Recent Posts

Morning Sankey 5/12/21

*INVITATION * Today * 10am ET * – Happy Coffee with Li-Cycle CEO Ajay Kochhar. Ajay is extremely strong on all things to do with his business, of re-cycling lithium-ion batteries. By extension, he is extremely strong on batteries, EVs, and particularly Li-Ion factories. He is absolutely at ease with battery market dynamics. Join a conversation with Sankey + a few clients. Yesterday the company announced an agreement with Ultium Cells, a joint venture of […]

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9:01 AM

Morning Sankey 5/11/21

Noted: private equity selling down $PXD, and Antero $AR issuing. No sooner had we highlighted the Goldilocks oil market, with strong refining margins implying good demand, the potential for further upside in demand from COVID recovery especially in global jet fuel, and the “Saudi Put” back in effect since January, than a bunch of Russian hackers show up and spoil the fun. The issue is that major negative volatility events like this are negative – […]

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9:02 AM

At the close Sankey 5/6/21

Some quick notes: Low Key Happy Hour tonight, tell me if you are interested. 5pm ET. Clashes with some results. Notably EOG and ET Energy Transfer. Market expects a huge beat from ET on Texas storms, after Kinder blew it out. On EOG, we have seen some market darlings such as XEC with mixed results. Expectations would be high that EOG management quality handled the storm well. There is low expectations for a Devon-style surprise […]

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4:16 PM

Sunday Sankey 5/2/21

All presentation today, see attached link, after the Sunny Saturday Sankey published yesterday and emailed to you, outlined the past week. The week ahead is extremely busy with results – you can see my diary in the attached presentation. The monster week of earnings is behind us, with impressive results from FMAGA – Facebook, Microsoft, Amazon, Google, Alphabet. Week ahead also has Secretary of State Blinken travelling to Ukraine. “I can’t tell you that we […]

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12:25 PM

Sunny Saturday Sankey 5/1/21

Winner winner chicken dinner: Hess this past week. ExxonMobil, we think won of the mega-oils. Hess is the “last great oil NAV play” on Guyana, the stock is worth $100/share+ if you believe $80/bbl is coming down the strip; Goldman clearly does, we get there too, with a weak US$ and not dissimilar balances – a demand boom is coming. Wildcards vs GS are Iran and India, alongside the potential for rising US interest rates […]

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3:11 PM

Morning Sankey 4/29/21

If you have the strength, Happy Hour Tonight 5pm Register Here:  https://us02web.zoom.us/j/84981726924 Let’s see who can be the most bullish on the call! Using $60/bbl long term we can get to a $90 net asset value for Hess, but that work is subject to a conversation with the company. At $70 long term oil we get to $100 NAV/share. It is not as crazy as the old Hess, which ostensibly was trading at a 50% […]

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8:56 AM

Sunday Sankey 4/25/21

Monster week of earnings ahead, a clash in the titanic battle of growth vs value. The forces of growth over-ran us values, but we started a fightback that saw several battles won since the terrible relative lows of August 2020. In Q1 this year, value began to rampage against growth. April has seen a growth fightback, with the US$ holding and US interest rates even rallying. I asked a market player if he was bullish […]

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1:52 PM

Morning Sankey 4/23/21

Well, it’s feedback Friday! The age-old client meeting line gets used again: Client Q: “Paul, what is the most common question that clients are asking right now?” Paul A: “What is the most common question that clients are asking you right now?” True joke, but being Friday, we are not done – here they are: Newsflash: US customs have intercepted $2m of lumber being smuggled in shipments of cocaine What do you call an anti-vax […]

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9:12 AM

Morning Sankey 4/22/21

Comparative advantage in ideas. Under the fundamental trade principle of comparative advantage (Ricardo, 1817), if you have two goods, and I have two services, we trade; to have one good and service each, more efficiently produced for each. Under a theory of trade of ideas, If we have two ideas each, and we trade; we each have four ideas. THAT’S RIGHT FOLKS, HAPPY HOUR IS BACK, TONIGHT AT 5PM. Muttering to myself about the latest […]

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8:25 AM

Morning Sankey 4/20/21

Staring at the blinking red and green Bloomberg ticks, alone in a home office, bombarded with Bitcoin headlines, Gamestop headlines, etc etc, it had become very difficult to make out the wood from the trees regarding the oil and energy call. I went on a road trip. I’m back. As suspected, the oils and energy have been tricky – notably solar has been ugly for the past month and year to date, albeit off a […]

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8:42 AM

Sunday Sankey 4/11/21

This week I am heading to Oklahoma to meet Devon CEO Rick Muncrief and then Houston to bid farewell to outgoing ConocoPhillips COO Matt Fox. Opposite ends of the spectrum for me – never met Rick, have hung out many times over the years with Mr. Fox. The lowlight in professional terms with Matt was doing the first marketing trip for COP in NYC after the dividend cut in 2016. The highlight was Matt making […]

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1:36 PM

Morning PSJeff 4/9/21

What’s Sisyphus’ least favorite band? The Rolling Stones We visited Japan for two weeks and did not see a single ninja. It was really impressive. “Officer, you can’t give me a ticket. I have to go run the marathon tomorrow.” Cop: “That’s not how you play the race card.” The Ketchup shortage this year was so predictable. Heinz sight is 2020. Happy Hour yesterday evening, we had a player whose firm had done a deep […]

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8:28 AM

SPAC Alert: The Life Cycle of Li-Cycle

Looking for SPAC names, we had highlighted Quantumscape as interesting from the point of view of long-term potential. However, like so many alternative energy plays, revenues are years away from scale commercialization (a pilot project for the $19bn market cap company is due by 2023), and the company recently issued 13m shares at $64 to finance its high-cost development work (the stock fell to $47 over the next two days). We had the impression “funding […]

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7:54 AM

Sunday Sankey 4/4/21

Greetings on Easter Sunday, The oil market got excited at the end of the week with the OPEC decision, basically because the “Saudi Put” remains in place, with the tapering of OPEC and particularly Saudi cuts extended through July. While surprised at the scale of the bullish reaction, given that the market had anticipated a rollover of cuts, it has been notable that oil prices have held the $60/bbl range pretty firmly with a bouncing […]

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12:26 PM

The cliché-myth of the Roaring 2020s

History does not repeat, but it rhymes. Consideration of the Roaring 1920s makes it clear that the major technological, economic, and social advancements of the era were remarkable. There was an incredible convergence of technological development combined with an economic boom into an upsurge of social liberalism. Equally, the Roaring 1920s came after the great 1918 influenza (H1N1) avian-origin flu pandemic of 1918-1919. There is a synchronous argument that says the global economy recovering from […]

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9:10 AM

Morning Mood Swing 3/30/21

Get ready for a dump of April Fool’s Day OPEC jokes as the Organisation meets formally this week, culminating on Thursday April 1st. Rollover is seen as the most likely outcome, which would be for April, Saudi extending its market control, with recent volatility in oil prices – ie downside moves – seen as the key concern. It’s a never-ending wonder trying to forecast oil markets, and now to be in new era. Here, we […]

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8:26 AM

Sunday Sankey 3/28/21

Hello Happy Sunday, Calling oil has become very tricky in the short term. Never mind the wider market, where the steadily winning value-over-growth trade has found a new level and turned into a daily battleground. Recently growth has taken a stand, but we think it is doomed. Basically, every time you see 40x EBITDA+ multiples, it’s just a question of how long you can stay solvent vs market irrationality. There are maybe five stocks every […]

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1:20 PM

Morning Sankey 3/26/21

My wife and I were sitting in the living room enjoying a bottle of wine. Out of the blue she said, “I love you. ” Surprised, I asked, “Is that you or the wine talking?” “It’s me,” she said, “talking to the wine.” What do you call a rich Centipede? A Dollarpede A mushroom walks into a bar and the bartender welcomes him. He’s a fun guy. A Freudian slip is where you say one […]

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9:05 AM

Morning Sankey 3/25/21

As of writing about the Suez Canal yesterday, we were very early to show how the bulbous nose of the giant ship was buried in the shoreline. That went viral, along with the shape the ship drew on satnav maps before entering the canal. The former, the buried nose of massively heavy vessel wedged in the sand, seems to be a major problem, and there was feedback on my comment that “two dudes in hi-viz […]

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8:59 AM

Morning Suez 3/24/21

Covering global oil markets, you can be sailing along peacefully and from nowhere, a new major event leaves you scrambling. And so a vast container ship blocks the Suez canal. Around 10% of world oil trade and 8% of world LNG trade move through the canal. Quite how the captain managed to hit the side of the canal and wedge the ship remains an open question, but we do know that the Suez is a […]

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8:38 AM

Sunday Sankey 3/21/21

Morning! Iran and China. Mr. Biden has his hands full with Putin asking for a live debate further to Biden being asked “is Putin a killer?”, that caused Russia to immediately withdraw its US ambassador. Big week for global geopolitics. There is no question that China is becoming ever-more diplomatically, geopolitically, aggressive on a sustained rising basis, and buying oil from Iran through smuggling is clearly at the top of the defiant self-interest list. Official […]

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12:36 PM

Morning Sankey 3/19/21

What is the highest rank in the popcorn army? Kernel. Where do you find the Andes? At the end of your Armies. Few people know that Bruce Lee had a vegan brother, Brocco. Where do DJs do their research? Wiki-wiki Wikipedia. It’s Friday! Why did oil airdrop? Probably because it was walking on air. Spot “flat” Brent prices fell 7.5% yesterday. A trading house sent this comment: “Vitol offered Brent aggressively, driving Dated lower. Shell […]

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8:41 AM

Morning Sankey 3/18/21

Yesterday’s DOE data was brutal for US refiners and particularly PBF. We had been hoping for a much more bullish picture – we got increases in crude AND product inventories. Imports surged particularly into New York Harbor – hence the PBF reference – as European refiners, desperate for market, scramble to attack the surge in gasoline prices caused by the Texas Crisis. This should be a brutal month for refiners, as the quarter ends and […]

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8:49 AM

Morning Sankey 3/17/21

Noted: $PLUG – has said it will restate financials within a couple of months of a major stock offering of 28m shares at $65 per share around January 29, 2021. Not good, unless you are a lawyer. Stock is half that level in the pre-market after yesterday’s shock announcement. The IEA has produced a double whammy today of the Monthly Oil Market Report and their Oil 2021 outlook for global oil markets to 2026. As […]

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8:26 AM

Morning Sankey 3/12/21

Not sure about the Dad jokes this morning. But I will try a couple for sighs. I accidentally sprayed deodorant in my mouth this morning. Now I talk with this weird Axe scent. I got my friend a fridge for his birthday. I can’t wait to see his face light up when he opens it. How do you walk a dog with no legs? Hit him with the first pitch. We had our uber bull […]

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8:49 AM

Sunday Sankey 3/7/21

This past week saw the worst market for US crude since modern records begin in 1990. We saw the lowest US domestic crude oil demand in thirty years or more. Who would have known it from the oil price action and oil market mood? Right when the scale of the Texas crisis hit, in terms of lost power, I was writing to you and on Bloomberg TV saying that this is a full-scale national crisis, […]

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12:19 PM

Morning Sankey 3/5/21

It’s Friday. What do you call an overweight kidney doctor who also predicts the weather? A meaty urologist. My thoughts on Mongolian poetry: It has its prose and its Khans. Why do astronauts use Linux? Because you can’t open Windows in space. Noted: Ovintiv results this morning, former rival big oil analyst, and buddy, Kate Minyard has been appointed to the board at the behest of activist Kimmeridge’s Mark Viviano. Viviano/Kimmeridge publish excellent “white papers” […]

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8:55 AM

Morning Sankey 3/3/21

NOTE KATHLEEN KELLEY OPEC EXPERT ON HAPPY HOUR THIS WEEK THURSDAY 5PM A year ago, March 6th 2020, I walked into the ExxonMobil analyst meeting day 2 – the deep dive sessions between senior company management and sellside analysts – and by way of introduction to the small group that had gathered drinking coffee before sitting down at the conference table, said what I had just heard from Vienna: “Russia are not going to cut.” […]

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8:51 AM

Sunday Sankey 2/28/21

One great business for sure is going to be lubricants for windmills. Guess who dominates the specialty oil lubes for windmills market? ExxonMobil. Guess who has their annual analyst day this week? ExxonMobil. March 3rd 9am Eastern, we get the latest iteration of The Big Unit’s story. Will they, like $EOG, get attracted like a moth to the flame of promising growth? We suspect ExxonMobil will, not that we have a problem with their Guyana […]

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12:01 PM

Sunday Sankey 2/21/21

Enjoyed making the slides today, take a look. Slide 1: John Hopkins Professor expects US herd immunity by April. Remember how quickly SARS disappeared? Fingers crossed. This past week we have highlighted QuantumScape $QS the solid state battery play, and did so again Thursday, and we “found the short” as they say. The heated email from a client arrived in response with 10 minutes. “It’s a joke.” He was referring to valuation. But in this […]

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10:39 AM

Morning QuantumScape 2/18/21

Field trip. Speaking to Devon yesterday after their results, I asked to visit the company in Oklahoma, which seemed somewhat ludicrous in the circumstances. There is an energy emergency in Texas and Oklahoma, in case you have been asleep all week. However a visit is okay to go, so if any clients wish to join me on a Oklahoma/Texas run in the week of March 15th, the plan will be to get through next week’s […]

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8:26 AM

Morning Sankey 2/17/21

The current energy crisis is much bigger than most people realize. This is a global crisis. The largest energy outage in US history. In the middle of a brutal winter, globally. Stay tuned, this crisis is just starting. An outage of this scale in Texas is world scale. The entire US and Atlantic Basin energy market is based on a core of Texas/US Gulf Coast. A lot of the debate currently is, as so often […]

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8:37 AM

Sunday LNG

Hi, We had legendary global gas expert Gordon Shearer on our Happy Hour – every Thursday at 5pm – this week. Writing up the notes for Friday sent me down a couple of rabbit holes, and so I put together a note with graphics on LNG, which is attached. Selected nuggets, there are more within: Natural gas as the key energy transition fuel is logical and imperative. Those that bucket natural gas, oil and coal […]

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11:54 AM

Sunday Sankey 2/7/21

Snowing again here in Brooklyn Heights. One thing that is very striking in this week’s charts is the 6-10 Day weather forecast for North America. It is freeeeezing. Bluest map I can remember publishing, and we publish it just about every week in mid-winter and high summer. As noted our Happy Hour this past week was very bullish oil, basically the call is that oil just went up 15% in a month and is rising […]

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11:32 AM

Morning Sankey 2/5/21

Max bullish oil here, buy oil leverage. That was the Happy Hour call last evening. By November last year we were saying “All in on the equities” and we ended the year with six investment grade oil stocks and six speculative oil stocks with the call: “buy both groups.” Key specifics: 2022 oil futures a bargain at $52/bbl, Oxy for operational (Brent) and financial (massive debt) leverage. MEG in Canada. Watch out for natgas exposure […]

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8:34 AM

Morning Sankey 2/4/21

Shell results, meh. We argue that to out-perform, Big Euro Oils need major US fund managers buying at the margin. For ever, Euro oils have looked cheap relative to US. It never changes. See chart below, the same at the most extreme applies to Russian oils. Right now, Big US buyers are either not buying any oil, buying oil leverage, or buying ExxonMobil. The Supermajor Euro oils are not attractive, ex TOTAL. The track record […]

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9:11 AM

Morning Sankey 2/1/21

Chevron-ExxonMobil on the front page of the WSJ quoting Sankey Research. Quick note this morning. not because we don’t generally publish on a Monday after the Sunday Sankey, but because I just spent two hours down the silver mine. Quite interesting actually. Clients have been saying that metals & mining analysis is not very good, the dynamics are very similar to oil in terms of reserves, marginal cost of supply, price of demand etc, and […]

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9:14 AM

Sunday Sankey 1/31/21

The feeling is that oil price action this past week was very bullish given that it is traditionally-weak January and it held up vs US$ up and market down moves. Major clients are highlighting SPACs. We see the SPAC route as a major outlet to address the market imbalance between investment $ seeking renewable energy opportunities, and lack of renewable energy market cap plays. In today’s Sunday Sankey we replicate several slides published by Houston […]

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11:55 AM

Friday Sankey 1/29/21

Yep! It’s Friday! I called the RobinHood helpline about Gamestop and they said “Please Hold”. Got it. I want to put my life savings into the stock – its called Gamespot Total Landscaping right? The Biden team is monitoring the Gamestop situation and will let the American people know when it is time to buy a Legend of Zelda chess set in a dented box. AMC is issuing a ton of stock, but Gamestop is […]

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8:50 AM

Morning Sankey 1/28/21

Quote of the day: SINGAPORE, Jan 28 (Reuters) – Shares in small Australian nickel and cobalt explorer GME Resources GME.AX jumped as much as 53% on Thursday, apparently driven by the similarity of its stock ticker code to U.S. retail investor darling GameStop GME.N. Looking forward to Happy Hour tonight! This should be a good one. As always 5pm – please register interest. Just ping me an email to join, it is a great client-only […]

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8:45 AM

Evening Ark Big Ideas

“Go placidly amid the noise and haste, and remember what truth there may be in silence…”  Desiderata* ARK Invest has published its Big Ideas for 2021, and its important to take a look. We can also take a look back at the 2017 predictions. From an investment standpoint, and shareholder returns standpoint, the fund has been staggeringly successful. Obviously by extension so have the predictions, although current zero cost of capital market conditions are perfectly […]

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6:35 PM

Morning Egregious 1/26/21

Quote of the day: “Will the SEC step in to protect Wall St from aggressive Mom & Pop traders?” – Joe Weisenthal A client who was long a lot of Concho stock for many years, bitterly opposed the company selling itself. In the context of the decision by Concho management to sell at the bottom, completely against my client/Concho shareholder’s view of best shareholder interests, the payment by ConocoPhillips of around $10m to three top […]

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8:31 AM

Sunday Sankey 1/24/21

“Does anybody in Washington care about the deficit? I mean 25% of all dollars ever printed were printed in 2020, and the total stimulus at $5trn, so far, exceeds the GDP of Germany… and Biden plans more…” I asked Frank Kelly, head of government affairs at DB, as we sat in Great Falls, just outside Washington DC, in a gastropub. We had driven past the preposterous mansions that line the road of this former farming […]

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12:33 PM

Morning Methane Limits

DC chat today, it’s Friday! Travelling to Atlanta via Washington and Durham today with son Max. I accidentally sprayed my son’s deodorant into my mouth this morning. Now when I talk I have this weird Axe scent. If you lose one of your senses, your other senses are heightened. That’s why people with no sense of humour have a heightened sense of self-importance. I told my wife I was making a bicycle out of spaghetti. […]

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7:12 AM

Sunday Sankey 1/17/21

Trying to get up this morning, I was pondering whether the US military could split and part go renegade. However we continue to believe the US constitution will prevail. Rather a negative start to the day, but I moved on to put together the Sunday Sankey for you, with energy, be it alternative, or regular oil and gas, starting the year very well. We continue to be obsessive about the US$ impact on oil prices, […]

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12:06 PM

Sunday Sankey 1/10/21

Good morning, The first working week in January is always a crazy week for this analyst, and by Monday afternoon, having run five 1×1 fireside chats with five refining CEOs, I was already joking that I was ready for my year end vacation. Then, from nowhere, Saudi unilaterally cut production on Tuesday 5th January at the now-monthly OPEC+ meeting, the afternoon as we rounded out the conference with a 1×1 with Valero management that morning. […]

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12:40 PM

Morning Sankey 1/7/21

We always thought that Donald Trump would be massively disruptive, but that the genius US government system would survive the test, and boy did we get that in spades! The “Duck Dynasty Coup” was very reminiscent of the “They will Bomb Iran!” counter-question, which was “What will they do on Day 2?” It was always a brilliant counterpoint to a syndrome that horribly played out in Iraq. While George W Bush declared “Mission Accomplished”, there […]

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8:23 AM

Morning Saudi Did What?

Sankey raising Brent oil price forecast to $54/bbl for 2021 (from $45) and $58/bbl for 2022 (from $56). Sankey raising WTI oil price forecast to $52/bbl for 2021 (from $42) and $55/bbl for 2022 (unch). It’s difficult to unpack what just happened to oil markets in terms of Saudi Arabia’s shock move to unilaterally “gift” cut production by 1mb/d for February and March; right down to 8.1mb/d, the very low of their historic production levels. […]

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8:41 AM

Morning Joe

Valero webinar today! Me vs CEO Joe Gorder and team. Not too late to register on www.sankeyresearch.com Briefly OPEC+ noted: Russia wants to increase production, to satisfy its own private oil companies and probably thinking of inflicting sustained pain on US E&Ps as much as anything. Saudi wants to maintain cutback discipline, probably concerned about future oil supply shortages if the global industry faces another year of low prices in the $40/bbl on high OPEC […]

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8:41 AM

Morning Elon Ma

Refining conference today! Not to late to register on www.sankeyresearch.com Strong delivery numbers from Chinese automakers over the weekend followed on from Tesla’s dash to the line for 2020 which fell just short – within the margin of error – for its 500,000 annual target for 2020, which is indeed a very impressive achievement. There were reports of Tesla asking existing customers for help in delivering vehicles. One mystery to us is how the company […]

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8:45 AM
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