Energy Sector

[Pelagic]

Kind of funny, guess ship crews in the Strait are just as confused about whether it's open or not as everyone else.
 

 

[Fly]

This ship should change its name to LEEROYYY JENKINSSSS

 

 

[SharperDingaan]

5 hours ago, frommi said:

Does anybody think this thing ends this weekend, or do we see a major escalation again?

 

It could go either way; announcements are easy, implementation .... not so much.

There is also the problem of wide differences between the prices of paper and physical crude; front month contracts for both WTI and Brent settle next week.

 

SD

 

[Spekulatius]

1 hour ago, Fly said:

This ship should change its name to LEEROYYY JENKINSSSS

 

 

LOL, could be the cruise of a lifetime.

[bizaro86]

4 minutes ago, Spekulatius said:

LOL, could be the cruise of a lifetime.

 

They cancelled all the cruises - no passengers aboard.

[rogermunibond]

 

[LC]

Perhaps Bessent was referring to renewing his White Russian at the bar? 

[rogermunibond]

Jack McClendon (yes Aubrey's son) on Odd Lots talking a bit about service costs and wait and see attitude on supply response from US O&G.

 

https://metacast.app/podcast/odd-lots/BsS6SNUS/jack-mcclendon-on-why-it-s-so-hard-to-create-a-new-american-oil-boom/h2zlFWYM

 

Yeah, that's a good question. I mean, as I said, I hate to use round numbers, but that's just kind

of the world we live in. And I think if you saw a sustainable price above eighty over a prolong period, maybe call it four to eight months, I think you would see a supply response because there's you know, there are a lot of there are a lot of shale wells that work at eighty to ninety that don't work at fifty to sixty depending on who you talk to in the permean, you know, there's kind of anywhere between five to ten years of what you would call core inventory left or economic inventory left that obviously changed. That's obviously largely a function of price as well as geology. So a higher for longer price, I think you would, you would you would see a production response from the industry. Now, you know, do I think we're going to go back to the days of growing one to one and a half barrels a day? You know, I don't. I don't think so. But could you see, you know, could you see an era where you know, we're growing three hundred to five hundred thousand barrels a day? Yeah, I mean I think that that's possible. But as I said, you would you would need to see prices settle above eighty for a prolonged period of time, I think to kind of see a supply response, because even shale, which you know is kind of called a that's a that's a short, short supply response, right, that's about as short as short barrows. Yeah, it's about as short as it gets, right. I mean, you've got you know, but it's still it's still a four to six month response time, right. I mean, because a lot of the a lot of the rigs that you saw kind of start to roll off, you know, that's a that's a six month lag.

[SharperDingaan]

It isn't just price; there's so much of it around (shale) around, that it's also become very price elastic. Without additional heavy, it doesn't take much additional shale production (new drilling, imported, etc) to really hurt the numbers.  

 

Tertiary extraction (water flood, CO2 injection) is also not an option unless the field is consolidated and local geology supports it. Drilled Tier 2 rock isn't the greatest.

 

SD

 

[lnofeisone]

Anyone here looking at NFE bonds? 2026 are trading at $18 with potential to recover $10 if they liquidate and roughly $68 (lots of assumptions here) if they exit UK equivalent of C11. You can stress test the exit securities and give a 50% discount to common and 50% to preferred (which I think isn't reasonable because the new company will be able to easily service debt and preferred but for the sake of the argument) and you still come out at $30.

 

[Gregmal]

What’s strange is that there seems to be this conception that there’s a shortage. There’s not. Prices just “went up” over a short period of time. Except the levels of “price” we have now we’ve already had quite a few times; albeit with a bunch less commotion and drama around it. Reminds me a little of all the drama around the magical “4.5% 10 year”…which also proved to be largely just noise.

Edited April 20 by Gregmal

[Spekulatius]

There is a shortage in some countries like the Philippines and Thailand and other Asian states because they got almost all their crude from the Gulf.

The Philippines declared a national emergency due to energy shortages.

[Sweet]

There are shortage if you know where to look.  US and Canada are most immune.

[rogermunibond]

[Stuart D]

~10m bpd offline and oil isn’t >$250/bbl.

 

Really makes you question the oil investment thesis.

[Sweet]

Because there is a huge commercial and strategic buffer.  But yeh, don’t listen to the oil bros, they are always simping massive oil prices.  A war with Iran was their wet dream.

[SharperDingaan]

You might want to keep in mind that US denial is extreme at the moment.

The greatest oil shock in history .... yet new index records are routinely reset every month, and there is minimal expected inflation from this? Global reserves have already been drawn down in a big way, and it will take a while to substitute electricity for gasoline.

 

SD

  

 

 

Edited April 23 by SharperDingaan

[Stuart D]

 

From this chart +1b barrels (7,800mb pre-covid compared to 8,800mb peak covid), was enough to send oil to $0/bbl.

 

At some point the lower inventories will send prices way higher. Is that point -1b barrels? (6,800mb?). I have no idea.

[rogermunibond]

[Ulti]

How long till western Canada gets with the program?  Bloomberg 

 

[Warner]

WCS is priced in Hardisty. There is no end-user there.
Add 10 usd to transport to the Gulf coast and then 2-4 for quality discount. 73+13 is 86 USD to better compare. 
SCO is trading at a 10 USD premium to WTI. SCO is advantaged for diesel and Jet A1. CNQ, SU, and IMO will do well with the volume they export after their Edmonton refinery feedstock. 

[SharperDingaan]

11 hours ago, Warner said:

WCS is priced in Hardisty. There is no end-user there.
Add 10 usd to transport to the Gulf coast and then 2-4 for quality discount. 73+13 is 86 USD to better compare. 
SCO is trading at a 10 USD premium to WTI. SCO is advantaged for diesel and Jet A1. CNQ, SU, and IMO will do well with the volume they export after their Edmonton refinery feedstock. 

 

+1

 

At present, all west coast tidal water pipe is pretty much full; additional oil exports for the next year or so will primarily be via chemical addition (drag reduction), higher pressure (higher throughput), and harbour dredging (tanker loading > 70% capacity). New pipe construction (Sunrise), is roughly 18-24 months away from name plate delivery.

 

Rail isn't really viable until dredging is complete, and tankers can load at 100%; until then ... it's better to construct additional west coast tidewater storage that can be rented out. Thereafter, replacement and up-size of the existing 1957 TMP pipe (existing corridor), and development of new rail, pipe, and port (infrastructure, icebreaker's, etc.) at Churchill.

 

SD 

Edited April 24 by SharperDingaan

[rogermunibond]

Lol

 

[nafregnum]

I was working on selling off my OBE shares but after seeing this yesterday I'm tempted to hold a while (The YouTube video title is so clickbait stupid I hesitated to even post it here, sorry)
 

I haven't heard this University of Chicago professor of Political Science before, but the commentary seemed intelligent.  Of course we'll eventually find out how things in the Strait resolve ...

The main claim I found interesting was that Iran is not about to give Trump a face-saving way out of this mess: that they see it in their interests to drag things out to November if possible ... 

 

 

 

[SharperDingaan]

The war will continue until a political solution is found; ceasefires just temporarily 'ice' the problem, not resolve it. The underlying problems themselves can go on for decades; Palestine/Israel being a poster child.

 

The US fleet/air power is ineffective, and stuck in the Gulf until there is a solution. Everyday the midterms get closer and the predictions worse. The greatest energy supply shock in history gets worse.

 

The solution is 3rd party negotiation. It will take time, but the SOH/Red Sea will reopen, and all parties will not get what they wanted. Who won/lost is just spin for the home supporters; tradeable headlines.  

 

The conflict has been sold as the Trump/Netanyahu war on Iran; both of them old men, in need of the war continuing over the near term in order to remain in power. Either of them gets assassinated tomorrow, the war is over; turnabout. The mystery is whether the two Ceaser's get taken out by their own people, or somebody else. 

 

SD