🛢️ $XOM — the buffer is almost gone and two oil majors just said so out loud
Stock’s at $150. Oil execs just stood in front of a room of analysts and said the inventory cushion keeping crude calm is running out. I’m positioned for the snap.
# The setup
Hormuz has been choked since February. Exports are running around 5% of normal. Oil hasn’t exploded yet only because the world has been draining stored barrels to cover the gap. That tank has a bottom, and we’re getting close to it.
# The models
Exxon’s Neil Chapman laid it out at the Bernstein conference. Inventories are hitting “unheard of” lows, they’ve modeled it, and once you reach minimum levels there’s only one way to go. His number is $150 to $160 Brent on a two to four week clock. Chevron CEO Mike Wirth said the same thing his own way, physical pressure flowing through in June and July as the shock absorbers empty.
The part I actually care about: this is an operational STRESS play. We do not need tanks at literal bottom. JPMorgan has OECD commercial stocks hitting stress by June. Capital Economics says critically low by end of June. Price rips as soon as the market wakes up to the cushion being gone, and that window is now.
# The draw data
Goldman Sachs, May 20 note from Struyven and Grigsby: global visible inventories drew at a record 8.7 million barrels a day in May, almost double the pace since the war started. Total stocks are down to about 101 days of demand, the lowest in roughly eight years. Bloomberg carried it straight from the desk, real institutional data.
Brent already touched $138 back in April when the strait first shut. It’s back near $91 because the market keeps pricing a peace deal that refuses to show up. Every week it doesn’t, the draw keeps grinding.
The risk, because I’m not stupid
That same Goldman note says they don’t see the floor breaking this summer, and the IEA’s draw math runs way slower than Goldman’s. A real reopening headline guts these overnight. Short dated calls, so if the re-rate misses my window theta does the rest.
# Tomorrow
EIA weekly petroleum report drops 6/3. If the draw is still hot and Brent finally climbs on the number instead of fading on a Trump tweet, the thesis is confirming. That print is the tell.
Positions
• 100x XOM $160C, exp 6/18, currently $1.18
• 30x XOM $155C, exp 6/26, currently $3.09
• Total $21,070, up 9.63% 🚀
Not financial advice.
# Risk management
This play is 2% of my portfolio, I’m ok with it losing. Size appropriately
