Recent Posts

Sunday Sankey 1/16/22

Well, I’m in one of those mindsets where every headline I read my reaction is “Bullish oil.” Iraq Oil report carries a much higher oil production number for Iraq than other sources. My reaction: “Bullish.” Libya struggles, my reaction: “Bullish.” These two elements are theoretically in opposition, but on the one hand, variable Libya performance is ongoing, on the other, the lack of spare capacity in oil markets is clearly driving prices and if Iraq […]

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2:07 PM

Mice & Men

Has Covid-19 forced you to wear glasses and a mask at the same time? You may be entitled to condensation. Vin Diesel only eats two meals a day to keep in shape for making movies: Breakfast and breakfurious A genie granted me one wish, so I said “I just want to be happy.” Now I’m living in a cottage with 6 dwarves and working in a mine. Robert Burns: “The best-laid schemes o’ mice an’ […]

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9:37 AM

Masters’ Class

Mike Masters was the first American to score a goal at Wembley. But we had a different Mike Masters on Happy Hour last night, the hugely successful hedge fund manager who had a swimming scholarship to Tennessee, and started Masters Capital in 1994. He became highly prominent in 2008, testifying to Congress on oil speculation. Mike Masters: the market is obsessed with post-COVID recovery, but is not thinking enough about the decade prior to COVID […]

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9:16 AM

Third Wheels & India

Portfolio Manager Special Happy Hour Tonight, 5pm ET, with Michael Masters. There might be no better commentator on “inflation day” than Mike. We additionally have four energy/natural resources PMs confirmed. VERY LIMITED event. Sankey Happy Hour Registration: https://us02web.zoom.us/meeting/register/tZIocuuprTooG9SqNZxj9rgUjl9KZxTOEHAJ Masters first came to national – and my – attention testifying to Congress further to a white paper he wrote on oil speculation around 2008. It is always a good sign when you write a research note […]

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9:25 AM

We like them all

Make a good call, they always play out really fast and leave you wondering what’s next. We left last year predicting a bad January but a good year for markets, and a good year for oils. Markets have been quite the ride, notably yesterday the NASDAQ was crazy, while the oils have been good. In our cross plot of performance shown below, it is clear that some 2021 laggards are ripping this year, notably refining. […]

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9:38 AM

Looking for Kilos

Yesterday I took on re-modelling the oil market according to the new world order: OPEC+. But I also spoke to a top hedge fund portfolio manager, US mega-player, who is based in Singapore for a couple of months. He made the following points: Strong Singapore economy with staff shortages – he waited an hour for a coffee the other day China cutting back on energy intensity. Brain drain from Hong Kong. Massive capex cycle starting […]

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3:31 PM

PSX in the City

This morning! PSX Phillips 66 Call 11am ET fireside with Greg Garland, Chairman & CEO, Mark Lashier, President & COO, and Jeff Dietert, IR.  This note has a brief history of PSX. Register here: https://www.sankeyresearch.com/2022-refining-conference/ There have not been Friday jokes for quite some time. You will never believe the theme: What’s the most positive thing about 2022 so far? COVID tests. We are mystified that people are so angry about Djokovic being an anti-vaxer. His […]

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9:02 AM

Russia: the tyranny of the week

I got up thinking about a quick look at Russia for the Morning Note; ALMATY, Jan 6 (Reuters) – Fresh violence erupted in Kazakhstan’s main city on Thursday after Russia rushed in paratroopers to put down a countrywide uprising in one of Moscow’s closest former Soviet allies. Police in the main city Almaty said they had killed dozens of rioters overnight into the early hours of Thursday morning. The authorities said at least 18 members […]

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7:07 PM

Wildcards and Certs

Wildcard 2022 year starter: Kazakhstan declares state of emergency amid unrest. A member of OPEC+ that has failed to meet its quota increases, at times in 2020. Yesterday’s OPEC meeting was a rubber stamp. The question is when they meet in person to re-set quotas more sensibly. June is the best guess. Kazkahstan is a major concern for Chevron, although their massive Kazakh operations are totally remote in what is the lowest population density country […]

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8:42 AM

Morning Refining Conference PBF

Our refining conference opened yesterday with an entertaining and informative conversation with the senior management of PBF: Tom Nimbley, Chairman and CEO, Matt Lucey, President, and Erik Young, CFO, and Colin Murray, IR. Noted in passing: OPEC meeting today, huge bull story over the past week was Russia’s December production numbers that once again failed to meet quota and remained flat with November at 10.93mb/d. Russian gas flows are also again very low to Europe […]

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8:37 AM

Sunday 2022

Happy New Year! Dan Loeb was complaining on Twitter that we hardly got any time off here: “Even prize fighters get 6 months off between fights, NFL players a week. Only 2 days off between years makes me want to join a union”. He was also welcoming New York’s new mayor; I am completely with Dan on both these matters. By the same token it feels as if neither of us will be joining Gettr.com […]

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8:48 PM

Some 2022 Bets Previewed

Thinking about the year ahead, one of my favourite Twitter follows @Raisingthebar47 published the following deliberately non-consensus list of things that will happen energy in 2022. The list is interesting, notably for natgas theorists, but also because it represents what could be considered a list of unexpected events for the year; it was just a quick checklist of things to consider: Natgas back to <$2.50/mcf MVP cancelled/pushed to ’23 (Mountain Valley Pipeline) Oil hits <$50/bbl […]

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12:23 PM

Sunday Boxing

Happy Boxing Day, The name Boxing Day being for boxes given to servants for their big day off: 26th December. My servants are all off, so here I am. So; we start the year with Refining conference, we continue to watch Washington which has to get some legislation done; it may not, as the split in the Democrat Party might almost be terminal. The Progressive vs Moderate split goes to the heart of the current […]

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1:43 PM

Morning Libya, Ecuador, and Oil Shock

A couple of stories over the past week have highlighted the precarious nature of global oil supply Outage in Libya 300kb/d Force majeure declared in Ecuador, cutting exports by at least 200kb/d Upstream Online 20th December 2021 Production from four Libyan oilfields has been shut in, causing NOC, the state oil company, to declare force majeure on crude exports from two ports the Zawia and Mellitah terminals. NOC said in a statement on Monday that […]

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8:34 AM

Sunday Sankey-Laffer

Not talking about COVID, just to say I am feeling 100% fine. This Omicron will hopefully be the largest and fast mass vaccination programme in history, whether by God or Government. Nice chart this morning from Greg Wachsteter, who kindly said I could publish. No more comment on COVID, I think the conclusion here is pretty obvious; this chart is therefore bullish S&P Energy. Sankey-Laffer curves. The presentation attached today, made me think what a […]

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3:52 PM

Renewables, RFS, RVOs, RINs & Refiners

Of the many fine analysts I have had the privilege to know over the years, Greg Bordelon is clearly in the pantheon. A true oil guy, son of a Mobil Oil man, he graduated in 2000 from Tulane, cut his teeth at Exxon, and moved on to finance at FBR Capital Markets and Millennium, and before spending many years as an oil long-short portfolio manager for Citadel, subsequently running his own firm. I extend deep […]

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1:13 PM

Morning $LICY & the rat hunter

A client wrote to me yesterday after the Morning Note negative Sunrun positive EQT, which mentioned in passing yesterday’s announcement of a new partnership announcement from Li-Cycle: “Wish that $LICY news was as positive as your initial read.  Their Capex increased from $175m to $485m for the Hub, so even accounting for the 40% capacity increase that’s a double in cost at least. I was expecting a cost increase in this environment but that’s pretty […]

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11:35 AM

Morning Solar Drop Gas Pop

Long EQT short Sunrun this morning. Mega-theme, the ESG backlash, as energy reality intrudes on excessive alternate ambition Highlighted: a major positive announcement from Li-Cycle $LICY today regarding a $50m equity investment by LG, as part of a commercial agreement that will expand their Rochester Hub by 40% of 35,000 tonnes, equivalent to 90,000tonnes of lithium ion batteries annually. I am speaking to the company today, through newly appointed IR Nahla Azmy. More after that! […]

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8:19 AM

Sunday Catch-up

It was a long trip to Texas, and it is good to be back in Brooklyn; this note is a short reminder to myself where markets are, having been running around. For example my time on Wall Street this past week, was Wall Street, Midland. What a comeback for oil last week, since the brutal air drop after Thanksgiving. We need to establish a level here, most would consider that the oil equity group is […]

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5:04 PM

The Fox and the Hounds – Oxy history

Sankey Research dinner with Steve Chazen TONIGHT this Thursday in Houston. Join! RSVP Magnolia CEO Steven Chazen, CFO, Chris Stavros Houston 9th December 6pm. Chazen is clearly one of the greatest oil executives in history, a mythical figure. The approximate story that he told me over the years, is that he was a dog handler in the Vietnam War; the dog whisperer; PhD in geology; worked on the moon programme as a geologist. He told […]

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5:07 PM

OPEC Happy Hour? Yikes!

OPEC tomorrow: Joint Ministerial Monitoring Committee (JMMC) 7am ET; OPEC+ meeting 8am ET Woah it seems the chat from OPEC is they may just stick with the plan. That is, there is potential for an INCREASE in line with the 2021 plan tomorrow. This in spite of Joint Technical Committee (JTC) showing a massive excess of oil in Q1: LONDON, Dec 1 (Reuters) – OPEC+ sees the oil surplus worsening to 2 mbpd in January, […]

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7:15 PM

Morning Petrobras

ExxonMobil confirms capex of $20-$25 billion per year through 2027. Spending $16bn in 2021e. ExxonMobil Q&A Analyst call at 10:30am ET Petrobras analyst day barely registers with Wall Street. Production expected to FALL in 2022 vs 2021 Production of 2218kb/d liquids is a hair lower than 2235kb/d in 2021e Everything looks great at Petrobras as a company, great resource, major Non-OPEC player, the weak Real is a positive for the company with Real costs and […]

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8:46 AM

Me and The Big Unit; XOM History

Busted flat in Baton Rouge, waiting for a train… ExxonMobil has called a historic snap analyst meeting for this Wednesday 1st December. The first meeting under a new, externally appointed, CFO, former Diageo executive, Kathryn Mikells. She is now in charge of finance, strategy, communication, and investor relations (IR). Kathy already refreshed her first earnings call, Q3 2021, interjecting, freely commenting, communicating; the company also gave clear guidance over what to expect from this update […]

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11:01 PM

Letter from the Front Line 11/28

Very tricky to call, indeed! OPEC/Saudi surely will act if markets don’t bounce – my Middle East Intelligence says Saudi is worried about the price but wants to see the market follow through Monday. Fascinating real-time week coming up, we think there might be a unilateral cut by Saudi if the market continues to collapse. But for OPEC to do a cut, is extremely complicated. The easy out, given they have to do something unless […]

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4:36 PM

Sunday Bets

Presentation today, and commentary below: Thursday evening annoucement: major sellside meeting by ExxonMobil: “updates to their company plan” on Wednesday December 1st. Sellside invited. Virtual. Big deal for ExxonMobil. We had pondered how ExxonMobil would manage their annual capex announcement, due in December, vs their traditional strategy update due next March. We pondered if plans would be ready in time for a December update, given the scale of board and management change that has occurred […]

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3:55 PM

Saturday Stories: Shell at the St Regis

Continuing our Saturday history series, a single story about what I learned at the St Regis hotel in January 2004: Bad corporate newsflow comes in waves Good management get on great with their employees Don’t be emotional in business; this is the big leagues In 2004 I found myself at the St Regis Hotel, the classic Big Oil event venue in Midtown Manhattan at Park Avenue and 51st, at a major Shell event. I was […]

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2:30 PM

Friday Sankey 11/19/21

The entire fiasco at Jurassic Park could have been avoided by hiring more than one IT guy. Every mocking online reply to a crypto bro is an NFT, because it’s a digital record of them being owned. Anti-stalking – learning another person’s routine in order to avoid them. Bonus information: what is being ratioed? It is when a searing response to your idiotic post gets more likes and re-tweets etc than the original. Hence ratioed. […]

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8:59 AM

Morning Be My Date 11/17/21

Big upcoming events for us: Happy Hour this week with former FERC Chairman Neal Chatterjee, along with Aaron Cutler, both now partners at major DC law firm Hogan Lovells. Aaron at 5pm, Neal at 5:30pm. Both have deep multi-decade Washington energy experience at the highest level – Neal was former Chief of Staff for Senator McConnell, Senate Republican Leader. It is obviously vital to understand the shifting energy landscape in Washington. These are the experts […]

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8:33 AM

Morning Bundesnetzagentur 11/16/21

BREAKING Major European gas news, Germany regulator suspends approval of Nordstream 2. Bullish news on Shell Corning glance on high glass prices BREAKING Watchers.News: Natural gas prices in Europe soared again on Tuesday, November 16, 2021, as the German Federal Network Agency — Bundesnetzagentur — suspended the process of certifying the new Russian gas pipeline called Nord Stream 2. The pipeline was completed in September 2021 and is designed to bypass Ukraine and connect Russia […]

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8:57 AM

Sunday Sankey 11/14/21

Good day, Pretty mixed, at best, Q4 so far for oil & gas and “old energy”; but thrilled to see our new energy plays,  Li-Cycle and Embark trucks, catching a bid. Oil & Gas are clinging on to our 2021 market leadership. More of that in the attached presentation. Also in the ppt, I ran a whole load of valuation tables, and performance tables. Beautiful day here, although darkness has fallen as I am late […]

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5:25 PM

Saturday Chevron

Saturday: there’s an unrelenting element to being a stock analyst. “You are only as good as your last note.” The need to constantly publish is relentless. With that in mind, it has been my intention to write an oil book. Something that can sit on a shelf. One of my favourite oil books is Anthony Sampson’s “The Seven Sisters”, which provides a brilliant, and concise, history of the seven major oil companies that formed the […]

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8:07 PM

Friday Sankey 11/12/21

Just spent £100 on a belt that doesn’t fit. Huge Waist. The misuse of the word literally drives me figuratively insane. The sky was looking ominous so I asked Siri, “Surely, it’s not going to rain today?” She replied, “Yes it is, and don’t call me Shirley.” That was when I realized I’d left my phone on Airplane mode. Major geopolitical tension continues in Europe against the backdrop of natgas prices trading at $25/mmbtu before […]

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8:54 AM

Morning EOGtism

Heading to a group meeting with new EOG CEO Ezra Yacob this afternoon, this note takes a look back at the history of the company from my perspective. As the oil age continues, and as global oil supply gets visibly tight against the remarkable 100mb/d of demand globally (>1,000 barrels per second of global oil consumption), we think the market will begin to pay more attention to inventory levels and reserves replacement rates. There was […]

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9:22 AM

Sunday Sankey 11/7/21

Quick note today as I have two events. One of my favourite parties, this morning an NY Marathon party in Carroll Gardens adjacent to the running route, which starts at 9am. It is the only party I know of that starts at 9am on a Sunday. And then to the NY Giants game playing the Raiders at Meadowlands 1pm. You can get there easily, getting out involves multiple trains. It is a family tradition to […]

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11:12 AM

Friday Sankey 11/5/21

Ezra’s first quarter as EOG CEO and he lofts it out of the park – massive increase in regular dividend, big special, buyback, he is in NYC next week, take a victory lap Pioneer wanes yesterday after weak buyback guidance Apache on fire We like Denbury on CO2 negative oil, and encourage Oxy carbon ventures Sunrun – we expected either a crashing miss or wild beat and massive stock reaction; we got neutral Delek beats; […]

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8:35 AM

Morning Sankey 11/4/21

OPEC Meeting live debating: who is Brandon? Continental shareholders overwhelmingly love the $3.3bn deal for marginal acreage in a new basin Meanwhile at seller Pioneer $1bn more than the asking price for non-core acreage; $3.02 special Final natgas injection number of the week (withdrawls start next week for winter)? The Biden Administration does not seem to understand oil, and more particularly how much spare capacity there is in OPEC. Here’s a quick lesson in global […]

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10:24 AM

Morning Sankey 11/3/21

Mega-theme, ESG backlash: progressive Dem agenda whacked by Virginia governor Republican backlash Mega-theme, short wind, long coal: second 2021 profit warning from Vestas Mega-theme, global energy crisis: European gas prices bouncing on Russia natgas supply outages Mega-theme, Renaissance of US E&P: Devon with great results, COP is about as good, Pioneer after market tonight ESG backlash: the general disarray in the current US administration has been exacerbated by the major swing of Virginia voters to […]

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8:54 AM

Morning Sankey 11/2/21

There was a funny Tweet about Joe Biden’s shut-eye at COP26 yesterday: “It’s not nodding off if you say “Amen” when you open your eyes again”. Two major developments caught our attention yesterday. First, Canadian PM Trudeau promises to reduce emissions from the oil & gas sector to net-zero by 2050. Second, with major implications for the US E&P industry, the WSJ reports that the EPA is greatly increasing its methane limits, a move which […]

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9:22 AM

Sunday Sankey 10/31/21

Jolly Halloween, Halloween is one of America’s greatest stealth exports. Now huge in UK, for example. In today’s presentation – Suncor strong Q4 to date in big catch up trade; oils outperform during inflation per Fidelity; growth won the past couple of weeks over value, even after Amazon and Apple missed; Big Oils have the highest free cashflow yields and dividend yields of the S&P500 Titans – by far; massive week of oil earnings ahead, […]

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3:03 PM

Morning Sankey 10/29/21

Last night on Happy Hour I was complaining that my calls are stone-cold right now, and sure enough, the theory that Chevron would have a messy quarter just got blown out of the water. Actually, I will take it, because my thesis all year has been long oils / short Big Tech, and these past two weeks, with feeble earnings from Oil Service, Kinder, Range Resources, EQT, badly received results from Hess (raising capex for […]

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9:45 AM

Morning Sankey 10/28/21

Bearish DOE and dodgy Q3 oil results, with a Shell miss and disaster at EQT, not helping the sector Horrendous results from EQT as expected – increases quarterly loss from 2020 Q3, to $1.98bn? Abysmal… AR re-iterating the client bull’s $35/share target Shell miss might mean bad news for XOM tomorrow, but results are irrelevant: a Shell rant Note Big Oil CEOs in DC today for a roast. One suggestion to the executives: if they […]

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9:21 AM

Morning Range Finder 10/27/21

Hess results look in line. We argue that as the market prices oil terminal value back in, on the failing energy transition, Hess’ Guyana position will re-value higher. Structurally bullish Hess. Range $RRC increases 2022 hedges d’oh. “Wake me up at the end of 2022 on this one”. Negative. Short Neste and long Equinor, both reported – two companies at opposite ends of the valuation spectrum Well, for a highly anticipated week of quarterly results, […]

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8:59 AM

Sunday Sankey 10/24/21

Huge week for earnings on deck this week, just about 50% of the market cap of the S&P500 reports,  and to celebrate, the traditional Sunday Sankey is back with a full presentation attached. Sample slide: Bloomberg lists Kuwait’s oil production capacity as 3.08mb/d. In the slide shown in the Sunday Sankey presentation today from the authoritative MEES, Kuwait’s production capacity has dropped by more than 500,000 b/d over the past three years to just 2.63mn […]

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2:29 PM

Friday Sankey 10/22/21

In Iran, everyone is terrified of spiders, but apparently in Iraq no phobia. The bible says “he who lies with a man as with a woman must be stoned” (Leviticus 20:13). Fortunately, both are legal in Canada. I once met an Olympic athlete. I asked him – Are you a pole vaulter? He replied – No, I’m German, but how did you know my name is Walter? We met former Federal Energy Regulatory Commission head […]

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9:28 AM

US E&P Q3: The Power to Set Oil Prices

Key points: Clients are focused on OPEC spare capacity and demand growth, but also, rightly, North American supply growth, which is the most price elastic component of global oil supply. Halliburton results yesterday naturally raise questions over US production growth; the company stated that it sees 20% rise next year in North American revenues, which includes “solid pricing gains”. This would imply Halliburton expects US E&P capex to be ~10% higher next year; not a […]

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3:07 PM

Embark Sunday Sankey 10/17/21

Today as your Sunday treat, we attach a focus note on Embark Autonomous Trucks, as part of our thematic research on the energy transition. Extending attention into the autonomous truck sector has been a fascinating ride, quite literally when I rode in an autonomous tractor trailer hauling 26,000lbs of sand through the traffic jams of Oakland, this September just past. The thing worked amazingly, through all the challenges of modern traffic. Imagine an asset-light company […]

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4:44 PM

Friday Sankey 10/15/21

Mega-theme: the backlash against the nonsense elements of ESG Mega-theme: LNG Friday, so here’s a longer joke (?): Conspiracy theory: The UK climate protest group Insulate Britain are so completely bone-headed and infuriatingly disruptive (blocking the key London ring road, M25), that I can only assume they are a British Government/MI6 counter-environment group that is working to increase public opposition to the environmental movement in the sensitive run up to COP26 on 1st November in […]

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9:37 AM

Morning Putin & Antero 10/14/21

Tonight: Gordon Shearer, world LNG expert, on Happy Hour 5pm ET. Email me for link paul@sankeyresearch.com Gordon fits brilliantly with the world energy crisis, discussed at length by Putin yesterday. This morning I took the time – and it took a good while, given simultaneous translation, etc – to transcribe what President Putin said at the Russia Energy Week Summit yesterday. This early morning effort was made: Because Putin is seen as holding a major […]

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9:37 AM

Brooklyn Sankey 10/12/21

Good Morning, Finally back in Brooklyn after some 6 weeks getting my mother set up with full-time 24/7 care. Quite how we managed it, is a complex question, but essentially for free, the UK National Health Service now provides round-the-clock in-home care. Finally achieving that, freed me up to get back to my real desk in Brooklyn, here I am. Main point today is to note Happy Hour this week at 5pm Thursday has Gordon […]

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10:02 AM

Sunday Sankey 10/10/21

We are moving into earnings season, with financials reporting this week, starting with JPM and BlackRock on Wednesday, rounded out Friday by Goldman Sachs. These are dynamic times in global geopolitics. This month, as oils report earnings, we finish the month with: G20 30th October in Rome, we noted to watch Xi-Biden, but Xi continues to stay home Right after, 1st November the climate summit COP26 takes place in Glasgow. We are in a new […]

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12:49 PM
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