Is the Chinese reopening a true game-changer and how will the attacks in Iran over the weekend alter the geopolitical risk picture for energy markets? We provide our takes alongside updated price signals on oil and natural gas. “We are happy when people/things conform and unhappy when they don’t. People and events don’t disappoint us, our models of reality do. It is my model of reality that determines my happiness or disappointments.” – Stefan Zweig 3Fourteen Research: The true story on the Chinese reopening The China reopening story has fueled oil’s 2023 rise. Read the last sentence carefully. I specifically said the China reopening “story.” Said differently, it has not been the reopening of China that has propelled oil to this point. Rather, it has been the “story” of the reopening. Three weeks ago, we dug into oil’s physical market. Back then, we argued that oil could not divorce from its physical reality for very long. With that said, over short time horizons, oil regularly divorces from the physical market. Ultimately, to make an educated guess of where oil is going, you must understand both the physical and paper markets. Today, we take a look at the paper market and how we incorporate it into the 3Fourteen Core Crude Oil Model. At present, the Model remains Neutral (components below). The physical and technical components are bullish. The inventory component is bearish. And, the positioning (i.e. paper or futures) component is neutral. We account for the paper market in the “Positioning” […]