Raymond James comments on oil market - Mar 21

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dan_s
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Raymond James comments on oil market - Mar 21

Post by dan_s »

Right at the outset, we want to acknowledge that macroeconomic demand-side risks have become front-and-center for the oil market, and rest assured, we will provide an update in the near future on the latest macro concerns. Today, though, we want to address a particular aspect of the supply side of the equation. One of the questions we hear is: why, at a time of healthy oil prices (even after the oil market’s recent selloff), are oil and gas companies drilling so much less than they did during the commodity boom of 2012-2014?

Based on our capital spending survey of 50 top oil and gas companies around the world, the final results of which will be published soon, 2022 was at approximately $360 billion, down 40% from the all-time high of $608 billion set in 2013.

The primary explanation is that, having been burned by two oil crashes within a decade, management teams have internalized long-standing shareholder demands for greater capital discipline. This point is applicable just about everywhere in the world.

A second factor — this one most prevalent in Europe — is that ESG funds are pressuring companies to “leave it in the ground”, i.e., produce less and therefore drill less.

Today we will zoom in on a third factor, which is more below-the-radar. The fact of the matter is that the industry has lost people, including some of the most highly skilled ones. Even if (hypothetically) companies wanted to get back to the levels of capital spending a decade ago, it would be practically impossible due to insufficient labor. As discussed in the Relaunching Coverage of Oilfield Services report from December 2022, worker availability represents a constraint for many job functions in the industry. Case in point: petroleum engineers.
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MY TAKE: IEA's demand forecast is too low and oil supply growth will be very slow to return. So, in just a few months the global oil market will be very tight.
Dan Steffens
Energy Prospectus Group
dan_s
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Re: Raymond James comments on oil market - Mar 21

Post by dan_s »

OilPrice.com

Oil Market Fundamentals Push Oil Prices Higher

Having survived the macro mayhem of last week, oil prices have marginally rebounded this week, with ICE Brent climbing toward $75 per barrel again. The perennial bulls have started to discuss the commodity supercycle again, while the UN published yet another report of a “ticking climate bomb”. For a second it might even feel like a return to the idyllic past when only supply and demand mattered. However, that feeling will likely be a brief one as the Fed starts its two-day meeting on Tuesday, potentially creating another downside factor for prices.

US Oil Exports Hit Record Highs. US crude exports are set for an all-time high this month, with outflows to Europe averaging 2.1 million b/d so far as wide discounts for the WTI benchmark and a significantly lower domestic refining pull compel oil producers to export as much as they can.

As French strikes are moving into their third week and at least four refineries are winding down operations due to blocked ports and overflowing stocks, Europe’s diesel woes are making a counter-seasonal comeback.

- French refining, recording 990,000 b/d in the last reported month of January 2023, is heavily geared towards diesel, but cannot meet the country’s hefty 850,000 b/d demand for the product.

- Consequently, the spread between the prompt and second month of Europe’s diesel benchmark contract, the ICE low-sulfur diesel, rose to a premium of $35 per barrel, the highest since November 2022.

- France might be the epicenter of the diesel squeeze because the blockage of import terminals across the country is limiting diesel importers from buying products, with diesel imports falling 50% this month compared to February.
Dan Steffens
Energy Prospectus Group
ChuckGeb
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Re: Raymond James comments on oil market - Mar 21

Post by ChuckGeb »

As to RJ comments from above and as a Houston CPA with over 40 years ago I have many geologists, petrol engineers , geophysicists, collection and oil svc execs as clients/and or friends. Every single one of them is now retired. Across the board they speak of the bright young grads coming in to take their places. I have heard many times that these young folks have no idea what an oil field looks like. For now the majority of them assume productive roles in the manufacturing phase of oil & gas development. The main concern is what happens when the tier 1 and tier 2 acreage is all drilled up. Time for a American Energy First resurgence.
Fraser921
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Re: Raymond James comments on oil market - Mar 21

Post by Fraser921 »

Just as worrisome, is our leaders have no clue and they are now getting up to speed on banking regulations
ChuckGeb
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Re: Raymond James comments on oil market - Mar 21

Post by ChuckGeb »

Like Nancy Pelosi says "We have to pass the legislation so we can find out what's in it!" Heard Barry Knapp say yesterday (or Monday) that the thing E Warren like to speak the most about is the thing she knows so little about. A financial crisis clearly exposes the morons we have in this fine Nation's capitol.
JBtheBrit
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Re: Raymond James comments on oil market - Mar 21

Post by JBtheBrit »

Talking of morons.... what a joke today.... Powell saying one thing and Yellen the opposite an hour or so later. What a cluster. I was in NY in the banking industry in 08/09... for all his faults, Hank Paulson made the right and brave calls and saved what would have been a horrendous collapse.... sadly the clowns there now are sorely missing someone with his business smarts (rather than Govn / theoretical background).
Fraser921
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Re: Raymond James comments on oil market - Mar 21

Post by Fraser921 »

and then there is this

https://content.clusterx.com/cluster-article/322-quantum-energy-us-shale-drilling-drop-20-current-energy-prices
ChuckGeb
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Joined: Thu Nov 21, 2013 2:46 pm

Re: Raymond James comments on oil market - Mar 21

Post by ChuckGeb »

Lots of potential Sweet 16 “running room” will become available at accretive prices this year. Lets our guys can beat the CCP to the data rooms. There will be better days ahead for our guys assuming their ships don’t sink in contagion infested seas.
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