VBIN's oil stock thread.

[fenders53]

(02-04-2021, 05:07 PM)vbin Wrote:

(02-04-2021, 04:17 PM)fenders53 Wrote:

(02-04-2021, 03:57 PM)vbin Wrote:

(02-03-2021, 09:13 AM)EricL Wrote: The last time exploration budgets were this low was '05/'06, which precluded the price spike to $140 in 2008.

And the 2021 budgets are even lower than what's shown because they've been cut more in recent quarters.

Thank you for sharing this Eric. Fenders this is a cyclical commodity, and we are at the bottom or near bottom. Guess what's next int eh cycle?

The bottom was negative something.  I'm not certain where we are TBH. Good luck.

That was an market anomaly.

Yes, and so is $100 oil over the past 50 years.  I stand firmly behind my previous statement that I really don't know where oil prices are going.  I've been careful to label my near-term targets as guesses because that is exactly what they are.

[vbin]

Despite crud drawdown, gasoline inventories are up so that's a red flag. Need to watch that come down post Feb.

[fenders53]

(02-06-2021, 11:24 AM)vbin Wrote: Despite crud drawdown, gasoline inventories are up so that's a red flag. Need to watch that come down post Feb.

Probably a short-term demand issue.  Maybe that Covid thingie?  The virus surge will cool off in much of the world by spring.  More people will vacation this year and most industries will start ramping back up.  Probably mid 2022 before mostly back to normal though.  I hoped that was wrong, but it was the prediction from about day one by people medically qualified to make such a prediction.  I am curious where oil prices go the next month or so.  Probably sideways with no big news.  Just another guess.   

I just know my XOM put expired worthless and ENB is doing OK.  

[vbin]

My xle outs the same and calls are up. Xle is bright in bear nor bull terrerory right now but it's moving towards bull terrerory and trying to break MAs.

[ken-do-nim]

With electric cars about to surge (so I read), I've been staying away from oil stocks. Does anybody have reason to think they are going to do well for decades to come?

[vbin]

Energy demand only going up. EV can't fulfil. nice narrative has been built by folks like Cathy woods. EV too expensive for masses to adopt. What happens to all the cars on the roads, buses, aircrafts, shipra, agri, most electricity generated from coal, oil, gas, military vehicles. Trains(diesel engines).

[fenders53]

My thesis is that the move to green doesn't reduce demand for fossil fuels but it is obviously taking a bite out of future growth. It's actually reality and not a thesis anymore. I believe all my green UTEs are at 20% renewables and it happened twice as fast as most projected.

IMO EV is not an immediate threat to oil demand. Auto manufacturers are just now getting serious about EV. World politics are going to make it happen and they don't care if the financial math works yet.

If oil producers don't grow production going forward it looks like a profitable business for decades. There might even be a price spike soon. Just what they need to justify ramping up EV investment.

[EricL]

I expect EV's to stabilize or reduce oil demand growth in the US and Europe, but I don't think they will be enough to offset demand growth in India and China.

As those countries continue to develop, their 2.7 billion people will use more oil/energy per capita just as all growing economies in the last 120 years have. 

   

Over the last 20 years, US and European consumption has flat-lined or fallen slightly, while India's has grown by 130%, and China by 192%.

Combined, they have nearly 8.5 times the population of the US. As their numbers grow, the US and European numbers become less relevant. 

Also keep in mind India and China are still trying to get electricity for everyone for everyday living, they don't have near the capacity to use it for transportation.

[vbin]

https://finance.yahoo.com/news/hedge-fun...22494.html

[fenders53]

So Shell has predicted they have seen their peak production pre-pandemic. BP and TOT perhaps heading in that direction. This is thought provoking for me because it seems early.

-Perhaps it's a good long-term decision. We can have that conversation but it will be pure speculation for years. All the charts in the world can't solve all the variables. It may be their near-term direction anyway as European companies. Their hand is getting forced in many ways. It's possible they could become legitimate renewables players. Seems it would have been easier if they started when they had solid FCF, but nobody predicted a 2020 pandemic. I suppose they could cut exploration spending WAY back for a few years and ride the cash cow for dividends and fund green projects. That seems like a likely course of action if your intent is to produce a little less oil every year.

-Seems very bullish for the US majors and OPEC+ in the short to midterm. They can drill a little more with less chance of oversupply. Somebody is going to drill because that's what they do.

-I think RDS and BP survive as smaller energy companies in the end. I think they will sell some fossil fuels for the rest of my life. I won't be investing in them anytime soon. I'll stick with experienced renewables companies. I could see a merger between major oil and renewables when the green money spigot is shut or tapered off for a few years. Politics is politics and eventually other programs will seem more important. Not soon though.

P.S. I think they should have taken out coal completely starting a few years ago. Let West Virginians make solar panels and windmill parts. I think we will learn we are 10-20 years early trying to kill natural gas off economically.

[EricL]

Saudi oil inventories fell to 140.16 MMbbls in December. That is the lowest inventory since 2002 (19 years).
 
 
 
How does their inventory continue to decline if they are holding back significant production?
 
Will inventory build by 1 MMbbls/d in Feb/Mar as a result of their unilateral cut?
 
What happens when the market demands the 4 MMbbls/d production they are purportedly holding back to be supplied again? Is it there? How quickly can they ramp?

[fenders53]

I think they will game a spike. Last year they clearly tried to hurt US oil. It appears we will do that to ourselves for the next few years. They have to be liking how this is playing out. I didn't see anybody predicting oil prices this high in FEB. I was thinking this would happen in July. I think our foreign policy decisions the next six months might be a big deal for oil in the midterm. Like 6-12 months from now.

In any event this will be a blessing for XOM. They were going to have to make more bad decisions to save that div and now they should be much better off for at least a few quarters. They need to turn a profit some quarter soon and this should be it. I'm just here to torment you and VBIN, not wish for you to lose money.