Newsletter

When Jeff Currie says that $4 or $5 gasoline is not a problem because the economy is strong, I’m sure he’s right for Goldman Sachs’ clients. I doubt he talks to the second economy in the UK where he works. I wonder if his company isn’t already shorting oil.

Investors demanded fiscal & growth discipline from tight oil. Tight oil delivered but investors are uninterested because there’s no growth story. Bait-and-switch.

I don’t know if our leaders are incapable of understanding or simply unwilling to publicly state the obvious: significant decarbonization without radical changes in global living standards and population is delusional.

We’re near the end of a price increase that began at less than zero back to the where prices were before the pandemic. That’s a recovery not a rally.

The obvious conclusions from this crisis are that 27% reliance on wind is a big risk and that Texas’s unregulated electric grid system is a train wreck.

2020 has been the most tumultuous year for oil markets and prices of  my career. Despite that, my calls have been quite accurate.

It is unlikely that the tight oil business will recover from its 2020 body blow. Saudi Arabia’s decision to cut production by 1 mmb/d tacitly acknowledges that it is unconcerned that higher prices will result in a resurgence of U.S. output.

The time from well start to enough production to offset base decline is almost a year—six times EIA’s estimate. It is nearly impossible for U.S. production to be flat at 11 mmb/d for 2021.

What the yield curve tells me is that there is little likelihood that oil prices will increase to much above $45 on a sustained basis until the market changes its sense of supply urgency. Until that happens, the yield curve provides good opportunities to play the excursions.

Missing barrels are inherent in the supply-demand accounting method that ignores inventory and only considers present period transactions.

What concerns me most is what will happen when markets realize that U.S. oil production will fall to levels not seen since the early 2000s.

Oil prices are stalled in the low $40s for WTi and mid-$40s for Brent. Producer behavior indicates that prices need to be lower.