Exclusive: Don’t Buy Crude ETFs for the Refining Crunch—Veteran Trader Warns of a ‘Temporary Crude Surplus’
Despite historic refining margins and 10% of global capacity sitting offline, former Petronas trader Baron Lamarre warns that a “temporary crude surplus” makes ETFs like United States Oil Fund, LP (NYSE: USO ) and United States Brent Oil Fund, LP (NYSE: BNO ) poor plays right now. Instead, experts suggest targeting individual refiners to safely capture the product shortage. Disconnect Between Crude and Crack Spreads The U.S. 3-2-1 crack spread recently hit a record $64 per barrel with ~8 million bpd offline, yet raw crude prices have failed to match that downstream boom. A ‘crack spread’ is the gross profit margin an oil refinery earns by breaking down—or ‘cracking’—crude oil into refined petroleum products like gasoline and diesel. Lamarre, co-founder of the International Digital Exchange (INDEX), attributes this to a fundamental divergence: "This...
Despite historic refining margins and 10% of global capacity sitting offline, former Petronas trader Baron Lamarre warns that a “temporary crude surplus” makes ETFs like United States Oil Fund, LP (NYSE: USO ) and United States Brent Oil Fund, LP (NYSE: BNO ) poor plays right now. Instead, experts suggest targeting individual refiners to safely capture the product shortage. S. 3-2-1 crack spread recently hit a record $64 per barrel with ~8 million bpd offline, yet raw crude prices have failed to match that downstream boom.
A ‘crack spread’ is the gross profit margin an oil refinery earns by breaking down—or ‘cracking’—crude oil into refined petroleum products like gasoline and diesel. " Read Also: Elon Musk Says Economy Will Be Measured in Energy, Not Money, as SpaceX Eyes Orbital Solar Power The Case for Individual Refiners Navellier & Associates founder Louis Navellier agrees, explicitly advising traders to “ prefer individual stocks ” like Phillips 66 (NYSE: PSX ) and HF Sinclair Corp. (NYSE: DINO ). Lamarre echoes this, noting record margins provide a “much cleaner tailwind” for refiners than crude trackers.
” Lamarre’s Crude Price Scenarios Emphasizing a wide-band outlook over tight forecasts, Lamarre outlines four crude scenarios: Baseline Range: Brent $80–$100 and WTI $76–$95. Near-Term Escalation: If Hormuz disruptions hold, Brent could test $100 and WTI mid-$90s. Full Chokepoint Closure: A total Strait shutdown could push crude to $110–$120. De-escalation: Normalizing flows could ease Brent to $75–$90 and WTI to $70–$85.
Navellier maintains war spikes will be “temporary,” projecting WTI to peak “up to $82 per barrel” through Labor Day. 06. 25% in the premarket on Monday. 11% higher in the premarket on Mnday.
Read Also: Donald Trump Jr. Says Oil Futures Under $70 Thanks To His Dad's Iran Deal: 'Lower Gas Prices Coming For Americans' Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published editors. Photo by Castleski via Shutterstock