Investors are moving money into the Energy Sector - Oct 11

[dan_s]

Note from HFI Research this afternoon:

The oil market is starting to come out of its apathy. Thanks to the geopolitical conflicts between Iran and Israel, financial fund flows are no longer overwhelmingly bearish. On the same token, physical oil market conditions have meaningfully improved and Q4 global oil market balances are surprising to the bull side. In particular, refined product storage draws have been healthy, resulting in higher refining margins in the future. This should propel crude prices higher and keep them between $75 to $80/bbl WTI.

But taking a step back and looking at the broader energy sector, I think we are on the cusp of a major move higher in energy stocks...
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As I have posted here several times: This feels like 2010. That year the Sweet 16 was up just low single digits until mid-October and then it finished the year up 54%; most of those gains in Q4.

[Cliff_N]

Dan, I am not feeling the love! Another beat down today. Looks like the outlook in China put the dump on Energy. Other reasons?

[dan_s]

Yes, today the paper traders are more focused on lower oil demand in China and ignoring the sanctions against Iran. Tomorrow we may see the reverse.
Hang tough. Q3 results should be good for all 16 companies.

[Fraser921]

What happens if it isn’t papers traders?

This just in

The possibility that Saudi Arabia will "open the floodgates" on its oil production has increased in recent weeks, according to a new report from Capital Economics.

"Although the focus in the oil market has shifted to geopolitical risks and potential short-term supply disruptions, just as importantly, we think the possibility that Saudi Arabia could open the floodgates has increased in recent weeks alongside reports of deteriorating cohesion among OPEC+ members," Capital Economics climate and commodities economist Kieran Tompkins wrote, adding the OPEC+ meeting scheduled for December 1 "could be a potential flashpoint."


Any half decent economist knows if supply exceeds demand prices will fall. Since prices HAVE fallen means there is plenty of supply for given demand.

Well known Paul Sankey says potential is $50 oil.

You have Israel on doorstep of taking out Iran energy infrastructure and oil falls? What that say?

I humbly suggest you read other experts rather than perma bulls. If you rank 89 piles of poop from 1 to 89 at the end of the day you still have 89 piles of poop.

Perma bulls will be correct sooner or later. Can you stay solvent until then? Vtle 60-28 for example

I can’t wait for the gassers to report q3 numbers. No one is making good money with sub 3 ng

[Petroleum economist]

Bill,

Your "well-known Paul Sankey", has the tendency to change his opinion on oil price quite a lot. His good right of course.

August 2022 — Oil Prices at $100 'Easy' Argument Starting in 2023, Sankey Says · Crude releases from US stockpile have put cap on price gains.
December 2023: “Barring a major geopolitical escalation resulting in a large supply outage—which cannot be discounted—, oil prices are unlikely to reach $100 a barrel in 2024”
March 2024: 'Go, go, go' into summer driving season: veteran oil analyst Paul Sankey's bullish oil forecast.
September 2024: 'Very bearish on oil', analyst Paul Sankey sees more pain ahead for crude oil market ;
October 2024: Paul Sankey of Sankey Research joins Jack Farley on Monetary Matters to share why he thinks the price of oil is headed to as low as $50/bbl.

Statements such as "The possibility that Saudi....." or "Says potential is $50 oil..." mean nothing to me.

Qouting others is easy. Where do YOU think the oil price is heading in 2025 after the Middle East war premium is running out of the oil price today?
I still believe in oil prices in 2025 between $ 70-75/bbl.