I have summarized below excerpts from David Hay's excellent piece in yesterday's edition of Making Hay. The basic message is that the market dynamics enumerated below may create a very compelling case for contrarian investors to getting ready to buy into year end tax selling. despite ever increasing negative economic news. Just another take on what Dan has been telling us.
It is almost sure we are going to have a recession [soon]. It is quite clear the first two quarters of next year will show that.” -Mario Draghi, former head of the European Central Bank
“The Permian basin is depleting faster than we thought.” -Natural resource experts Goehring & Rozencwajg
Oil inventories remain scary low.
Drilled, Uncompleted (DUC) wells look as depleted as the Strategic Petroleum Reserve these days.
This has the potential to be a serious problem based on the continuing decline in working drilling rigs
Mounting evidence that the Great Green Energy Transition is in trouble
Europe is already in recession and the U.S. may not be far behind
It has been highly rewarding to buy oil after it’s gotten crunched in recent years.
It will surprise me if demand falls by one million bpd, even if the U.S. does .....experience a hard landing.
One of the best ways to make money in a geopolitically precarious world, ...is to buy energy when it gets thumped.
A falling rig count combined with plunging Drilled/Uncompleted Wells and the inventory levels show ...totally inconsistent with oil in the 70s.
Triple digits remain my oil price target.
Most energy stocks have been weak this year. ...they could be tax-loss selling candidates.
Be prepared to (purchase).....if they slide further over the next month or so. If they do, that should make the rebound even more lucrative. In fact,
I’ll go out on my usual cracking limb and say that could be this year’s Christmas present to contrarians.
Friday Haymaker- Salient Points
Re: Friday Haymaker- Salient Points
As I stressed in today's podcast at this link: https://www.youtube.com/watch?v=3LTIbWfV-wo
The IEA has been telling the world for months that demand for oil exceeds supply. OECD Petroleum Inventories are much lower than normal and continue to fall. If they keep falling, oil might need to go over $120/barrel to balance the oil market.
The next IEA "Oil Market Report" will come out this coming week. You can read the highlights at his link:
https://www.iea.org/analysis?type=report&q=Oil%20Market%20Report
Predictions of a recession have been with us for over a year. It is the most advertised recession in history.
Unless we have a SIGNIFICANT RECESSION, it will not lower oil demand. Demand has bounced back quickly after ALL RECESSIONS. Demand for oil is tied directly to human population growth, which is going up more than 200,000 PER DAY.
The IEA has been telling the world for months that demand for oil exceeds supply. OECD Petroleum Inventories are much lower than normal and continue to fall. If they keep falling, oil might need to go over $120/barrel to balance the oil market.
The next IEA "Oil Market Report" will come out this coming week. You can read the highlights at his link:
https://www.iea.org/analysis?type=report&q=Oil%20Market%20Report
Predictions of a recession have been with us for over a year. It is the most advertised recession in history.
Unless we have a SIGNIFICANT RECESSION, it will not lower oil demand. Demand has bounced back quickly after ALL RECESSIONS. Demand for oil is tied directly to human population growth, which is going up more than 200,000 PER DAY.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group