Recent Posts

Snake on a Plain: Diamondback > Pioneer

In our thematic note last week “The E&P Inventory Underhang” we explored growing inventory concerns at Coterra and Pioneer after their 3Q22 earnings reports.  Citing Pioneer’s well productivity deterioration, ill-defined capital allocation philosophy, and a broader question mark on the reduction of Pioneer’s future drillwell inventory, we offered Diamondback Energy (FANG) as an alternative to PXD for those investors seeking large cap E&P exposure to the Permian Basin.  Here, we illustrate the underpinnings of our […]

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5:03 PM

Sunday Garden

The mood on Wall Street is suddenly, that the market will have a traditional post-Midterm bull run into Christmas. Buy them all. There might be some threat from the major turn in the Chinese market, sucking money back into China, and of course the FTX Crypto collapse is widely reported to involve a $30bn personal net worth loss for the now-notorious Sam Bankman Fried, and an $8bn black hole. Will that negatively affect markets? Well […]

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11:07 AM

Thematic: the Most Interesting Boring Chart in Oil

With 3Q22 oil & gas earnings effectively in the books, we took the opportunity to aggregate 2023 production and capex forecasts across the oil & gas sector.  We looked at consensus estimates for 50 of the largest energy producers in the US, Canada, and Europe and find 2023 production expectations struggle to stay flat as a projected 15% y/y capex inflation continues to undergo upside pressure. The aggregate producer group represents just over 21 mmbbl/d […]

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11:57 AM

Morning Rodeo

Tonight on Happy Hour, Ira Joseph, Senior Research Scholar, Center on Energy Policy, Columbia University. Former Head of Global Generating Fuels & Electric Power Pricing and Research at S&P Global Platts. Former Head of Global Gas and Power PIRA Energy Group. Former Editor in Chief Energy Intelligence. The man has 30 years form in energy expertise. Ira was recommended by Sankey Research friend Jay Saunders, long term natural resource Portfolio Manager at Jennison, and connoisseur […]

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10:09 AM

Sunday Breakfasts

Well hello, We sent a note last evening on Coterra and Pioneer reserves/inventory reporting which email already has 1,060 opens in less than 24 hours. That is, in line with our best-read note of the past two months being “Ethane Rejection”. This is a very limited email blast list (paying subscribers only), so the readership is impressive. Please email if you wish to re-receive either. With that said, you are here for your Sunday Sankey […]

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8:14 PM

Thematic: the E&P Inventory Underhang

There was plenty of client interest in a comment we made a while ago now, say Q1 2022, that US exploration and production (E&P) companies have become homogenized in terms of what they offer shareholders, as basically all corporate strategies now have, thankfully: Focused on returns and so capital discipline, and Reduced growth to the benefit of market supply & demand balance. Those that cannot resist growth are private or have gone private (Continental Resources) […]

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5:39 PM

Morning Dry Ice, Dry Eyes & Wet Gas

There was a collision yesterday in Tribeca between your experience-bitten, long-since cynical energy (oil) analyst, and the Schlumberger’s analyst meeting. Big oil clients have seen oily friends fired, exit Wall Street forever, been asked to cover extra sectors, been bullish when they should have been bearish, watched great companies humbled, seen clients lost to 1,000 yard stares. Schlumberger is a huge part of the arc of oil history, not least on Wall Street. We, the […]

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7:56 AM

Evening, No 3-letter “F” Words

Tomorrow Happy Hour: Jon Rigby, IR ENI Thursday Nov 3, 2022 5:00 PM ET  Please click this link to register Rigby is the recently-appointed (April 2022) head of investor relations and strategy planning at Eni, the $50bn market cap Italian energy giant. Previously he was a well-known London-based sellside Lead Oil & Gas analyst, covering global major stocks, for UBS, as managing director. He joined UBS in 2004 from Commerzbank and holds Chartered Financial Analyst […]

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5:11 PM

Sunday Penguins

Week ahead: Fed decision and plenty of earnings. Last week was a big one for markets, to say the least. Mega-cap tech bombing the tape. Worked out great for the oils and energy. A client said my chart of oils’ share of market earnings are too low: I have the group at 5% of the S&P500, but 10% of the earnings of the market, he is getting energy earnings at 15% of the market, which […]

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6:27 PM

Morning Succinct

Great guest tomorrow, especially as everyone is asking about natgas. Robert Raymond, private equity wizard, the man who gave us our Antero bull stance which he had when the stock was a toddler in 2020. Mr. Raymond is the founding member of RR Advisors LLC/ RCH Energy. He joined Crow Family Holdings in 1994 and subsequently built and managed their energy investment program from 1997-2004. Mr. Raymond oversees all aspects of RCH Energy investment platforms […]

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8:45 AM

Morning Range’s Ranges

US Natgas:cash price at Waha trading negative today. Boy is it good to be long natural gas supply in the USA. That mega-theme is probably under-appreciated. For example, it makes the US$ really strong. We went from zero LNG exports to largest LNG exporter globally from 2016 to 2022; production is booming. Note in the left chart below: zero LNG exports at start 2016. Incredible performace from the US oil & gas industry. $RRC: we opened […]

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9:38 AM

Sunday Shares & Sheeran

Greetings from Texas, The world’s biggest mangrove company kindly invited Paty & me to the Austin Formula One Grand Prix (F1). Cars running E10 are screaming behind me on four source power trains; (V6 1.8 liter, one electric exhaust powered, one electric latent braking powered, and a turbocharger). The world’s biggest mangrove company is Aramco, F1 primary sponsors for this race. I think the sponsorship is genius in increasing the popularity of the world’s greatest […]

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4:19 PM

Morning Rubbernecking

What can you do but write an earnings note during earnings? Well, we put out a theme note yesterday on East Med, which had good reviews, but question marks over the materiality to the big winner, Chevron. As the oil space, and its respective components, have settled into a sensible valuation structure and lack of differentiation between themes, the quest is on to look at Kosmos or offshore drillers for some excitement. And we will […]

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9:38 AM

Thematic: East Med, EU Gas Crisis Solution

With attention on a major oil announcement by President Biden today, widely leaked as a further Strategic Petroleum Reserve (SPR) release that amounts to stuffing a leaking dam with non-sustainable paper towels, we have been highly critical of the Biden Administration’s Energy policy. We have also slammed the European Union and UK, notably starting with our 2021 thematic note “Britain & Germany vs the USA” that foresaw a European gas crisis far before Russia ever […]

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8:56 AM

Sunday History

Yo, Noted, French refining strike seems to be drawing to a close, with ExxonMobil’s Fos returning to normal. Continued issues with the most extreme of the unions, the CGT, for TotalEnergies. Around 30% of French gas stations reported short of product. We perceive the refining workers strike in Iran to be a domestic issue – for now. History of the Iranian Revolution was driven by strikes by Iranian oil workers. The 1979 Iran revolution directly […]

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3:20 PM

Saturday Stop Glue (Oil Product)

Yullo from London, Today a look back at the past week in London, tomorrow a short Sunday look forward: Best line of the week, from major energy transition fund in London. “Our client mandates are extremely ESG-conscious, like University superannuation funds, yet nowadays we are allowed to own oil & gas stocks… But we absolutely cannot lose money in them. We can be long First Solar and lose a ton, that is fine by the […]

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3:44 PM

Morning Idi

Gossip from dinner with my London lawyer friend who is familiar with, let’s say, “emerging markets law”: Russia’s power rests between the Oligarchs who have the money, vs the military, that have the weapons. The single crossover oligarch, who controls the military, is Putin alone. Can the oligarch class form an ex-Putin alliance with the military? Difficult. Rational analysis of Nordstream pipeline explosions, which logically would conclude that Poland done it, with NATO deep state […]

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6:28 AM

Morning Lettuce

Greetings from London, Noted, more buyback? Less capex? How about a stealth capex deal, Diamondback for “closely held private” Firebird. Diamondback’s addition of adjacent drilling locations in the Permian underlines that the US oil bonanza has turned from growth to productivity – world oil supply is structurally challenged, “even in the Permian”. The price looks reasonable, even in the context of Diamondback’s own stock price, the point being, where does this sit with their net […]

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7:37 AM

Sunday Primrose Hill

Greetings from London Town, The Giants and Packers fans were out in numbers around the West End – I can’t believe the Giants won! My daughter Honor is the expert – her line was that the Giants might be the best-coached team in football. She is deeply cynical about the team, so, powerful words. By the way her life ambition is to be a CEO, and a Giants Season ticket holder. Meanwhile in the pub […]

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5:28 PM

Saturday Sunday Sankey

Your correspondent is flying tomorrow at 7am La Guardia to Houston for Steve Chazen’s Memorial at 2pm assuming flights co-operate, and so this week’s Sunday is here on a Saturday; a brief highlight reel, or should that be “bloopers” “fails”, and “cringe” in this tape. From the UK pound, to Japanese Yen, to Credit Suisse credit default swaps (CDS) this is a market at war with itself, quite literally. The incredible sabotage to the Nordstream […]

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7:58 PM

Afternoon Theories

This evening! Premium Event! Steve Levine on Happy Hour tonight at 5pm ET re: batteries and electric vehicles, he is a world expert. Biography was emailed to you yesterday, impressive. Steve is now Editor of The Electric, a new, exclusive premium publication at The Information on batteries and EVs. Steve Levine 5pm Thursday 29th Sept: https://us02web.zoom.us/meeting/register/tZwtduuvrDMqEta4M3eKkusntGrE1nVV2HoK ~ Watching the NASDAQ below its 200 weekly moving average for the first time in 13 years “The West” […]

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3:20 PM

Morning Negative Revisions

With markets in flames like something out of a Naked Gun movie, Central Bankers the inept cops, rioting traders burning and looting, we continue our post Labor Day theme of advising on fire prevention and avoiding arrest. So: it is sadly time for another negative earnings revision cycle.  We rolled up over 60 US-based energy companies covering upstream, midstream, downstream, integrateds, and oilfield service to see get the booking mugshot for the group. After chasing […]

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8:37 AM

Morning Complex and Simple

Trading call: all the world is expecting a market bounce today, quite possibly violent this week, as the Fear/Greed index gets into “Extreme Fear” Territory. We see this as a short term bounce, and are waiting until we are nearer towards full winter before looking for the big bull call on oils into 2023. Weather in Brooklyn: chilling in line with winter starting December 5th, our traditional date for first snow in NYC; key question […]

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8:59 AM

Sunday Calm Before

We mourn the passing of Steve Chazen on 23rd September, he will be remembered as a legend. It was a privilege to have known him. Rest in Peace. We wrote the History of Oxy in December 2021, which includes the almost 30 year impact of Steven Chazen (joined in 1994, died as Chairman 2022). ~ Bill Bishop at Sinocism: For those who have not heard the rumors, Xi [Jinping, China President] has been supposedly removed […]

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5:54 PM

Morning Scope 4

Brooklyn Cop at 844th Precinct accuses innocent Sankey of being “weird-looking” “They” got caught speeding yesterday: fast unwind of long natgas / short refining trade Terrific Happy Hour with Jay Saunders and a couple of other hitters last night; introducing Scope 4 Jennison portfolio manager (PM) Jay Saunders is very popular in the market, you can tell that by the players that dialled in to participate in his call yesterday. He co-runs the Jennison Natural […]

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9:30 AM

Morning Mo Money Mo Problems

“I, Russia” Putin desperation rising Oil markets: would you rather have weak China demand with low oil product exports, or post lockdown China with high product exports? Yet another inventory release threat: China An inventory release threat, Iran, was highlighted by us as likely to go into instability given reports of the serious illness of the aging Supreme Leader. Say her name: “Mahsa Amini”. Protests raging, rightly. “Morality Police” murdering women. As the Fed raises, […]

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8:45 AM

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

Sunday Gold Delivery

Fed decision this week. TINA is dead. Nothing big in earnings this week, Fedex reporting Friday has warned, in case you totally missed last week; if you did, you missed the largest stock market move on an economic data point, in history Rules of Wall St series: Always short the new CEO of a highly rated stock. Not in the news: Iran’s Supreme Leader said to be gravely ill – watch for upheaval ~ Fed […]

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6:19 PM

Morning Tape Bombs

Refining getting worse LNG export developer Tellurian whacked as it struggles to finance “by mid-2022”. It’s Q3 2022. As the share price falls, financing from the at the money issuance facility becomes even more problematic. Macro influencer Luke Gromen on Happy Hour Fedex profit warning Fiscal 2Q23 guide $2.75 vs cons $5.46 (!!!) Xi-Putin As we feared refining is getting worse. China export quotas as we highlighted yesterday have further pressured weak Asian margins that […]

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8:41 AM

Morning Rails

PREMIUM EVENT TONIGHT Luke Gromen, high profile strategist, is on Happy Hour this week, Thursday 5pm. Big guest, big views, big themes, Main Event Gromen vs Sankey HH 53. Tonight Sep 15, 2022 05:00 PM ET Register in advance for this meeting: https://us02web.zoom.us/meeting/register/tZMkcemrqDIvHtyqA85Av3APXBad-aTjuSBR Another great call from our Washington DC guru and Happy Hour regular Frank Kelly, who weeks ago said that he did not believe that a rail strike would be tolerable to the […]

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9:04 AM

Morning Mr Gromen

Dollar vs oil correlation has moved back to inverted very recently. Right now, the oil price is winning, US$ weakening. For the first time in well over a year, media is stating the oil price is rising on a weakening US$. That’s a bit like saying the NY Giants are dominating the NFL – after winning their first  game of the season. WITH THAT SAID Luke Gromen, high profile strategist, is on Happy Hour this […]

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8:15 AM

Sunday Grey

It was a week that started with the Queen accepting a new British Prime Minister, and ended a new King Charles III and the always-somber 9-11. It is a miserable late summer day in New York, drizzle from a windless grey sky. With due respect, there is not a lot in those events directly relevant to oil/energy, and no doubt the last thing you need is more coverage from me. Rather, there is lots of […]

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4:48 PM

Morning between a Hard Rock and a palace

Rest in Peace, Queen Elizabeth II. Long live the King! The rainbows were just amazing. One US media outlet described the Queen as the last human link to Great Britain, the Britain of Empire, such as it was when she became Queen in the 1950s. This resonated with me, the Queen with Churchill in photos, for example. Her passing bought back memories of my father, another link to Empire, who left this mortal coil last […]

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8:12 AM

Our Bob’s Gasoline

Last call for the Sankey Research Party at the Hard Rock Penthouse tonight. If you are in NYC and around Times Square, we have a glittering panoply of oil market experts, CEOs, investors, and some hangers on, all welcome. Kathleen Kelley “OPEC whisperer” will comment on the symbolic cut, and we are highlighting the new CEO of refiner Delek USA Avigal Soreq. RSVP if you want to join, there is plenty of space and we […]

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1:13 PM

Sunday Life Guard

Labor Day outlook for oil and energy markets into year end; there is plenty more research to be done. You could make a big call on oil today for the next four months, and be wrong by Tuesday this week, with OPEC+ meeting Monday. If they cut and crank oil prices, you could make a bear call today, reverse your view on Tuesday and be wrong by Thursday when the ECB may be pushed towards […]

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8:32 PM

Morning IRA… the IRS Inflation Act

Observations on the “Inflation Reduction Act”: We read all 730 pages, with 198 being on healthcare, and conclude that, rather than calculate an “Excel told me” analysis, but rather, because of the surprise announcement of the Bill, the stock market provides an early indicator of the Bill’s likely impact: we show you key stock price performance since the Bill was shock-announced by Senators Manchin & Schumer on June 27th: We temper this market reaction. We […]

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8:36 AM

Midday Verb

Happy Hour this week with Michael Lynch, absolutely tenured energy analyst. Michael can explain the last time California had an EV mandate and why it  bombed, he had a good article in Forbes this past week about it. Long time MIT, totally established energy expert. I will be chatting to him, and if the attendance is graveyard slot (this Thursday evening before Labor Day weekend) I will persuade him to return. Mike Lynch President at […]

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1:29 PM

Sunday Salads

So we made it to the Wall Street’s vacation week, the last week in August. What’s the first rule of Wall Street? Keep your seat. We got through another year. Congratulations. Three observations about what the market might be missing: Is Putin’s EU squeeze a pre-cursor to him suing for peace/settlement in Ukraine? European energy prices are insane, but the futures strip is self-defeating Drought in China is epic – the scale may be under-appreciated […]

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5:31 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

Morning DOE Boom!

It’s a time of year when the Wednesday 10:30am US government Department of Energy, Energy Information Administration (DOE EIA) weekly oil data matters. We normally disdain trying to jerk our knee faster than the army of commodity analysts who jerk their knees as fast as possible to DOE print, some who go so far to send out the entire tables verbatim (thanks!) but this week, for fun, we are competing for the fast note reaction […]

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11:28 AM

Morning Saudi Put… Iranian Call

“The Saudi Put is back” wrote a client yesterday Could well be related to softening in Iran negotiations Certainly, it implies that Saudi wants, enjoys, needs, $100/bbl+ Brent Part of their calculus is a belief in strong demand despite $100/bbl+ this summer, with winter coming That is, the Saudis optimal price is as high as demand can take, and not so high as to cause demand destruction. This summer’s demand strength strongly suggests that range […]

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9:54 AM

Sunday Mega E&P – and Fred

So I am back in Brooklyn after vacation (Nizuc Resort, Cancun), needless to say muttering and grumbling to myself. We left some calls hanging before the week away, updated in this note. It was a week this past week where performance reverted to year-to-date performance (see first chart);  we are still bullish US natgas, led by AR, bullish Oxy led by Warren Buffett, bullish the US oil sector on the structural improvement in the companies […]

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4:02 PM

Morning Nizuc

One of the many lessons of Wall Street, is “don’t expect any sympathy”. This is more sharply put: “If you want a friend, buy a f#^@*# dog.” I’ve got two dogs. As I have been proclaiming, this is a long summer. We don’t have Labor Day until September 5th, and with me stewing nicely in Brooklyn with the dogs, thinking of what fun the run is from Labor Day to Christmas, to be in NYC […]

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7:35 PM

Morning War in Europe

We like the long oil trade here, explained Europe is at war. Russian/EU gas expert Jim Henderson was stark on our call: Russia is waging full scale economic war on Europe. Winter is coming. Darling! I never knew you cared Bull trade in oils is back on, in our view. First, we contend that oil equities often predict the next move in oil, the commodity. As shown below, over the past five days E&Ps (and […]

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9:25 AM

Morning Pain Trade

Delighted to say that Dr James Henderson is on Happy Hour Strategy Session tonight, A PREMIUM EVENT. Jim is currently Senior Research Fellow at the Oxford Institute for Energy Studies, alongside his consultancy work and professorships. When: this evening, Aug 11, 2022 05:00 PM ET, Zoom, Register in advance: https://us02web.zoom.us/meeting/register/tZ0sd-CtpjsrGdVM0p-MsG1P4WU0dr3hBWq3 ~ One of my favourite concepts on Wall St (or should I say hated?), is the “pain trade.” I first heard of it 20 years ago and […]

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10:09 AM

Sunday CRC

I asked a major activist investor if I should zip over to Denver this week for the Enercom conference, (starts tomorrow). It’s a staple of the August energy conference diet, which is not a rich diet. Enercom, you pay to attend and a plethora of smaller oil & gas exploration and production companies make presentations with meet & greet. I’ve been once and a client told me as I headed there, the first time he […]

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11:41 PM

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

Morning Go Pelosi

Signature stock: Diamondback strong results, high cash return Signature stock: Devon strong results, high cash return Pelosi to Taiwan: the Administration has strong foreign policy and is pushing China I spoke to a senior government official with knowledge of Foreign Policy yesterday. We first agreed, that we are suffering “lingering COVID” where our recovery from a bout in the past weeks has persisted with non-debilitating symptoms, fatigue, etc – I had a similar conversation with […]

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8:07 AM
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