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Evening Ethane Rejection

Hate to keep going with our infuriating “bearish short term, bullish long term” call (eg refining. We had a conversation with Battery Guru Steve Levine today about how badly future electric vehicle sales are going to fail to meet expectations over the coming years, and he is confirmed on Happy Hour for next week, 29th September, 5pm ET save the date. This week: Jay Saunders, Senior Co-Portfolio Manager, Jennison (Natural Resources). Jay has been running […]

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7:53 PM

Morning Refining Fire

We have spoken about the structural shortage of US refining capacity repeatedly. We have warned that the US refining system has been running very hard, but has been unable to keep inventories from all time lows relative to demand, particularly for distillate. And we have underlined that distillate (think diesel for my newbie readers) is the default “convenience premium” fuel when natgas and coal get short. It is easier to transport, and generally directly substitutable. […]

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9:31 AM

Exciting Events, Tourmaline

Delighted to say that Dr James Henderson is on Happy Hour Strategy Session this week A PREMIUM EVENT. Henderson is an expert in Russia. He started at Amerada Hess, then joined Wood Mackenzie in Edinburgh, where to my eternal gratitude, he was directly responsible for hiring me to join Wood Mac. Great times, Wood Mac and Edinburgh, where my 3 kids were born. Jim moved on from Wood Mac to Russia, heading research at Renaissance […]

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5:34 PM

Morning Data Centers

We are looking for a big fat gasoline demand bounceback number this week in the DOE data, seeing as this morning my Deli guy told me the DOE gasoline numbers are understated. Thanking him, I noted that DINO management (HollyFrontier) confirmed on their results call yesterday that gasoline demand is at worst around 5% below 2019 (not 2020, as appears in the DOE) levels, and in some of their markets – and they have a […]

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9:12 AM

What are you doing? Reading transcripts

The two weeks, mid-earnings, when we pull together company results transcript comments, are not a science, they are an impressionistic art; a colour to our themes. Basically these are comments that caught our eye over the past week. Like sellside analysts, the companies tend to all present the same more-or-less generic message, but occasionally, as we strive with Sankey Research, a comment stands out, is differentiated, or so wild that it is worthy of note. […]

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2:25 PM

Morning Miss

Tonight Happy Hour: Kathleen Kelley on OPEC. Frank Kelly (invited) on Washington DC – lots of action there. View share on results on what happens next. Today Thursday 4th August 5pm Eastern. Register for this meeting: https://us02web.zoom.us/meeting/register/tZUkc-qvqjgrH9NWL5mVuMMR2AyR3q1cZrtm I was on Bloomberg TV bright and early this morning and… I used the “B” word. Just to note, we are long natgas over oil into the coming economic slowdown, and playing for winter. The announcement that Freeport […]

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8:30 AM

Morning Take a Sad Song

Tomorrow KelleyKelly Hour: Kathleen Kelley on OPEC. Frank Kelly on Washington DC – lots of action there. View share from clients on results and what they expect next. Tomorrow Thursday 4th August 5pm Eastern. Register for this meeting: https://us02web.zoom.us/meeting/register/tZUkc-qvqjgrH9NWL5mVuMMR2AyR3q1cZrtm We increasingly think that we will favour buyback-heavy oils going into the second half, with our year starting, as always, day after Labor Day. What happens next? The Big Oils are all singing from the same […]

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9:23 AM

Sunday Cedric

Good Day! You only get so many summers in life – a beautiful Sunday in mid-July, we should be at the beach or pondering the Wimbledon final. Hopefully you are on a yacht or at a swim-up bar as you read this. Here in Brooklyn Heights/Brooklyn Bridge Park they have recreated The Hill at Wimbledon with a big screen to watch tennis. Packed today. Tourists are returning en masse to New York. Week past: the […]

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12:43 PM

Private vs Public, Cash vs Multiple

Libya down by 1mb/d, maybe President Biden should visit? APA (Apache Oil) duster in Suriname is unfortunate for the marginal mega-bull case BP – like Shell, the non-alcoholic beer of big oils – sells out of Canadian Oil Sands but increases exposure to Western Canada offshore OKLAHOMA CITY, June 14, 2022 /PRNewswire/ — Continental Resources, Inc. (NYSE: CLR) today announced that its board of directors (the “Board”) has received a non-binding proposal letter, dated June […]

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8:34 AM

Sunday Sancerre

Glad tidings, A long weekend in the US, a four day weekend in the UK for the Queen’s platinum jubilee, seventy years as Monarch. Quite the rein. Go easy on your temperamental French executive chef today as he crashes around in a fury having to stoop to make your requested Memorial weekend hot dogs and chicken nuggets. The fact that you intend to slug super-chilled Napa Screaming Eagle Sauvignon blanc is only upsetting him more.  […]

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3:59 PM

Rose Tonight: Tourmaline

Tonight, in conversation, the CEO of Tourmaline, Mike Rose, carrying an extremely high reputation. Also CFO Brian Robinson, and Scott Kirker Chief Legal Officer. We also really like IR Jamie Heard, who clearly gets it. 5/26, 5PM EST – Sankey Strategy Session: Tourmaline Oil (TOU) CEO, CFO, CLO, IR Register in advance for this meeting: https://us02web.zoom.us/meeting/register/tZAtd-qgrTgiGt1U3rdbkLIZZZRt5VcpfcKR 6/2, 5PM EST – Sankey Strategy Session Bob McNally, President, Rapidan Group Register in advance for this meeting: https://us02web.zoom.us/meeting/register/tZUud-iopzIjHtwxZSBacic_3OqJmo5vAzQj […]

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11:33 AM

Portfolio Manager Special: Sunday Calls

Few, As they say on the internet. Today we have a PORTFOLIO MANAGER SPECIAL in the presentation, which includes a full glorious ppt on the largest stocks in the market, and for bonus, a Sankey Recommendation on each stock. The oils look great on these charts. The recommendations on names like Google (BUY) or Disney (SELL) are purely quanatitive interpretation of charts, we do not cover non-energy related stocks fundamentally. So this is quantitative analysis, […]

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12:55 PM

May Day Sunday Sankey 5/1/22

Happy May Day Sunday, Today in partnership with Greg Bordelon of Isentropic Capital, we publish a note on natural gas markets by way of thesis overview to a theme that we will continue to pursue. The note is long graphics, and particularly interesting on US markets. If you only want to read half, read the second US half. It is as noted graphic intense. European gas markets are fundamentally far more un-analysable than US right […]

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2:48 PM

LNG: Gordon & Gorgon

This LNG round up with Gordon Shearer (Poten & Partners guru) from Thursday night took longer to write and I got tangled in the SLB results, which came in okay – readers will know I am not pushing service companies but love oils… “to 10% of S&P500!” Chatting to a client with Midstream expertise before Gordon Shearer, LNG expert, came on Strategy Session Thursday evening, the view was that Kinder Morgan results were decent owing […]

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5:43 PM

Give them an inch

Thanks to those of you – Chuck Yates; and the classiest guy on Wall St, Mr Sully at Goldman – who called me regarding the Brooklyn subway incident/terrorism/whatever this morning; Patricia takes the subway all the time. She’s flying back from London right now, so totally safe. Very classy to call, thanks. Hope you too are all safe. Of course needless to say, my breezy offer to run any stock in the S&P500 earnings share […]

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12:30 PM

Sunday CPC

In the drama of the week, we never got to publish the dreaded and yet celebrated “Sankey Porcupine” charts that reveal the key message from two analyst meetings last week, Chevron and ExxonMobil, in four charts: capex and volume targets. We do that in this note, and cover Chevron risk in Kazakhstan. Do NOT try to pick the top in this oil & oil equity market; there could be a long way further up to […]

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2:32 PM

Morning Strategy 3/3/22

Strategy Session Tonight, Mark Viviano & Megan Hays of activist Kimmeridge. A former Portfolio Manager at mega-player Wellington Management, Mark leads the first public/private active funds at Kimmeridge, one of the top activist managers in the oil space. Megan Hays has joined Kimmeridge after 15 years of IR experience including Concho and Cimarex, and even allowing for that length of experience, still recently rated as one of Hart Energy’s “40 under 40.” Please click this […]

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9:00 AM

Sunday Silence

A correspondent asked if I would be writing this Sunday about what to do if Russia invades Ukraine. “I wrote about it in early January,” I sourly texted “I am more likely to write about Venezuela,” I added snootily. “But you’ve been saying Russia won’t invade.” He pressed. “I had to take a week off because I didn’t know. No point in chasing the puck.” Not wanting to chase the “will they/won’t they” puck, I […]

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1:36 PM

Brassy Sunday Sankey

We have a big Renewable Diesel note coming later today, so in recognition of your Sunday time, just a couple of points on next week. Valero management are in New York City Monday/Tuesday. See what we are doing here? Our Renewable Diesel note is not published tonight by happy accident, it is a cunning plan. One Valero event is a Mark Mills presentation, presumably he of the Manhattan Institute and steely-eyed critic of the energy […]

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4:16 PM

The rage of the Intelligent Investor

What’s going on the market? The Intelligent Investor is back from extended sabbatical and he/she/they is furious. Key current trading ideas: Long Shell into results tomorrow. Long Suncor into results tonight. Stock has lagged CNQ badly, one month, three months, six months, one year. We had strong downstream chat from Suncor’s EVP of downstream Kris Smith on our refining conference, which continues tomorrow with Joe Gorder’s Valero, RSVP. SU has key differentiation from CNQ in […]

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9:33 AM

It’s behind you!

Tonight, Strategy Session with Jay Wilson, Vice President, Hess Corporation. 5pm RSVP. You are not going to believe this: Valero beats. That would be the 17th straight quarter that Valero has beaten analysts’ estimates. Kudos to IR! It does beg the question of why would any company ever miss estimates? After all, Valero earnings since 2017 have hardly been a cake walk. This period includes COVID and the worst possible environment for a refiner. They […]

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9:11 AM

Sunday Sankey 1/23/22

In the war of the market, we have reached a crucial battleground: the 200-day moving average on the S&P500. Do we hold, do we bounce, do we break? That is pretty simple; we broke the 200 last week. Re-gaining it will be a battle. And by the way, we broke the 200-day on the Nasdaq like throwing a crystal decanter against a brick wall. The market went through the NASDAQ 200 like a falling chain […]

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2:52 PM

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

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

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

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

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

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 11/2/21

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 10/28/21

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

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

Morning Sankey 10/5/21

The headlines from yesterday’s OPEC meeting were “oil jumps to its highest level since 2014”. We finally made it back, and goodness me, it was a long road. Of course, the WTI price we have attained today with a super-bullish backdrop is completely different from what we faced in October/November 2014. At the time, we had peaked at $107/bbl in mid-2014, after a sustained period 2010-2014 when oil traded in a range with $80/bbl as […]

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8:09 AM

Parakeet Sankey 9/26/21

Jolly Sunday to you, Global energy crisis: Having written at length about this eight days ago in the note “Germany & UK vs the USA”, all week I have been reading about the global energy crisis led by the UK and Germany. Everyone makes the same points, last year cold global winter leading to low natgas storage, lack of wind in Europe, nuclear shutdowns, Asia squeeze, Russia squeeze etc. The one I talked about in […]

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2:20 PM

Airworld Sankey 9/21/21

Comment to my sister yesterday on life in London with my mother: “Nothing’s burning, apart from the stock market.” Oil behaved great especially as the US$ strengthened. Noted oil laggards like $EQT flat on the day. Bullish action for us “energy tranistion” folks. Regular readers will recall it is not two weeks ago we had a China expert, Ryan Haas, Brookings Institute, on Happy Hour. I checked in with Ryan yesterday, and his call. He […]

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9:36 AM

Sunday Sankey 9/19/21

Quick Sunday Sankey today. If you want to read more, yesterday there was a long email on Europe vs US energy transition dynamics with a focus on two leaders: UK and Germany. Emailed yesterday on the web at www.sankeyresearch.com It has occurred to me that we may just enter a long, grinding, bear market, as stretched valuations and lack of new marginal buyers slowly erode the market. I mean like a 1970s multi-year market deflation. […]

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1:43 PM

Rouge Deluxe

August is upon us, with results effectively over, I am back in Brooklyn having dropped Harry for pre-season college soccer in Boston, trip review from a gasoline perspective closes this note. Speaking on sons and August, yesterday Max, who is yet to go back to college in Atlanta, was on CNBC. That is him ludicrously stationed in shot in the background of my Fast Money segment, pretending to work. You can see the clip here. […]

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10:43 AM

Sunday Sankey 8/8/21

The US has negative unemployment, by one measure. The confirmation of that on Friday led to an interesting market reaction. The data point on negative unemployment released before the market was that there are 8.6 million people considered out of work in the US and nearly 10 million job openings. This could be a moot point in the EU where movement of labour is much more challenged by language and culture, but in the US, […]

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11:47 AM

Where did it all go wrong?

With EOG rounding out oils’ earning season after the market yesterday, we had the final disappointment as oil prices test downside support levels breaking $70/bbl (Brent, WTI already broke into the upper $60s.) Expectations of an excess cash return special or splashy buyback announcement by EOG were dashed. Nothing. Just good free cashflow in a $70/bbl+ tape and the promise to pay down more debt by 2023. This is not the first disappointing Q2 earnings, […]

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8:52 AM

Sunday Sankey 8/1/21

We found ourselves standing on the North Slope, Alaska, above the Arctic Circle, surveying the endless flat tundra. There there is no sunlight from October to early March; total darkness over half the year. For the rest of the year, the sun does not go down – no darkness. That place, my friend, is Far North. The nearest city is Anchorage, 1,000 miles south, itself as distant as Perth Australia; palpably remote; strange and distant […]

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1:25 PM

Sunday Sankey 7/25/21

Greetings, It is all about the presentation this week; please click on the attached file for a look at what is in store for the week ahead – earnings; OPEC chat; what to buy when US natgas prices hit $4/mmbtu, which they did this past week; factor performance disconnection; and our only solution since we wrote The Renaissance Thesis of US E&P in 2017, namely hard cash return to shareholders. These oils have to bribe […]

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12:39 PM

Friday Sankey 7/23/21

The “Why we prefer buybacks” note yesterday got a lot of feedback. There was some comment that it had no conclusion, to which my response was 1) it should have been titled Part 1 because this will be a continued theme for us through earnings and beyond because 2) my old line “you don’t buy cheap stocks and sell expensive ones, you buy good management” is the key. The chart on Sankey Stars would indicate […]

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9:12 AM

Why we favour oil buybacks (at this time)

Thesis: there is little differentiation in the market between the merits of individual big oils; factor investing (ie thematic baskets) has rewarded the most levered oil companies, given the surge in oil prices from historic lows. There is a major opportunity with an immediate catalyst of Q2 2021 results for differentiation among oils in terms of the strength of their earnings at $70/bbl Brent (with weak refining). There are two types of leverage, operational and […]

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10:06 AM

Morning Sankey 6/23/21

Tomorrow June 24th on Happy Hour we have Charif Souki, Chairman and co-founder of Tellurian, the integrated Haynesville gas-to Driftwood LNG export project play. Should be a great chat! Souki is one of the select legendary executives to be featured in The Frackers, an entertaining book about the key characters in the US unconventional revolution.  Register here Charif Souki on Sankey Happy Hour Next week, on July 1st, please attend the Sankey Research 1st anniversary […]

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9:03 AM

Friday Sankey 6/18/21

Fun fact: Australia’s biggest export is boomerangs. It’s also their biggest import. What actor could never play Quasimodo? Humpfree Bogart Doctor: Your body ran out of magnesium. Me: 0mg. The urge to sing The Lion Sleeps Tonight is just a whim away. A client writes: Paul! One day doesn’t make a market, but your next letter can’t come soon enough. Is the run in oil done? Dear clients, Key bear triggers were twofold yesterday. First, […]

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8:42 AM

Sunday Sankey 6/6/21

Welcome to summer, hope you are enjoying breaking out your white pants after Memorial Day. Time to drop $250 on new sunglasses. Get in quick before they are $400.   There is no presentation today as I am working on an oil company Board Presentation for Tuesday in Texas. Ramp spending by increasing debt… might actually be the call, or at least the outside-the-box option, notably to make an acquisition. This week I learned what […]

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1:35 PM

Memorial Monday Sankey 5/31/21

OIL RISK HIGH. We have an OPEC meeting tomorrow, and the word is that Iran is pumping into storage on anticipation of successful negotiations with the Biden administration, which, for reasons I do not fully understand, is very keen to make a nuclear deal. This will allow Iran back into global oil markets. We understand that OPEC is warning Iran not to flood the market, and Iran is saying “we are going to flood the […]

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1:34 PM
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