Happy Monday, and welcome back to our weekly Energy editorial, where we as always keep you posted on everything energy markets! Warren and 3Fourteen Research has been bang on with their bullish crude trade posted in July, which has returned approx. 33%, and Andreas is also solidly in the green on his long energy bet, but is now the time to exit the trade? How big is the risk/reward in betting on further upside? Andreas and Warren’s models disagree slightly. 

On the other side of the energy space, Natural Gas is starting to look like a possible substitute for a long crude position, while the uranium and nuclear trade could be running on fumes. As always, read along for a deep-dive into our thinking and models. Enjoy!

Steno Research: We buy when Habeck goes short 

What a week in markets! We had headline numbers in CPI and PPI jump on the back of a strong month in crude and we also note that the nuclear sector is flying higher with Sprott’s physical ETF being up 13% last week on the back of FOMO and political acceptance in nuclear space. 

Let’s start out by discussing crude oil where we turn our attention towards MBS who is enjoying life in the sand box at the moment. As WTI and Brent are trading at around USD 90 Saudi oil is close to USD 100, which reflects the pricing power that the Saudis have gained over the last year and a half. 

The Saudi pricing power is driven by two factors. First, the Saudis are taking a part of the cut that oil refiners have taken advantage of via the crack spreads and second, the West forgoing Russian crude oil.     

Chart 1: The Saudi crude premium