I certainly don’t know,” Looney said.

“Could it be peak oil? Possibly. Possibly. I would not write that off.”

Not everyone agrees. ExxonMobil’s chief executive Darren Woods recently said that the long-term trends “have not changed.” 

A new study from IHS Markit also sees oil demand mostly returning to “normal” by the end of 2021. “It may be hard to comprehend now. But barring a second wave of the pandemic, nearly all pre-COVID demand could return by the second half of 2021,” Roger Diwan, vice president of financial services at IHS Markit, said in a statement. The firm sees oil demand rising to 96-98 percent of pre-coronavirus levels by the second half of next year. 

“If that transpires it could even lead to a market squeeze in the medium-term as supply destruction hinders the ability of supply to keep up with recovering demand,” Diwan added.

A separate report from the Oxford Institute for Energy Studies sees something similar. The report eyes a supply deficit as soon as the third quarter of 1.5 mb/d, on the back of severe supply curtailments and a rebound in demand. The report says the market could be undersupplied in 2021 by as much as 5 mb/d. But the inventory overhang means that Brent trades in the $40 to $50-per-barrel range for most of next year.

The Oxford report also sees demand mostly arriving back at pre-pandemic levels at the end of 2021. 

The problem with that notion is that a second wave of coronavirus infections is completely plausible, perhaps even likely (something both the IHS and the Oxford reports admit are big uncertainties). Time will tell. 

But the permanent changes in some behaviors, along with the ongoing market share gains for electric vehicles, go beyond oil market cycles. If demand does return, and boom follows bust, the shift to cleaner energy will only accelerate, and that’s before even considering any green stimulus measures now under consideration. 

One important issue that the Oxford report raises is how Saudi Arabia responds after the immediate crisis subsides. With the prospect of peak demand looming, there are “advantages” for Saudi Arabia if it pursues a high-volume/lower price strategy, the Oxford study says. That is, Saudi Arabia may want to ramp up production in the years ahead in order to monetize its remaining reserves as demand peaks and begins to decline. 

Cutting by too much in an effort to push prices to $50 per barrel or above would clear the way for a return of U.S. shale. Better to keep the market well supplied, capture more market share, and box out a rebound in shale drilling. 

Other analysts agree. “Will OPEC+ then hold on to production cuts in order to opt for price rather than volume once the oil price moves back to $50/bl thus once again chase the oil price to $60/bl and $70/bl by holding back supply?” Bjarne Schieldrop of SEB wrote in a report. “If so, this would again give preference to shale oil volume rebound in exchange for a higher oil price to OPEC+.”

A list of Obama administration officials who participated in the ‘unmasking’ of former National Security Adviser Michael Flynn has been released by Sens. Ron Johnson and Chuck Grassley. The names include former FBI Director James Comey, former CIA Director John Brennan, former Director of National Intelligence James Clapper, and former Vice President Joe Biden.

SCOOP @CBSNews obtains @RichardGrenell notification to congress declassified “unmasking list” Flynn between late 2016 and January 2017 – Read 3 pages provided by NSA here pic.twitter.com/NozVpQlRn2

— Catherine Herridge (@CBS_Herridge) May 13, 2020

#FLYNN unmasking docs include these key details “Each individual was an authorized recipient of the original report and the unmasking was approved through NSA’s standard process..While the principals are identified below, we cannot confirm they saw the unmasked information.” pic.twitter.com/vz9W3uHPSz

— Catherine Herridge (@CBS_Herridge) May 13, 2020

The revelation comes after Biden was caught trying to lie about his knowledge of the Flynn investigation during a Tuesday morning interview – changing course after host George Stephanopoulos pointed out his documented attendance at a January 5 Oval Office meeting in which key members of the Obama administration discussed the ongoing investigation into Flynn’s intercepted contacts with the Russian ambassador.

As we have previously noted, “unmasking” is a term used when the identity of a U.S. citizen or lawful resident is revealed in classified intelligence reports. Normally, when government officials receive intelligence reports, the names of American citizens are redacted to protect their privacy. But officials can request that names, listed as “U.S. Person 1,” for example, be unmasked internally in order to give context about the potential value of the intelligence. Unmasking is justified for national security reasons but is governed by strict rules across the U.S. intelligence apparatus that make it illegal to pursue for political reasons or to leak classified information generated by the process.

Last week, Acting Director of National Intelligence Richard Grenell visited the Justice Department with the list of unmaskers, which the DOJ effectively said was up to him to release, according to a Fox News report.

After Obama National Security Adviser Susan Rice was outed as the ringleader of an unmasking campaign, the Wall Street Journal reported that she wasn’t the only administration official to participate in Flynn’s unmasking.

The new disclosure comes after the FBI was revealed to have attempted to ensnare Flynn in a perjury trap, despite the agency’s own DC field office suggesting that the case be closed.

Last week we pointed out perhaps the most critical distinction as the US begins the long and arduous process of recovery from the coronavirus pandemic: that voluntary lockdowns are worse than official ones as they can’t be turned off by fiat, because as Rabobank’s Michael Every put it, “if people stay at home anyway, the economy will not recover as hoped.”

Adding to the complexity, in recent days we have observed that this distinction has increasingly fallen along party lines, with democratic states refusing to reopen or happy to wait (and in the case of California warning it may be shut for another 3 months), while mostly Republican states already pursuing a partial or full reopening.

This particular distinction was featured front and center in the latest CivicScience survey, which found that 69% of respondents would not resume all normal activities after states lift stay-at-home orders, while nearly a third of Americans, or 31%, would remain under quarantine even if local governments issued a notice to go back to normal day-to-day activities in order to prevent an economic collapse.

While we won’t discuss the political affiliation of these 31%, the data above underscores the nature of the crisis: until the virus is under control, and until the reopening is viewed as a political issue – especially if continued state shutdowns help cripple the Trump economy ahead of the November election – there will be a very substantial speed limit on the economic recovery, especially as Democratic states do everything in their power to delay reopening for as long as possible.

Authored by Sharyl Attkisson via JustTheNews.com,

As health officials and the public have worked hard to sort fact from fiction during an emerging and new health crisis, it has become clear that they — and we — do not always have accurate information at hand.

There are three big reasons for this.

The first one is not that anybody is necessarily trying to mislead. But the nature of health information, not to mention information in general, is that it frequently changes as we learn more.

What we think we know today will often change tomorrow. The government recommended against the general public wearing a masks — before it recommended they do so. Predictions of coronavirus deaths, how many, when, and where were wildly off the mark compared to the ultimate result (to date). It could be that the models were wrong or that we managed to change our fate. In any event, what we thought we knew at one point in time proved later to be untrue.

The second reason we do not always have accurate information at hand is a bit more sinister. It is because certain corporate or political interests are working hard — often spending a lot of money on their efforts — to control a certain narrative.

They liaison with the media, quasi-news media, health officials, government, and politicians. They publicize “studies” or “scientific reports” that are little more than slanted works designed to convince the public to believe something.

The final reason why factual information is often out of our reach is because it is simply censored, hidden or disappeared.

The influences who seek to control narratives in order to gain power or make money can reach with their tentacles into Facebook and make sure certain facts are labelled “false” and removed. They can do the same with Twitter, YouTube, and Wikipedia. They can commission a misleading “fact check” from any of a number of “fact checking” groups, designed to controversialize a set of true facts, the scientists unearthing them, or journalists reporting them.

For all of these reasons, it has become increasingly difficult to rely firmly on what we read and hear. And those controlling the narratives pretend it is we who are off base when we ask questions or address this reality. The wise information consumer knows better. 

For more, listen to The Sharyl Attkisson Podcast: How Information Manipulation Could Be Destroying Our Health:

One topic that is occasionally brought up by Tesla skeptics, but rarely examined in depth, has been a litany of out of the money call buying in the name that appears to be occurring, relatively aggressively, on a weekly basis.

While the buying could be attributed to normal market forces, a new article by Dan Stringer looks into the specifics of one such trade that took place last week, where it appeared that over $2.5 million was deployed in a very short term, very out of the money options buy.

In his piece, he looks at the accumulation of Tesla $850 weekly call options, expiring May 8, 2020, which occurred on both May 7 and May 8 (the date of expiration). With the equity trading around $770 on May 7, more than 35,800 $850 strike calls were bought. Then, on May 8, 12,600 more of these calls went off. 

Between these two days, 48,400 call option contracts were entered into for a strike price of $850 within a day of expiration. For context, Tesla shares were trading at around $770 per share on May 7, more than $80 out-of-the-money for these options. Rational expectations would assume that something fairly material would need occur for these to pay out. These were trading at roughly $0.50 per share on the Thursday and traded up to $0.60 per share early on Friday, which would make the total cost of this position $1.79 million for the first 35,800, and a further $756k for the next 12,600 on Friday morning, bringing the total cost of the position to $2.55 million.

As the piece notes, this is a substantial bet for a “very unlikely” event to occur – namely, Tesla would have to rise by almost 10% over the course of just one day for the options to be in the money.

“The notional value of this trade becomes even more as it represents $3.7 billion worth of Tesla stock at the trading price of $770, where the stock was trading at the close of Thursday, May 7, 2020,” the piece says.

The author then lays out that OCC rules dictate that the clearing house must have a certain percentage of this stock on hand to deal with the calls should they move into the money. He estimates a 20% ratio:

The broker-dealers need to have some margin level (per Rule 601 of the OCC rules); this can vary by broker-dealer and is subject to calculations with these rules. I have heard a typical ratio is roughly 20% on hand, so for the purpose of this exercise, I will use that.

From there, he determines that the options buy would trigger a purchase of 716,000 Tesla shares to cover the trade. He also notes the timing of the transaction, pointing out that “broker-dealer margin requirements are sent out by 10:00 am EST, or within the first ½ hour of trading” and arguing that this could cause a spike at the cash open.

This would create a potential spike in buying at the open, causing shares to spike. The following 12,800 options would then require a further 256,000 shares to be purchased using the same margin requirement methodology.

Finally, he concludes that while the options trade was still a loser, its cost could be offset by a purchase in Tesla shares. A long position of 63,750 shares would have offset the cost of the options trade, since Tesla finished up about $40 on Friday, the author notes.

The author concludes by stating that the options buy could be a “relatively inexpensive” way to generate some forced buying in Tesla.

For a large-cap company like Tesla with the volume of shares that have been trading over the last several months, this option position would be a relatively in expensive cost to generate some forced buying, at a cost of just 5% of the open position.

Recall, the topic of strange call buying was also brought up in a podcast with well known Tesla skeptic, @TeslaCharts, last week. Though the buys were discussed, neither the host nor the guest could speculate as to why these buys might be taking place. Thanks to Dan Stringer’s article, they may be on their way to an answer.