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Home > Energy Week > Episode 85 - WSJ on oil investment | Saudi Aramco delays IPO | Dean Foreman
Podcast: Energy Week
Episode:

Episode 85 - WSJ on oil investment | Saudi Aramco delays IPO | Dean Foreman
Category: Government & Organizations
Duration: 00:52:20
Publish Date: 2019-10-22 08:42:32
Description: Oil Prices Set to Climb? Investors Aren’t Betting On It
https://www.wsj.com/articles/oil-prices-set-to-climb-investors-arent-betting-on-it-11571569200
Armageddon coming to oil and gas industry? There are other ways for producers to make money (spare capacity in pipelines, etc.) that perhaps the high up investors in banks aren’t looking at.
Wall Street incentivized producers to prioritize drilling expansion over profits. Now the incentives are flipped and producers are trying to comply.
Is there any forethought from investors on future price of oil? Does Wall Street think prices will soft at $55 for awhile and thats why they are presuming companies to make money? Or is it just a right now kind of strategy?

Tesla speeds toward unpleasant earnings turn, Boeing faces tough questions
https://www.marketwatch.com/story/tesla-speeds-toward-unpleasant-earnings-turn-boeing-faces-tough-questions-2019-10-20
Investors don’t seem to have very high hopes for Tesla’s reported earnings.

Saudi Arabia plans bumper Aramco IPO, relying on easy loans and rich locals
https://www.reuters.com/article/us-saudi-aramco-ipo/saudi-arabia-plans-bumper-aramco-ipo-relying-on-easy-loans-and-rich-locals-idUSKBN1WW1JB
IPO delay - shows that Saudi Arabia has confidence to get a higher valuation

Aramco IPO Delay Shows Saudi Confidence
https://www.forbes.com/sites/ellenrwald/2019/10/18/aramco-ipo-delay-shows-saudi-confidence/#184dfe294002

Russia says it missed oil-deal target due to rise in gas condensate output
https://www.reuters.com/article/us-oil-russia-output/russia-says-it-missed-oil-deal-target-due-to-rise-in-gas-condensate-output-idUSKBN1WZ07A

https://www.cnbc.com/video/2019/10/19/russia-can-withstand-a-sharp-drop-in-oil-prices-finance-minister-says.html?

Dr. Dean Foreman and the API Monthly Statistical Report
- total inventories increased year on year for the 11th consecutive month - not good for oil prices?
- record high in terms of demand, record exports yet inventories still built up so production still really strong
- rig counts down - DUCs are leaving the pond and flying south? Or are they? As rigs come off the market, what’s the production lag? When will production turn over? Timeline has changed and shorter deliverability has gotten shorter. Days to weeks not months.
- Excess pipeline capacity now - will that impact production as producers get more on the margin with transportation?
- Keep crude price differentials in mind. Brent to LA light crude differential is only about $2/barrel compared to Brent-WTI differential which is still $5-$6/barrel.
- As pipelines continue to come online (and there are still more to come!) the price differential between Brent and WTI will continue to decline.
- Jet fuel demand downturn - some pullback usually in September as summer travel season ends. This drop is exceptional. Largest drop since September 2001. Could be indicative of broader economic change.
- Perhaps high demand this summer was a result of airlines overbuying jet fuel because crude prices were lower and they thought they might go higher and were buying to store?
- Distillate Economic Indicator - what we saw in 2008 was seriously indicative of a recession. Not seeing that low a plunge here. Right now its anemic but moved sideways. The sky isn’t falling yet.
- Petroleum exports and imports: export record in crude+product exports. Indicates that global demand for crude oil isn’t tanking. US is supplying all of the growth in global demand.
- What really changed month/month is on import side. Drop of 1 million bpd in crude oil imports. Lowest crude oil imports in a long time. US is net exporter of total energy for first time in 60 years!

Our earlier episode on the Aramco IPO - https://www.spreaker.com/user/9550540/energy-week-77

API Monthly Statistical Report - https://www.api.org/products-and-services/statistics/api-monthly-statistical-report
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