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Morning Game Theory

“We are not going to have an easy meeting. Some members oppose extending the previous production cut. And this makes it difficult.” – Iranian oil minister Zanganeh comments this morning as the meeting kicks off in Vienna. The OPEC meeting started virtually at 8am NY time. There is no more classic modern day example of Game Theory, and more specifically the Prisoner’s Dilemma, than an OPEC meeting. Cortez burned his conquistador boats in front of […]

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9:20 AM

Morning Sankey 11/24/20

The oils continue to be lively driven by the surprising up-move in Brent & WTI crude prices, that has come at a point that looked by some measures to be max bearish. If you recall, over the last days of October, Brent fell from $43/bbl to $37/bbl and looked like it might have a run at $30/bbl, COVID resurging, Europe shutting down. Libya roaring back with 1mb/d incremental light-sweet supply. That bearish Atlantic Basin picture […]

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8:18 AM

Morning Friday 11/20/20

Breaking news: Germany is advising people to stock up on sausages and cheese. This is starting to look like the Wurst Käse scenario. I lost 200 pounds. That’s the last time I go to a British casino. Rudy Giuliani really risked his career on this. The dye is cast. Out of all the inventions in the past 100 years, which one was the most remarkable? The dry erase board. We had a refining CFO on […]

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8:38 AM

Morning Sankey 11/18/20

There are lots of interesting stories out there to consider, hoping to publish on Iran later this week, a sort of primer. Also in this note: UK Energy Policy, Bitcoin, Non-OPEC Guyana & Norway. As tweeted yesterday on my Sankey Research Twitter @crudegusher it only takes a 10% rotation OUT of Tesla into oils, to generate $36bn of buying pressure on this emasculated S&P Energy sector with a $694bn market cap. Energy (S&P ex utilities) […]

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9:02 AM

Morning Iran 11/17/20

Deciding what the rumour has priced into the market price, then watching the actual news hit, always tends to be a surprise, in that the market ripped yesterday on a second vaccine announcement from Moderna, even though it felt like vaccine news was all whispered all over the market just prior to the election, so prior to both announcements. As with these markets, you buy the rumour and buy the news, (you don’t fight the […]

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8:44 AM

Waving or Drowning Sankey

With the first debate in late September followed by President Trump contracting COVID shortly after in early October, the market dynamic this year, in our view, has been 1) to rip off the March lows on Fed US$ printing, 2) then falter on election uncertainty and COVID resilience, then 3) resume ripping on more Fed printing, and then 4) finally, for October and Q4, increasingly price a “Blue Wave” as of October/Q4. Essentially the dynamic […]

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9:19 AM

Morning Sankey 11/3/20

Thoughts and sympathy for the victims of terrorism in historic and noble Vienna yesterday. A city close to the heart of anyone involved in global oil. We are many; terrorists are few. Rest in Peace. A momentous day, and I am not referring to the fact that November 3rd is National Sandwich Day. Yesterday on Twitter Arjun Murti, former Goldman Sachs legendary lead oil analyst, now Warburg Pincus adviser and ConocoPhillips board member, pointed out […]

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8:49 AM

Morning Iran

Iran – clients are asking, naturally worried that 1mb/d+ of oil exports will be added to glutted markets in the case of a Biden win. Comments on Foreign Policy under Biden below. Noted Enterprise posts good results. $EPD has been one of our few recommendations these past months. We have particularly highlighted the units to investors questioning ExxonMobil’s 10% yield, that $EPD offers a higher yield, with a more focused, secular-bull business model (see our […]

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9:26 AM

Pioneer-Parsley & History

Breaking news: WSJ October 18th 2020 Pioneer Natural Resources is in talks to buy Parsley Energy, according to people familiar with the matter, as a wave of consolidation takes hold in the beleaguered oil patch. Word from the oil field is the deal was due to be announced last week and got sidelined by COP-CXO. (Twitter). M&A stories in the WSJ are considered the most reliable of any business new source. Last week they were […]

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8:11 AM

WEO Woah Woe Sankey

One of the cool things about experience in energy that goes back 30 years now, is that long term energy forecasts have come, and gone. Fifteen years ago, I obtained ExxonMobil’s 1980 energy outlook (to 2010), which was fascinating. It correctly predicted $100/bbl oil prices, but unfortunately missed the first move to $10/bbl (1986). CEO Lee Raymond swore never to use an oil price forecast again. At the IEA in the early 1990s, I worked […]

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8:47 AM

Sunday Sankey 10/4/20

Obviously, the week ahead will be dominated by the twin horsemen of COVID and bailout. We are making history. In this note, XOM is now worth less than Jeff Bezos, even after his divorce. Nextera has become the largest energy stock in the US. We also show XOM compared to Big Tobacco, to show this is not all ESG. The oil market looks rough, as we had warned all summer, it would be post Labor […]

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11:24 AM

Morning Sankey Wainscott

The US government Bureau of Ocean Energy Management (BOEM) has projected that some 2,000 offshore wind turbines will generate 22GW of power by 2030 for the US. Its hardly surprising that BP has bought into this spectacular growth, which fits right into their low carbon shift in the 2030 timeframe. Reminder, in a September 10th press release, BP announced it would pay $1.1bn for a 50% stake in Equinor’s 2 GW Empire Wind, located off […]

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8:25 AM

Sunday Sankey 8/30/20

Good day, welcome to the week of summer shut down on Wall Street, The usual variety of great slides in the  Sunday Sankey this week, and an entreaty to “play the game” this week of taking vacation. If we all do it, we can overcome. The personal story is a lot longer this week, because as regular clients will remember, “the only person who talks more than me, is my mother.” After I noted that […]

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11:36 AM

Sunday Sankey 8/23/20

This week we can hardly avoid the elevated market levels, the all-time record of growth over value, and the general unease on Wall Street at the nature of current markets. I had the privilege and pleasure of chatting to a favourite client and senior world-famous investor yesterday, quarantined as he is in the Hamptons, and he said in his long career he has never seen anything like this, but that you have to assume that […]

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12:14 PM

Morning Lumber 8/17/20

With our “new 1950s” theme of US suburbanisation, featured in the Sunday Sankey last week as this week sees many suburban stocks reporting (Home Dept, Lowes), we got some feedback on our lumber price boom commentary yesterday. One thing that your energy transition former oil analyst immediately noticed when he looks at the discussion around lumber prices: nobody mentions the US$. With marginal supply coming from Canada, a quick screen on the DXY trade-weighted US$ […]

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9:09 AM

Sunday Sankey 8/16/20

With several “suburban stocks” reporting next week, Home Depot, Walmart, Lowes, Target, this week our “New 1950s” theme gets a run, with additional slides on derivatives such as lumber and copper. Notably lumber prices are skyrocketing, and we once again highlight that wood produces more electricity than wind in the US, and that wood with biomass is the largest part of of US “renewable” electricty generation (see slides within). Continue reading

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9:57 AM

Morning Sankey 7/17/20

As we expected since May, as basically happens every year, oil prices run into Memorial Day and then stall out. Same for this year, so in writing about oil in June, it was clear that around $40/bbl was about as good as it would get for 2020, with such major overhangs on supply, never mind the vagaries of demand recovery. One of the major drivers of the run from negative -$37/bbl to +$37 a barrel […]

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8:20 AM
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