Morgan Stanley is out with a call for $100 oil in the second half of the year today, warning about undersupply.

“The key oil products markets (gasoline, jet fuel and gasoil/diesel) all show strong crack spreads, steep backwardation and inventories that have fallen to low levels. None of this signals weakness,” analysts said in a note.

I'm behind that call but what doesn't make sense is the short-term demand. US gasoline inventories have had their largest three-week increase on record and omicron is hitting gasoline and jet fuel demand.

Yet crude is up almost every day.

Today, it finally looked like there would be a respite as oil tumbled to $82.78.

Yet we skip ahead a few hours and it's right back to $85.15.

15 minute chart:


The buying has been absolutely relentless, even on days like today when the risk trade is taking a beating.

I have to think that somewhere in the physical market -- perhaps China or somewhere in Europe -- is stockpiling crude (or at least hedging for shortages) on fear or expectations of a Russian invasion and possible supply interruptions.