Recent Posts

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 […]

Read More »
8:32 PM

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 […]

Read More »
9:54 AM

Say what? Not there yet… Q2 2022 so far

This note outlines the mega-themes that are emerging mid-way through oils’ reporting season. We listened to a lot of calls, read A LOT of transcripts, and distill it here, for your Saturday afternoon reading by the pool on your yacht. Last evening I reflected that this weekend I was as likely to bit hit by a massive piece of falling Chinese space debris, as to win the mega-millions and get my own yacht with pool. […]

Read More »
2:52 PM

Chesapeake: On a Mission from God

The concept of this note is “putting the band back together” in the theme of the Blues Brothers, as we see the potential for Chesapeake to merge with Southwestern. The Blues Brothers (1980): Jake: We’re putting the band back together. Mr. Fabulous: Forget it. No way. Elwood: We’re on a mission from God. We could get into a long and tearful reminiscence about US natgas legend and Chesapeake founder Aubrey McClendon (there is a tribute […]

Read More »
8:21 AM

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 […]

Read More »
9:43 AM

Coterra & US E&P: Keep Your Discipline

The attached note started as a focus on Coterra, the $22bn market cap combination of two US E&Ps, Cimarex and Cabot, one oily, the other gassy, that merged and just started trading as $CTRA in late 2021. In the note you will find the rank data: the value destruction for shareholders of the US oil exploration and production (E&P) industry in their giant shale oil science experiment 2010-2019. Line from the note: “from 2006-2019, the […]

Read More »
7:58 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 […]

Read More »
2:35 PM

Elastic Policy

ALL STAR STRATEGY SESSION tonight 5pm ET: Paddy Nicoll, UK Defense expert, Frank Kelly, DC expert, Kathleen Kelley, oil market guru, Jan Stuart, oil market guru. Register Here https://us02web.zoom.us/meeting/register/tZwtcu-vrjsvHNZytoBYUkhN5LzpcaKa-p1O Nothing beats a crisis to test a framework, and loyal readers will know that our framework has been that the marginal producer of global oil (& gas) is the USA, and the marginal consumer of global oil is the USA. Sure enough, cometh the crisis, cometh, […]

Read More »
8:58 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 […]

Read More »
3:31 PM

Some 2022 Bets Previewed

Thinking about the year ahead, one of my favourite Twitter follows @Raisingthebar47 published the following deliberately non-consensus list of things that will happen energy in 2022. The list is interesting, notably for natgas theorists, but also because it represents what could be considered a list of unexpected events for the year; it was just a quick checklist of things to consider: Natgas back to <$2.50/mcf MVP cancelled/pushed to ’23 (Mountain Valley Pipeline) Oil hits <$50/bbl […]

Read More »
12:23 PM

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 […]

Read More »
3:07 PM

Morning Putin & Antero 10/14/21

Tonight: Gordon Shearer, world LNG expert, on Happy Hour 5pm ET. Email me for link paul@sankeyresearch.com Gordon fits brilliantly with the world energy crisis, discussed at length by Putin yesterday. This morning I took the time – and it took a good while, given simultaneous translation, etc – to transcribe what President Putin said at the Russia Energy Week Summit yesterday. This early morning effort was made: Because Putin is seen as holding a major […]

Read More »
9:37 AM

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 […]

Read More »
8:09 AM

Sunday Sankey 6/27/21

Please join the Sankey Research party in DUMBO this Thursday as we celebrate the crazy past year, since first publishing the first Morning Sankey as independent research, on the Friday, of July 4th weekend 2020. What a muted occasion that was. Now New York is raving, and that is before international tourists return. RSVP for the party. It’s meant as an opportunity for people to come to see the remarkably transformed and very cool Brooklyn […]

Read More »
1:27 PM

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, […]

Read More »
8:42 AM

Morning Sankey 6/15/21

At the last in-person Shell analyst meeting at the NYSE, I raced the head of upstream in a life-sized side-by-side Pennzoil NASCAR simulator and then moved on to talk to CEO Ben van Buerden. One key message: sell the Permian. My argument was that Shell would never be recognized as a Permian player, would never get credit, even if they out-performed the industry, and valuations were riding high. Shell should be a mega-project player in […]

Read More »
8:46 AM

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 […]

Read More »
8:28 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 […]

Read More »
8:59 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 […]

Read More »
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 […]

Read More »
8:26 AM

Morning Bullish Sankey

Very interesting Happy Hour yesterday… and an overwhelming sense of bullishness swept over me! How can this be when the oil market is still struggling so badly? Well… a couple of things. But first, it’s Friday, and this is the Friday Sankey, so its JOKE TIME. What’s the biggest lie in American politics in 2020? You have 2 minutes uninterrupted.Please respond to your opponent’s total ignoring of the question. You have two minutes.A fly on […]

Read More »
8:27 AM

Propane Sankey

Yet another bull point on propane. The Morning Sankey goes down the rabbit hole. New York City has made outdoor dining permanent, and the City has lifted the post-911 ban on propane canisters in Manhattan (welders were excepted). With indoor dining limited to 25% capacity, operating restaurants are dependent on outdoor dining, and there has been a scramble to buy propane heaters. My neighbour manages three restaurants and said he was about to buy 15 […]

Read More »
10:02 AM

Sunday Sankey 9/20/20

Good day! A chill September wind is blowing across Brooklyn Heights, as summer officially ends and fall very much starts. The market is feeling chills too, with COVID continuing to present a major challenge to policy-makers globally. We remain extremely frustrated by the excessive lock down requirements in New York despite effectively zero COVID. With massive testing, less than 1% positives are being found, and essentially no deaths (statistically speaking). This past week we quoted […]

Read More »
11:37 AM

Where is oil as Laura hits? Morning Sankey 8/27/20

Corporate newsflow remains quiet, with the market awaiting more details on the historic announcement from BP on its climate change plans, due September 14th-16th. Several major US oil investors consider this BP move a 100-year strategy shift for big oil. Notably the stunning -40% oil and gas production reduction, as a strategy pillar. US investors remain cynical, the most negative seeing the announcement as a smokescreen for the dividend cut. Elsewhere re-injection issues for ExxonMobil/Hess […]

Read More »
8:35 AM

Morning Sankey Biden Time

Washington Brief: the latest Biden energy plan announced yesterday is essentially roll up of the AOC/Bernie Sanders Green New Deal and Nancy Pelosi’s recent HEROES Act, not passed by the Senate, which represent huge – multi-trillion – US$ government spending. Intelligence from Washington: if the Democrats sweep in November, it’s happening. Intelligence from Washington: will the Democrats sweep in November? Yes. These are opinions based on public facts, but informed and respected opinions. Meanwhile, also […]

Read More »
8:50 AM

Morning Sankey 7/13/20

Well, there goes another bankruptcy. Hi Crush ($HCR), the Frac sand play has filed with some $500m in debt. As readers of the Sunday Sankey yesterday https://www.sankeyresearch.com/2020/07/12/sunday-sankey-7-12-20/ can see , the collapse in US E&P activity has been extraordinarily severe in terms of rigs, and equally severe in terms of Frac Spreads. Running at 350 crews as recently as Mid-January 2020 (see chart below), by May 2020 spreads dropped below 50 and currently stand at […]

Read More »
7:40 AM

Dakota Access Shock

PSXP stock is getting hit hard on today’s surprise Dakota Access shutdown ruling, alongside Energy Transfer (ET) and Bakken players such as Contintental, OAS, WPX, NOG and diverse names such as MRO. Winners: Canadian suppliers, Permian and other Basins than Bakken, and in refining “Valero wins by not losing.” Of course in the grand scheme of things, the most environmentally-friendly way to move oil is by new pipeline, less by rail, least by truck. But […]

Read More »
4:07 PM
View All Reports