Energy Sector

[Stuart D]

Picture below from a recent Adam Rozencwajg YouTube video.

 

Conventional + Alaska + offshore in green/yellow/blue. 
 

Shale oil in red.

 

The decline in shale obviously hasn’t happened yet (he’s projecting forward).

 

No comment on the timing of shale’s decline (could be soon, could be many years from now), but gee what happens if that decline curve is even remotely accurate.

 

[Dalal.Holdings]

https://www.wsj.com/politics/policy/trump-oil-industry-executives-policies-85eb74e6

 

Drill, baby, drill ! Another R president who is a "friend" of the industry! Yeehaw!

 

Quote

That wager is paying off. The Trump administration is opening swaths of wilderness land and federal waters to drilling, approving new terminals to export natural gas and proposing to ax environmental regulations, including an Obama-era rule used to curb emissions from power plants, tailpipes and oil-and-gas production. His One Big Beautiful Bill is expected to hobble renewable-energy projects and stunt the adoption of electric vehicles. 

 

Oops...

 

Quote

So far, however, the industry’s policy wins haven’t flowed through to the companies’ bottom lines. Trump’s shifting positions on trade, coupled with an increase in crude supplies globally, have depressed oil prices, cost energy firms billions of dollars in stock-market value and contributed to layoffs across the industry. And new tariffs on steel and aluminum are making drilling more expensive.

 

[Stuart D]

On 9/8/2025 at 10:20 AM, Stuart D said:

Picture below from a recent Adam Rozencwajg YouTube video.

 

Conventional + Alaska + offshore in green/yellow/blue. 
 

Shale oil in red.

 

The decline in shale obviously hasn’t happened yet (he’s projecting forward).

 

No comment on the timing of shale’s decline (could be soon, could be many years from now), but gee what happens if that decline curve is even remotely accurate.

 

I get the exhaustion from hearing ‘peak shale’ for the last decade but…

When US shale isn’t adding +1M bpd but instead declining by 1M bpd…. That’s a huge deal right?

[FCharlie]

6 hours ago, Stuart D said:

I get the exhaustion from hearing ‘peak shale’ for the last decade but…

When US shale isn’t adding +1M bpd but instead declining by 1M bpd…. That’s a huge deal right?

Especially when global oil demand continues growing at the same time. I'm surprised more people aren't worried about this. 8 million barrels per day of US shale has a decline rate of 40-50% which makes it really challenging to just hold production steady. This is a key piece of why I think offshore is the most important source of production going forward. 

[Saluki]

PBF energy (a trading sardine of mine, but not one I currently hold) is up almost 10% today after the Israelis killed someone in Qatar. 

 

 

[mananainvesting]

@Saluki where do you see that? I couldn't find anything. Can you share a link please. I have no stake, just curious

[SharperDingaan]

You might want to use current conditions to lighten up .... one can always buy back in later.

 

All the persistent Russian refinery hits, and WTI can barely hold USD 65/bbl? Fewer/no further hits as part of 'negotiations' always a possibility ... what do think happens to WTI if it actually occurs? 

 

Supposedly Exxon gets their 30% of Sakhalin-1 back, and Russian can access o/g tech again; if they agree to peace in the Ukraine.  Orange Boy wants the Nobel Peace Prize, and time is running out ... what do think happens to WTI if there is an actual agreement? 

 

What do think happens should any of this also occur in time for tax loss selling season?

 

SD 

[Dalal.Holdings]

https://www.bloomberg.com/news/articles/2025-10-05/opec-agrees-to-modest-137-000-b-d-oil-supply-hike-for-november?srnd=homepage-americas

 

Moar Oil...

 

Quote

The Organization of the Petroleum Exporting Countries and its allies will add 137,000 barrels a day next month, OPEC confirmed in a statement on its website. 

Russia, which has previously pushed for restraint in supply boosts, favored an adjustment that would help to defend prices while Saudi Arabia — more mindful of market share — supported a larger addition, a delegate said prior to Sunday’s gathering.

 

[FCharlie]

13 hours ago, Dalal.Holdings said:

https://www.bloomberg.com/news/articles/2025-10-05/opec-agrees-to-modest-137-000-b-d-oil-supply-hike-for-november?srnd=homepage-americas

 

Moar Oil...

 

 

They are going to run out of spare capacity......... and oil is going to soar. 

[fareastwarriors]

9 hours ago, FCharlie said:

They are going to run out of spare capacity......... and oil is going to soar. 

 

 

Edited October 6, 2025 by fareastwarriors

[Dalal.Holdings]

2 hours ago, fareastwarriors said:

 

 

 

LOL....

[Stuart D]

19 hours ago, FCharlie said:

They are going to run out of spare capacity......... and oil is going to soar. 

Thoughts on Venezuela? 

That’s the real spare capacity right?

[FCharlie]

22 hours ago, Stuart D said:

Thoughts on Venezuela? 

That’s the real spare capacity right?

Thoughts on Venezuela? Not much other than the obvious. They has tons of reserves, but their infrastructure needs significant investment after years of starving it of capital. Also their oil is heavy, sour, high sulfur, and expensive to refine. 

 

Most of OPEC has no spare capacity already. Saudi Arabia obviously does, but think about the last time OPEC was widely perceived to be running out of spare capacity. We're talking early 2008. Global demand was growing, US shale hadn't happened yet, and oil went to $147/barrel. Perception is everything. For the last couple years everyone has been aware that OPEC has millions of barrels of day being held back. But the more they unwind their self imposed production cuts the less spare capacity they have and while it may seem counterintuitive, in my opinion it's bullish. Let's see global demand grow a few million more barrels and US shale have zero supply response. Perception will change quickly from "we're drowning in oil" to "Oh shit no one has any spare capacity"

[Spekulatius]

Perception is not everything. It may cause short term price spikes, but not much more. Supply and demand is everything. I don’t think demand is looking strong near term.

[Marco Van Basten]

On 10/6/2025 at 10:35 PM, Stuart D said:

Thoughts on Venezuela? 

That’s the real spare capacity right?

It is not just Venezuela.  There is also Iran, Libya, Russia.  Then there are massive oil discoveries in Guyana and Brazil if I am not mistaken.  

[Stuart D]

Yeah, if this is true then there’s plenty out there.

[bizaro86]

4 minutes ago, Stuart D said:

Yeah, if this is true then there’s plenty out there.

 

I'm amused every time I see this chart and OPEC affiliated Venezuela's heavy oil is on there but non-affiliated Canada and their 170 billion barrels of heavy don't count.

 

1.5 trillion barrels is about 50 years worth at current rates. But recoverable oil is an irrelevant way to look at it anyway, imo. You need to compare current productive capacity to demand. It's literally econ 101 supply curve/demand curve intersection. 

 

If demand exceeds current supply at the current price, then prices need to rise to incentivize new drilling. If current supply exceeds demand than pricing can fall fast as the cost of producing barrels from existing wells is low - but with natural declines production would drop quickly at very low prices.

[Stuart D]

I think it’s useful to consider potential production capacity, because if oil ever hits $200 a barrel, every political leader will be doing everything possible to increase global output.

 

While current productive capacity versus current demand drives today’s price, the presence of untapped potential — for example, in countries like Venezuela — limits how long prices can remain elevated.

[Spekulatius]

It seems to me that drilling costs go down over time in real money terms (adjusted for inflation). I expect the price of oil to follow a similar trajectory than drilling costs, so the price of oil will also rise less than inflation. Of course over shorter time frames, anything can happen, but over a few decades that’s how it is likely to play out.

Edited October 8, 2025 by Spekulatius

[Dalal.Holdings]

The funniest thing about oil bulls is...

 

They gloat "MY oil company has increased reserves!" (See OXY thread) without thinking about the broader implication and what happens when just about every other oil company is also doing so...

 

Just look at shale drilling technology and all the oil it has unlocked at low, low cost...and only in the U.S. so far. There are shale deposits around the world yet to be tapped...

 

And yes, $200, even $150 oil would cause many new sources to come online/be discovered

 

And you have a R President who wants to open up more land for drilling and is obsessed with keeping oil prices low...

 

And then you have to contend with demand: the likes of BYD churning out more and more EVs/hybrids and shipping them around the globe....

 

Edited October 8, 2025 by Dalal.Holdings

[bizaro86]

16 hours ago, Stuart D said:

I think it’s useful to consider potential production capacity, because if oil ever hits $200 a barrel, every political leader will be doing everything possible to increase global output.

 

While current productive capacity versus current demand drives today’s price, the presence of untapped potential — for example, in countries like Venezuela — limits how long prices can remain elevated.

 

I guess I think potential production capacity is functionally infinite and no graph of someone's opinion of currently economic reserves is relevant to that situation. At $150 there's tons of economic oil everywhere - tens of thousands of stripper wells could re-start and wash rock for 1% oil cuts forever. The cure for high oil prices is high oil prices, and that hasn't changed.

 

 

[SharperDingaan]

Oil prices will rise if the USD depreciates (continued pricing in USD), and if demand outstrips supply (unlikely over time). Absent a US national defence response (jets cant fly when there is no gas); most would expect that the market supply/demand price will also be constrained as China both replaces diminishing OPEC+ supply (may even become a OPEC+ member), and increasingly becomes refiner to the world. $100 WTI is probably the limit, and mostly via USD depreciation.

 

Different for heavy oil. Also a lot of it, but Iranian/Venezuelan supply is not reliable, even if China were to take over operations via 'belt and road' initiatives. For reliability purposes, a US/Chinese refiner really needs a healthy supply of Canadian heavy, hence the new pipe.

 

Should peace continue to break out, war premiums will also dissipate and even $60 WTI will be hard to maintain.

 

SD 

Edited October 11, 2025 by SharperDingaan

[SharperDingaan]

On 9/17/2025 at 10:18 AM, SharperDingaan said:

You might want to use current conditions to lighten up .... one can always buy back in later.

SD 

 

Per the new China tariff; quite the market sell-off is expected on the next open - DJ down 1,100 points per the current futures market (2025-10-11, 10:30 AM EST). Have to think there is a good chance of the sell off being materially more once the Q32025 reporting season is over.  

 

With peace now in Gaza; WTI futures are now < USD 60.00 all the way out for the next 2 years+ to Jan-08; expect a stampede of gift horses over the coming year end tax season  Have to think that there is a good possibility that the tariffs drive WTI into the USD 55.00 range for a time, before it gets better.

https://oilprice.com/futures/wti/

 

While swing trades are often maligned, the reality is that they are a material part of an active buy and hold. A value investor is always buying sh1te (at a liquidity discount), to sell later on an emerging story. No different to garden composting; sh1te in at the top, compost out the bottom, and the more stink the better!  

 

GLTA

 

SD  

 

 

Edited October 11, 2025 by SharperDingaan

[fareastwarriors]

Oil Prices and News Big Oil forced to confront some tough choices as ‘monster profits’ fade into memory

[Dalal.Holdings]

Oil sell off was very predictable IMO outside of some black swan geopolitical explosions. I continue to avoid until I see some real pain in the sector