Energy Sector

[Dinar]

3 minutes ago, SharperDingaan said:

 

Most would expect volatility, but any numbers are little better than 3-month guesses.

As/when the US starts filling the SPR, the NA floor for heavy sour crude is supposedly USD 70-75 landed, and sourced primarily from Mexico, VZ, and Canada. If US/UK LNG exports are to double over winter, the SPR will also be filling with associated light crude from mostly southern US fields.  Ukraine severely damages a Russian oil/gas facility in a reprisal raid, and o/g prices materially spike upwards overnight.

 

SD

Yes, but won't materially higher oil prices kill Europe's economy and hence end support for Ukraine?  Similarly in the US it would be hard to send $30-50bn a year when people are struggling to afford gas and food?

[Viking]

1 hour ago, Dinar said:

Yes, but what about Venezuela?   Can its production recover?  Could it go back from 400K barrels a day to 2MM?  

The world is not short oil reserves. The issue is oil is the devil. The capital is simply not available to develop the reserves. Banks can’t lend to oil. Institutional money can’t own oil equities. ESG is growing as a movement so this will only increase as a constraint. 
 

Western governments are also getting increasingly hostile to big oil. This will only get worse over time as climate change becomes more apparent… we will need to blame someone for $150 and likely $200 oil (not to mention the more frequent and more destructive natural catastrophes). Big oil has a bulls eye painted on their backs. Oil executives also know growing production will not get the bulls eye off their back (if anything it will only make the bulls eye bigger). 
 

So what isa rational oil executive to do? They will prioritize returning cash to shareholders. As much as possible as fast as possible. Except for shareholders, pretty much everyone else is trying to put you out of business. 
 

Does Venezuela have a shit ton of oil? Yup. But who is going to pony up the $ to get it? Especially in a country with maximum political risk?
 

Big oil is desperate to exit operations in countries like Canada. We really are in a brave new world when it comes to not just oil but most commodities. It will really become apparent when we get to the next global expansion (2024?). My read is supply will simply not be able to keep up with demand… at any price. With ESG/government demonizing energy/mining etc, supply will not increase much moving forward. But demand will and by a lot.
 

And guess what spiking commodity prices will do to inflation… Like i said earlier… brave new world. 

Edited December 20, 2022 by Viking

[ValueArb]

7 hours ago, Dinar said:

Yes, but won't materially higher oil prices kill Europe's economy and hence end support for Ukraine?  Similarly in the US it would be hard to send $30-50bn a year when people are struggling to afford gas and food?

if higher energy prices ends European support for Ukraine, we should just negotiate Europes complete surrender to Putin now.  Can you imagine Churchill telling Parliament, “We shall fight them on the beaches, unless gas prices exceed 25 cents per gallon as I have an election to win!”

Edited December 21, 2022 by ValueArb

[Dinar]

1 hour ago, ValueArb said:

if higher energy prices ends European support for Ukraine, we should just negotiate Europes complete surrender to Putin now.  Can you imagine Churchill telling Parliament, “We shall fight them on the beaches, unless gas prices exceed 25 cents per gallon as I have an election to win!”

You are being melodramatic.  Hitler was an existential threat to Europe, Putin is not.  Putin has shown that Russian army is incapable of winning a war, it is not Wehrmacht and Shoigu is no Rommel/Erich Von Manstein.  

You are also conveniently forgetting the tens of billions of dollars that Ukraine has received and continues to ask for.  When your people are freezing, they may not understand giving tens of billions to Ukrainians.  The moment Western money ends, the war is over.

Edited December 21, 2022 by Dinar

[ValueArb]

1 hour ago, Dinar said:

You are being melodramatic.  Hitler was an existential threat to Europe, Putin is not.  Putin has shown that Russian army is incapable of winning a war, it is not Wehrmacht and Shoigu is no Rommel/Erich Von Manstein.  

You are also conveniently forgetting the tens of billions of dollars that Ukraine has received and continues to ask for.  When your people are freezing, they may not understand giving tens of billions to Ukrainians.  The moment Western money ends, the war is over.

if Putin wins in Ukraine, he becomes an existential threat to Europe. He’s been moving one country at a time for a long while.

 

and the performance of the Russian military has been far better than their performance in 1941, and they ended up winning that war. Russia is enormous and deep with resources. They can easily replace their losses ten times over. Europe is massively wealthy, can easily afford higher energy prices AND to aid Ukraine. Especially when France and Germany have barely contributed so far.

Edited December 21, 2022 by ValueArb

[mcliu]

7 hours ago, ValueArb said:

if Putin wins in Ukraine, he becomes an existential threat to Europe. He’s been moving one country at a time for a long while.

Where is the evidence for this?

[Dinar]

6 hours ago, ValueArb said:

if Putin wins in Ukraine, he becomes an existential threat to Europe. He’s been moving one country at a time for a long while.

 

and the performance of the Russian military has been far better than their performance in 1941, and they ended up winning that war. Russia is enormous and deep with resources. They can easily replace their losses ten times over. Europe is massively wealthy, can easily afford higher energy prices AND to aid Ukraine. Especially when France and Germany have barely contributed so far.

USSR lost at least 20M people in World War II, and USSR was much bigger with more resources than Russia.  No way can Russia afford this kind of a victory.  

USSR was several times bigger than Germany, and Germany was fighting US & UK as well.  

Western Europe has 3-4x more population than Russia today.  Oh, and Putin is not Hitler.  

As for what Europeans can or cannot afford, go to a German or UK pub and tell people that each one should suffer $5K in more expenses per annum via higher fuel & food costs as well as higher taxes to support Ukraine and see whether you can come out of there alive.

Talk is cheap, telling other people that they should sacrifice their prosperity for the sake of foreigners is easy when you do not have to do it.  Go and sell all of your possessions, turn off heat in your home and give all the money to Ukrainians before telling the people in Europe to sacrifice anything.

Nobody owes Ukraine anything.

[Spekulatius]

The energy crisis will persist in Europe no matter the outcome of the war in Ukraine, but I think it will be over in 2024 when enough LNG capacity as well as other sources are online (Norway, Algeria etc.). Putin controlling Europe's energy supply just isn't an option any more - this is over.

[SharperDingaan]

The Ukraine war ends with Putin in a box and a negotiated political solution. No different to anywhere else, the man is replaced, the nukes stood down, and the new team does its thing. Box, or a 'slip and fall'; the man is gone.

https://www.youtube.com/watch?v=rStL7niR7gs

 

Dictatorships with their foot on energy prices is the norm, not the exception, and well understood.

The players just periodically change, as the old dictatorship falls to the new one.

 

SD

 

 

[james22]

18 hours ago, Viking said:

ESG is growing as a movement so this will only increase as a constraint. 

 

If something cannot go on forever, it will stop (Stein):

 

https://legalinsurrection.com/2022/12/europe-cools-toward-esg-in-light-of-energy-realities/

[ValueArb]

1 hour ago, Dinar said:

USSR lost at least 20M people in World War II, and USSR was much bigger with more resources than Russia.  No way can Russia afford this kind of a victory.  

USSR was several times bigger than Germany, and Germany was fighting US & UK as well.  

Western Europe has 3-4x more population than Russia today.  Oh, and Putin is not Hitler.  

As for what Europeans can or cannot afford, go to a German or UK pub and tell people that each one should suffer $5K in more expenses per annum via higher fuel & food costs as well as higher taxes to support Ukraine and see whether you can come out of there alive.

Talk is cheap, telling other people that they should sacrifice their prosperity for the sake of foreigners is easy when you do not have to do it.  Go and sell all of your possessions, turn off heat in your home and give all the money to Ukrainians before telling the people in Europe to sacrifice anything.

Nobody owes Ukraine anything.

nobody owes Ukraine anything.

 

nobody owes Finland anything

 

nobody owes Sweden anything

 

nobody owes Poland anything

 

nobody owes the next domino anything 

[Dinar]

18 minutes ago, ValueArb said:

nobody owes Ukraine anything.

 

nobody owes Finland anything

 

nobody owes Sweden anything

 

nobody owes Poland anything

 

nobody owes the next domino anything 

Finland fought the USSR to a draw, while Ukraine with 10x the population would have already collapsed without Western aid.  Go cheer for Ukrainian corruption.  

Edited December 21, 2022 by Dinar

[ValueArb]

2 hours ago, mcliu said:

Where is the evidence for this?

The evidence is he’s been slowly increasing his power base and attempting to recreate the USSR ever since he came to power.  
 

That’s the main reason for the invasion of Ukraine, to increase the size of the Russian military significantly and give it unrestricted access to the Black Sea, along with all of Ukraines resources. The idea that Ukraine was ever a threat to Russia is as ludicrous as a defensive alliance like NATO being one.

[james22]

4 hours ago, ValueArb said:

nobody owes Ukraine anything.

 

nobody owes Finland anything

 

nobody owes Sweden anything

 

nobody owes Poland anything

 

nobody owes the next domino anything 

 

Deserve's got nothing to do with it.

[ValueArb]

One day the American empire will fall because no one comes to our aid, and we’ll say “we don’t deserve this! I just built a new house!”

Edited December 21, 2022 by ValueArb

[Gregmal]

7 hours ago, mcliu said:

Where is the evidence for this?

Same place where we got our intel that the evil Qatars killed that journalist cuz he wore a gay pride shirt. 

[Dinar]

30 minutes ago, ValueArb said:

One day the American empire will fall because no one comes to our aid, and we’ll say “we don’t deserve this! I just built a new house!”

Yeah, and if we  just give  Ukraine a trillion dollars, then the Germans who can't be bothered to live up to NATO commitments for the past thirty years and Ukrainian government that steals everything will send troops without weapons and ammunitions to help the US.

[Sweet]

6 hours ago, Dinar said:

Finland fought the USSR to a draw, while Ukraine with 10x the population would have already collapsed without Western aid.  Go cheer for Ukrainian corruption.  

USSR won both their wars with Finland - it’s not a draw when the USSR gets more than it demanded before the war began.

[ValueArb]

1 hour ago, Sweet said:

USSR won both their wars with Finland - it’s not a draw when the USSR gets more than it demanded before the war began.

 

And the second one while simultaneously fighting Nazi Germany!

[ValueArb]

7 hours ago, Dinar said:

Finland fought the USSR to a draw, while Ukraine with 10x the population would have already collapsed without Western aid.  Go cheer for Ukrainian corruption.  

 

And LOL at hanging your hat on "Ukrainian corruption" in a country that just passed a 4,000 page appropriations bill that not a single representative or senator read.

[Viking]

Good 1 hour discussion on oil and refining from someone knowledgable (Rory Johnston) who is not trying to sell you anything. 

 

Lead-Lag Live: Is Oil Set To Collapse With Rory Johnston

 

https://www.youtube.com/live/501WAYFLpmM?feature=share&t=1

Edited December 22, 2022 by Viking

[Viking]

ING’s latest (Europe focus): Energy Outlook 2023: Oil, gas and power markets to remain tight

 

“…However, the impact of the EU ban on Russian crude oil is still playing out, and we will have to wait until early February for the ban on Russian refined products. The ability of India and China to absorb a still more significant amount of Russian oil is likely limited. As a result, we expect Russian supply to fall in the region of 1.6-1.8MMbbls/d Year-on-Year in the first quarter of 2023.”

 

- https://think.ing.com/articles/hold-energy-outlook-2023-oil-gas-and-power-markets-remain-tight-in-2023/#a1

[fareastwarriors]

Japan adopts plan to maximize nuclear energy, in major shift

[Stuart D]

13 hours ago, Viking said:

Good 1 hour discussion on oil and refining from someone knowledgable (Rory Johnston) who is not trying to sell you anything. 

 

Lead-Lag Live: Is Oil Set To Collapse With Rory Johnston

 

https://www.youtube.com/live/501WAYFLpmM?feature=share&t=1

Thanks for posting.

[Viking]

Oil/energy: what a delicious set up for investors. Tight markets. Major producers, Russia and Saudi Arabia, want higher prices. US needing to re-fill SPR. China reopening. 
 

Oil stocks look to be the gift that keeps on giving for investors in 2023. 
—————

Oil Prices Jump After Russia Says It May Cut Production

- https://oilprice.com/Latest-Energy-News/World-News/Oil-Prices-Jump-After-Russia-Says-It-May-Cut-Production.html

 

After two weeks of silence in detailing how it would react to the G7 oil price cap, overnight the Kremlin raised the stakes for the west when state-run Tass news service quoted Deputy Prime Minister Alexander Novak as saying that Russia may reduce output by 500,000 to 700,000 barrels a day in response to the cap.

 

 

Edited December 23, 2022 by Viking