Recent Posts

Sit Chat Get Banged

Strategy Session was back to the round table stock discussion. It was sufficiently enjoyable that we will now have a monthly round table on stock ideas. Next week we have Tourmaline, week after Bob McNally. In between, Memorial Day is a week Monday, check the whites in your wardrobe and start yelling at the pool guy’s voicemail. Companies mentioned last night: Long Inventory E&P’s. We discussed oil volatility and beta skew as oil holds over […]

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10:47 AM

The Value in Scarcity: US Refining

Re-iterate Price Target: Valero $150/share by June 30th. Re-iterate Overweight all US refiners. Illustrating Valero $190/share argument. This is a time of year when the weekly Department of Energy US oil data is crucial: it will be released at 10:30am today. We see an emerging crisis in US oil product markets, depending on how much of that crisis we export to Atlantic Basin markets. It will be a battle of demand destruction: who blinks first […]

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8:37 AM

Good times in the right places

Happy Sunday in May, Never a bad thing. Fog this morning has lifted. Aramco results this morning rounded out a week when it became the largest stock in the world by market capitalization, surpassing Apple (not by free float, the Saudi government owns 94%). It  generated an enormous profit in a quarter when Brent averaged just about $100/bbl (actually $99.53/bbl Q1 average).   Refining earnings, as well as continued huge upstream earnings, will be even […]

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3:56 PM

Shorts and Shortages

PREMIUM EVENT TONIGHT Sankey Strategy Session: Kaes Van’t Hof – President and CFO, Diamondback Energy May 12, 2022 05:00 AM Eastern Time (US and Canada) https://us02web.zoom.us/meeting/register/tZ0rcuyorD8rEtFYFdOdB79bWBSDY7MFzYzP Quote of the week: “I am a dinosaur, but I have never seen these things,” Saudi minister Prince Abdulaziz bin Salman (AbS), who’s been attending OPEC meetings since the 1980s, said Tuesday at a conference in Abu Dhabi, referring to the recent surge in prices for refined products. “The […]

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8:55 AM

For Love & Money: Chazen Time

Recommending BUYBACK PLAYS in this tape. We love the Diamondback approach of buybacks when the stock is cheap, specials when the stock is expensive. PREMIUM EVENT Sankey Strategy Session: Kaes Van’t Hof – President and CFO, Diamondback Energy This Thursday May 12, 2022 05:00 AM US Eastern Time. Register Here: https://us02web.zoom.us/meeting/register/tZ0rcuyorD8rEtFYFdOdB79bWBSDY7MFzYzP ~ Legendary oil executive Steve Chazen on yesterday’s Magnolia $MGY conference call; “I think that the re-evaluation of the industry from 4% of the […]

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8:52 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

It’s a Marathon and a Print

We had Kathryn Kelley and Bob Jonke on the Strategy Session yesterday. The story of how I managed to steal a major client’s wallet after we watched the Real Madrid vs Man City game with Kathryn was not repeated. It was an accident! Bob is worried about demand destruction and not super-bullish crude here. By contrast, Kathryn sees a 3mb/d shortage of oil in 2H which simply cannot be drawn from inventory, so something has […]

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8:47 AM

Fear of Market Collapse (FOMC) Day

Sankey Strategy Session tomorrow evening: Bob Jonke, Oil trader for Engelhart CTP and Kathleen Kelley, Oil Market Expert aka “the OPEC Whisperer”. When: May 5, 2022 05:00 PM ET, Register in advance for this meeting: https://us02web.zoom.us/meeting/register/tZcofuqprzMuHd0CDoGbkzN6CiapFAdCg6k2 The Strategy Session this week will be in the context of what will be an extremely low-key OPEC meeting tomorrow with no press conference. Why no press conference? No comment on Russia. Simple as that. Bloomberg 5/4/22 The European […]

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8:14 AM

Arch Comments

Client feedback on yesterday’s Long ADM short Tyson note. “If you love ADM and think it’s attractively valued, you must not be able to contain yourself over Bunge 😊” Long Valero and Refiners – Valero streching for $7 EPS in Q2 and $150 price target Long Arch Coal and/or Peabody – huge free cashflow and implied cash return, like Archer Daniels, like refiners, everything is going their way. Don’t fight it, embrace reality. ~ CNBC: […]

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8:01 AM

Leg Day: Archer Daniels

Sankey Research core focus: energy, but you don’t want to skip leg day. A couple of interesting results today, this brief covers ADM. While ADM does not screen spectacularly on valuation, cheap or expensive, it has a track record of consistently beating expectations. The company official target is $7 EPS by 2025. It on track to $8 EPS this year. The stock has run from a $40-$50/share range prior to COVID, dropped to a COVID […]

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8:13 PM

Morning Joe

Good looking results beat from Valero setting up the “$5 in Q2” call we made over the past week – CEO is Joe Gorder Valero may turn oils performance that was undermined by oil service results last week, Halliburton leading the oil tape lower; we have had a brutal week since my “Mega-bear call: Oils to 10% of S&P500 note”. Sorry about that. ARCH coal announces an $8 dividend up from 25c. Watch Peabody and […]

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8:30 AM

Is it time to sell Valero? No

With the company reporting tomorrow, a client asked if it was time to sell Valero with the stock over $100/share. Our first target was $120 prior to the Ukraine invasion. We now think that $150/share is a stretch target. For your consideration: Using VLO’s reported indicators as a starting point, we see momentum established in late 1Q has carried through to 2Q so far.  These are straight off the VLO website: We’re in uncharted territory […]

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8:58 AM

Sunday Sankey

Quick read today as you got a longer note yesterday on LNG, and I am running late. Just pictures today, and Betsey asked to be on the cover of the Sunday Sankey so it’s a presentation. All the fun favourite charts. Key slides: next week’s earnings highlights starting with Valero. Relative performance, oils performance, high free cashflow yields, and a cash return chart that will be updated on a rolling basis through earnings. Earnings calendar […]

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5:46 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

Happy Anniversary

The only good number in oil is the oil price The only good demand number in oil is refining margins The only barrier of entry to being an oil analyst is units You are only as good as your last call CNBC want me on this afternoon – unusually they booked me two weeks ago – for the second anniversary of oil prices going negative. Let me go to the grave saying I called for […]

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9:43 AM

Sunday Philosophies

Greetings from Maryland, With limited computing power at my disposal, and having been in thought since watching Elon on Thursday give a TED interview, followed by self-identified philosopher Alex Epstein on our Thursday Strategy Session, a couple of days off, a stroll in Annapolis, this is note is more ideas in 1,000 words, to make a picture, than pictures worth 1,000 words. No demand destruction because there is nowhere to go to substitute Therefore self-compounding […]

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12:48 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

Oil’s share of the SPX

Ripper chart, most bullish I have seen in 30 years following US E&P – quant analysis. Any chart available on request, any stock in the market… Share of S&P500 market cap vs share of S&P500 earnings. Black line is sellside. Blue line is buyside (share of market cap). Buyside is smarter than sellside, read the charts. Mi amigo US E&P, chart most bullish in history; Oxy, PXD, COP, FANG, APA, Hes.. Unprecedented bullish chart, buy […]

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5:05 PM

PBF & PBS Strategy Session

China rant PBF – Q1 likely half messy, but finishes running strong into incredible margins as Q2 starts Sankey Recommends: Liverpool vs Man City Premiership decider tomorrow – two of the best club football teams ever to play, at their peak. PBF CEO Tom Nimbley, President Matt Lucey, CFO Erik Young, and IR Colin Murray were on good form on Strategy Session yesterday evening. Nimbley started his career in refining in the 1973 oil price […]

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8:53 AM

Nets, Knicks, Refiners

Tonight PBF management on Strategy Session, 5pm for a tight hour. RSVP. I was at the Knicks vs Nets game last night with a global oil executive; combined with conversations with ConocoPhillips management Tuesday, some brief points. First, Shell profit warning this morning. Break it up. We would like to see a global LNG & gas and power trading powerhouse, a downstream “high carbon” operation with refining, chemicals and retail, a deepwater company. We don’t […]

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8:48 AM

Zen and the art of refining maintenance

This Thursday 7th April, Strategy Session with PBF Senior Management 5pm – RSVP Tonight – ConocoPhillips senior management in town for informal sellside drinks Tomorrow, DC hearing, House Energy and Commerce “Gouged at the Gas Station: Big Oil and America’s Pain at the Pump.” In oil, the excitement this morning is New York jet fuel prices going off the scale, part of the theme we talked about over the past couple of weeks, especially after […]

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9:20 AM

Tilting at Windmills

Well, that was quite the Q1 2022! But we got it in the books. I think the low point of Q1 for me was the evening of Thursday 3rd March, shortly after the 24th February Russia-Ukraine invasion, when the largest nuclear plant in Europe, Zaporizhzhia, appeared to be under direct attack and burning, right as I had a one-hour briefing with the State Dept, and my contact told me that surviving a nuclear attack is […]

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11:52 AM

Sunday Targets

This week, a three page thematic overview, followed by supporting charts. First the text, then the charts. ~ Noted refinery explosion last evening, no deaths reported, at ExxonMobil’s small (“only” 60kb/d) Billings Montana niche refinery that is important for local balances. Would drive margins higher for Midcon players such as HollyFrontier, Coffeyville, Delek, and West Coast PBF, and might accelerate ExxonMobil’s long standing attempts to sell the plant (price always said to be too high). […]

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3:22 PM

$200/bbl by next Friday (disty)

Key messages from Strategy Session with Kathleen Kelley: Oil supply crisis – you ain’t seen nothing yet. The oil market is trading very physically right now, making price discovery more volatile. Watch for distillate markets, which are pricing like crazy, with particular volatility (upside) likely next Friday on expiry – we can see (Sankey says) $200/bbl on expiry of the April contract 31st March, the same day as OPEC is expected to disappoint. Kathleen boldly […]

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8:42 AM

Kazak Whisperer

Kathleen Kelley, “OPEC Whisperer” tonight on Happy Hour. Additionally in the following weeks we have two major refining CEOs ready to talk about oil markets. 3/24, 5:00PM EST – Kathleen Kelley 3/31, 5:00PM EST – Delek CEO | Uzi Yemin 4/7, 5:00PM EST – PBF CEO & CFO | Tom Nimbley and Erik Young You can participate on application, but if you don’t pay Sankey Research, why would you ask? If you want a charity, […]

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8:57 AM

Sunday Overtime

Extremely busy this weekend, juggling Patricia wanting to go spring-time walking dogs and window shopping in (packed) SoHo, and me wanting to solidly sit in front of the TV watching March Madness while making bets online. Somehow she does not see the appeal of watching seven games of college basketball back-to-back over seven hours. Of course, she wins. I did snag North Carolina to win it all at 50-1 BEFORE they beat #1 seed and […]

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2:35 PM

PBF is the new Oxy

Friday joke in serious times: yesterday a “Stop Oil” pitch invader interrupted the Everton-Newcastle (Saudi-owned) Premier League soccer game by attaching himself to a goalpost mid-game. An additional 17 minutes of extra time played. The joke? What does he think the zip tie that he used to attach himself with, is made of? Yep, he used an oil product. While wearing plastic glasses. He should have used rope? So much more inconvenient. Client question of […]

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8:16 AM

You are the champion, Pasha

Tonight Strategy Session with Jan Stuart, Cornerstone Macro global energy economist, on oil markets. Zoom call, 5pm. Kathleen Kelley is busy, unfortunately for us, happy for her, she is hosting a St Patrick’s Day party. God Bless Ireland! My paternal grandmother was from Cork, Ivy Sankey (nee Jefford). We have an oil trader joining to ask questions. A real live, oil trader. In the early 1990s, Jan was my first colleague at the IEA in […]

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8:41 AM

TINA Turner

“Only the dead have seen the end of war” – Plato (Attributed). The Quote is writ large at the entrance of the Imperial War Museum in London, one of London’s great museums, if lesser known. Recommended. Thoughts & prayers with the suffering in Ukraine. Peace in Brooklyn, the weather our worst direct concern. The hard yards, I always say from my First World Wall St perch, are January 1st through to March Madness. And today, […]

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4:17 PM

Trade: Buy Tech Short Oil & Pray for Peace

There have been massively structural changes as a result of Vladimir Putin’s disastrous invasion of Ukraine. In the short term we believe that negotiations for peace are more advanced than seemed to be the case yesterday morning. We also received intelligence that the loss of a disproporionate number Russian commanders, starting, it was said, with the Chechen death squad sent to assassinate Ukrainian President Zelensky, who were apparently “neutralised”, indicates that elements of the Russian […]

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8:43 AM

The Big Shot

Big Shot, Big Short moment. Nickel suspended at $100,000 per tonne on the London Metal Exchange. That means that today a Nickel (5c coin) is worth 12.5c, given it is 5g in weight and 25% nickel. The other 75% of a Nickel is copper, by the way. It’s being reported that Chinese entrepreneur Xiang Guangda – known as “Big Shot” – had a large short position on the LME through his company, Tsingshan Holding, the […]

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8:42 AM

Sunday Kharkiv

Well, this bloody mess was why we could not believe Russia would launch a full Ukraine Invasion. Reports that Ukraine has fought back and held Kharkiv are somewhat incredible – Ukraine’s second largest city is to the east and very close to Russia. The idea that Russia could not take control here, is a massive problem for Putin. Military experts are expressing surprise that Russia has not obtained air control, and is suffering logistics issues. […]

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12:22 PM

Yikes

Huge shock. Particularly to major European clients that had stated their house view: no invasion. Their view was weeks of noise, no invasion. What will happen to this extraordinary chart? We see demand destruction at $120/bbl, and think oil prices will continue to go to that level of demand destruction if US demand remains as strong as it currently is. Lagging US economic strength and upcoming summer speak to ongoing demand strength, even if it […]

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8:18 AM

Friday Highlights

Having featured a fellow independent researcher on Strategy Session last night – Doomberg – today’s note is a highlight reel of other people’s research. But of course first, Friday you demand jokes, and we are not here to disappoint clients. I used to play the triangle in a band, but it’s just one ting after another. I swallowed a dictionary, and now I have thesaurus throat. My boss arrived at work in a new Lambourghini, […]

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8:41 AM

I just dropped in…

Hi I am just checking in to assure you I survived the Houston NAPE conference, landmen and all, but am still on the road, headed to New Orleans. This week has been discombobulated – my initial flight on Tuesday was cancelled by United, I rushed to Newark, made the 2pm, just made dinner in Houston, made the NAPE conference yesterday, made dinner with a Nebraska CEO, went to the after party rave and here I […]

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10:50 AM

Renewable Diesel Rules

Executive Summary With decades of experience covering oil & gas, from a US and global perspective, the authors have sufferedtwenty years of government renewables fuels “strategy” as brutally as any analysts in the market. In this notewe conclude there is a major problem with the current hottest theme in global oil & gas investment:renewable diesel. We walk you through from “what is it?” to “what is the problem?” The answer is:feedstock. This note is the […]

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7:56 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

Not Joe Rogan, but a little Toby Keith

Nothing ruins a Friday faster than realizing its only a Tuesday. Psyche! Yes, you guessed it, it’s Friday jokes after a LONG week.   Where does a mansplainer get his water? From a well, actually… The Irish army has a sniper famous for bouncing his shots off rocks and other hard surfaces. His name is Rick O’Shea. We should also mention the Irishman who sits outside: Paddy O’Furniture. For a second consecutive year a team […]

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9:12 AM

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

Sunday Sankey 1/30/22

Before we argue that Big Cap tech can stabilise the market here, on a fast & personal take of last week’s and next week’s earnings, in recognition that we need to focus on mega-themes, the latest population data from China is extremely important. NYT January 17th, 2022: China announced on Monday that its birthrate plummeted for a fifth straight year in 2021, moving the world’s most populous country closer to the potentially seismic moment when […]

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4:41 PM

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

Exciting times… for Strategy Sessions

Clients! We have a great schedule lined up for our Thursday Strategy Sessions, starting this week: 1/27 Jay Wilson, Vice President, Hess. 5pm. Delighted that right after Hess reports full year results for 2021, we have one of the most tenured oil executives on Wall Street joining us this week. Jay’s name came up recently in the history notes we have been writing – he was notably widely quoted in the press applauding Oxy’s deals […]

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4:01 PM

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

Then Su me

Strategy Session last night with William Su of Blackrock, a tenured oil analyst & investor. My first question was whether we would see a positive gamma squeeze in oil given the rapid increase in open call interest. The charts below show: 1) the price of a 3-year at-the-money (ATM) WTI call, going up and up and up, and alongside it to the right 2) the scale of open interest in $100/bbl call options for June […]

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11:47 AM

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

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
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