If You Are Long Oil Companies, You Have to Be Bullish on China

As someone who deals frequently with energy companies, it is difficult to disengage from the images of and the human toll from Hurricane Harvey. As a fictional character once said, though, "money never sleeps" and the markets are trying to price in the dislocations to U.S. refinery capacity caused by Harvey. In the near term, gasoline prices are getting most of the attention as the front-month NYMEX RBOB gasoline contract powers through $2.20, up 20% in the past two trading days. 

From a policy standpoint, one has to wonder why the U.S. hasn't built a major refinery since the Marathon unit came online in Garyville, La., in 1977 and why American refinery capacity is built to face the seas (and accept imports) when horizontal drilling powered by hydraulic fracturing has demonstrated that this country has abundant hydrocarbons onshore. To have any sort of bullish stance on crude for the intermediate term, it is important to focus on the potential from countries where such structural deficiencies do not exist. In short: If you are long oil companies, you have to be bullish on China. ...410 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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