A friend sent me a text this morning and asked if I was as bullish as some of the analysts on Wall Street have gotten about oil prices late next year. My response: If you want optimism, get a dog. When it comes to oil prices, I remain befuddled.

With 7 mmbo/d still shut in by OPEC+, more cheating of quotas expected, and friction from the UAE, the “don’t worry, demand is right around the corner” argument doesn’t fly.

Back of the napkin math saw 25-35 mmbo/d of demand destruction in April and May which built inventories by more than a billion barrels. To believe some analysts, world demand is back to 95 mmbo/d against 92 mmbo/d of supply after accounting for US decline YTD. At that rate, it should take until next June for inventories to decline. BUT… we still have 7 mmbo/d waiting to get back and U.S. producers ramping up frac spreads to mask declines.

Prices will be higher, but it feels premature. So my advice to every N.A. Co. Hedge like your company’s survival depends on it. It does.