Energy Prospectus

John Johnson:

“Around 11:41 EST this post hit the wires: “Saudi Arabia has signaled that it is unwilling to prop up the oil market with further supply cuts and can sustain prolonged period of low oil prices, Reuters reports, citing five unidentified sources with knowledge of the matter.”

WTI opened Monday’s session at 6 PM on Sunday, April 25, at its high for the week of $63.49, popped to $63.92, and went straight down $6/barrel for 3 sessions. It doesn’t take a genius to conclude KSA knew what they were going to tell the world this morning. You can’t call foul on someone like MBS trading inside information when they themselves are the insiders.

However, it is fair warning to all who trade oil: there will be more of this, and nothing about it is new. When stabilizing forces say they are going to stop doing it, the market will become unstable. Producers are going to start trading oil, not just selling oil. It’s a trading game now, and Russia, KSA, and China know how to trade.”

An excerpt from Doomberg's piece today which is one of his best, recounting his three recent calls on the electrical grid vulnerability with renewables, the Canadian elections and impact on US relations, and the Saudi Surrender which partially follows:

President Trump has made no secret of his intent to flood the market with cheap energy to drive down the price of oil. He ran on a platform of American energy dominance, routinely boasts about affordable US gasoline on social media, and shows a keen understanding of the role abundant energy plays in catalyzing his envisioned manufacturing renaissance. The real mystery is why so many energy investors remain hesitant to believe him—or continue to underestimate his influence on markets.
Such reticence was the motivation behind “Punctuated Equilibrium,” which captured our initial response to the unexpected announcement that Saudi Arabia would play ball with Trump—a development that sent oil prices tumbling to multi-year lows. Here’s a key excerpt:
“The timing of OPEC’s surrender hints at its likely irreversibility. The US, Russia, and Saudi Arabia—the three largest hydrocarbon producers in the world—have been engaged in high-stakes diplomacy since the outset of Trump’s return to office. The headline justification for this flurry of activity has been the war in Ukraine, but history teaches that punctuating decisions like these are often cloaked in misdirection. Trump wants $50 oil and he looks likely to get it. What has been given in return is not yet known, but OPEC’s decision to pour oil on Thursday’s burning tape hardly feels like a coincidence.”

Maria had John Catsimatidis on her show about a month ago and he calmly prediccted oil going to $55 which at the time was stunning. However, this guy from the New York scene while not an oil guy seems to hasve a seat at the table where the big decisions are made and put into action. His calls have been right on. There are a lot of things going on behind the scenes that we will never know about but over time learn to read the signals from those who prove to know the less the obvious signs to regular folks.

Strap in. i think natural gas, technology and strong balance sheets will carry us to the next upcycle in oil but me thinks its going to be bumpy.