VBIN's oil stock thread.

[fenders53]

For sure lol. There will be more days (months) like this by spring, even though I think it will consolidate soon. I am always greedy and wish I had bought more of anything that's run but not chasing works out over time.

[EricL]

https://www.wealthprofessional.ca/investments/alternative-investments/why-oil-is-an-incredibly-target-rich-environment-to-create-alpha/363533

Quote:...But, he said there’s a real lack of knowledge about how oil is used – and the likely timeline for alternatives to displace oil.

“Let’s look at how oil is used,” he told Wealth Professional. “60% is transportation; 40% is not. Transportation is the low-hanging fruit. When you talk about electric cars, that’s 27% of oil demand. There are 1.3 billion internal combustion engines to displace. That number continues to grow as the world’s population grows and living standards rise. Last year, electric car sales were five million and it will be ramping up. But, how quickly does have million per annum have to scale to displace 1.3 billion?

“The other thing is heavy hauling trucks, which will have to use hydrogen instead of oil. Well, you’re looking at the mid-2040s before you can produce enough hydrogen for them. That will require hundreds of billions of dollars of investment to displace global diesel.
“And there’s jet fuel at eight million barrels per day. They’re talking about renewable jet fuel that uses cow tallow and algae and a while bunch of wonderful things. It’s not profitable and, even if it was, you’re looking at a timeline measured in decades. So, that’s the easy stuff: that’s 60% of oil demand. You don’t reach critical mass until at least two decades from now.

“The other 40% are things like petrochemicals, plastics, lubricants, cement, agriculture – and all of those things grow as the world’s population grows. The challenge with that is the global population is going to grow by over two billion people between now and 2050, and we’re supposed to hit net zero. The only way you can do that is by lowering your living standards because the higher the living standard, the more we consume.

"The average person in North American consumes over 20 barrels; the average person in the world consumes five barrels every year. So, as global living standards are rising, and populations are growing, that oil intensity is rising, it is not falling. Only the most energy ignorant could think that we will not be using oil for the foreseeable future. You and I will be using oil for the rest of our lifetimes.”

[fenders53]

For a few years now I have thought the inflection point would come when renewables could entirely consume the new growth in world oil consumption. Oil will be heavily used the rest of my life but it's still an important transition. That may not be too many years off, but I get the impression some politicians thought it could be two years ago. There is no amount of regulation and money in the world to defy the time it takes for tech advancement.

[EricL]

And there goes $90!

   

[vbin]

Its at $92 today. sold half of my positions. Still have decent size in oil. On the way to $100 may be.

[EricL]

Seems to me the drillers and suppliers are the next way to play the oil boom.

I started a position in HP last week. They had a decent earnings report and stated that pricing is starting to pick up.

NOV, SLB, HAL are a few other names, or simply buy OIH if you want to keep it simple.

[fenders53]

I am glad your patience paid off with OXY. That was a horror movie for awhile. It was obvious they could produce but $40 oil was not going to get that debt paid.

[vbin]

Yeah, but they were also trading at too much discount. In a hindsight( hindsight is always easy), I am kicking myself for not buying more oxy at $6. Eric thank you brining suppliers and drillers. I understand somewhat also looks like more capex coming which is good for suppliers and drillers. would appreciate more insight from you and Fenders on suppliers and drillers.

[fenders53]

OXY was that cheap for a reason. Only the majors were safe from financial destruction if the recovery took an extra year to begin.

[fenders53]

(02-05-2022, 02:01 PM)EricL Wrote: Seems to me the drillers and suppliers are the next way to play the oil boom.

I started a position in HP last week. They had a decent earnings report and stated that pricing is starting to pick up.

NOV, SLB, HAL are a few other names, or simply buy OIH if you want to keep it simple.

I haven't looked at their finances for years.  After this I might grab some SDRLv3 

Oil is getting a little FOMO for FEB.  I wish it would consolidate for a month.  We don't need to break fracking records this summer.

[vbin]

(02-05-2022, 04:27 PM)fenders53 Wrote: OXY was that cheap for a reason. Only the majors were safe from financial destruction if the recovery took an extra year to begin.

Yes it was cheap for a reason. But market is pendulum in short run, get too sentimental in both directions and always overshoots. You know this better than me probably. The stock was trading at deep discounts companies to book value and assets they hold.

[fenders53]

It was priced for bankruptcy. Scary time in oil.