The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Worldwide jet fuel consumption is 7m bbls/day alone.
Most figures I see are for about 95% reduction in flights.
Now consider that France or UK uses about 1.6m bbl/day, mostly for transport. But there is very little transport happening right now.
So the demand loss is WAY more than 9m bbls/day, and 30m sounds far more realistic.
Especially as the USA is a huge consumer of gasoline and jet fuel and both are severely curtailed at the moment.
Eased yes, lifted no.
Spain, France and Italy all still very much in lockdown.
If the US starts to ease now, they will have a very big problem on their hands.
Dec 21 Brent is 41$/bbl. Buy a load of that and you will be a millionaire in 6 months time.
Guaranteed.......
daytrade, yes but they will extend again. They always do. They can't announce more than 2 weeks extra at a time or people will freak out.
Would be good to know how much of TLW's oil is sold on term contracts (the premium or discount to the Brent marker will be 'decent') or spot, where the discount will be nasty (due to poor state of prompt market).
Anyone have that info?
Er, the markets are closed no?
Good post.
I would however question whether the industry has seen significant under investment since 2016. Not in the USA. They have powered ahead with shale production and output hit a new high in Nov 19 and is (was!) forecast to be even higher in 2020.
But yes, they are in trouble as the cost of production is too high for today's market. It works at 50$ plus, not at 25.
So there will be many bankruptcies and shut-ins, although you would hope that at least some had the foresight to hedge production when prices were above 60$.
Another point of note is that electricity production is now cheaper with green sources than with coal and potentially gas.
So that removes another source of oil consumption.
My view is that the next month or so with be messy as the excess is soaked up, then a steady rise to 35 ish.
With all the oil in storage (record amounts) the market cannot spike until all that is cleared away, so I see no way oil sustains above 40 this year. The futures market would agree.
Spain has a huge tourist market that will NOT be open this summer.
What does that tell you for jet fuel consumption in Europe, and most likely worldwide?
And even just one more month of very low oil consumption from Spain will hurt.
Supposedly a country that was 'getting back to work' and was 'well into the deescalation phase' has just extended lockdwon till 9th May.
And this is TOTAL, severe lockdown.
Anyone thinking this is going to blow over quickly is out of their mind.
Supposedly a country that was 'getting back to work' and was 'well into the deescalation phase' has just extended lockdwon till 9th May.
And this is TOTAL, severe lockdown.
Anyone thinking this is going to blow over quickly is out of their mind.
Why is it that mindless ramping like this;
you’ll be rewarded for sure from this sp level it’s up up and more up back to 30/40/50/60 and in time £1+ :-)
is acceptable and cheered by all and sundry, whereas anyone pointing out any possible danger areas is immediately hung drawn and quartered?
Chill out!
Everyone's entitled to their opinion. We have seen it fall over 15% in a day based on nothing, so it's a very volatile stock at this point.
A rise to low 20's is just as possible as a fall to low teens. Thinking this stock is now somehow immune to a drop is asking for trouble IMO.
Would agree with MiddleEast more than RiskReep. There is still a very bumpy road ahead. The US is in a very dangerous position, and if they start dropping their guard now, it will get chaotic very quickly. Trump is an idito making all the wrong decisions. I anticipate a serious drop in the Dow at some point next week.
Oil is not out of the woods yet either. Short term is still nasty. Lots of cargoes, very little space, demand just not there and won't be for a while, refineries idling or shutdown. Longer term looks better as oil fields shut down or in, and supply starts to be reduced. Don't forget though that it costs the Saudis 3$ a bbl to produce.....
So in essence, I see some potential in TLW, but would only be tempted in if it became 'cheap' i.e. low teens. If I miss it, so be it.
Well I guess I'm going against my own advice here as I don't know much about medicine or chemistry, but it just seemed kind of obvious to me that pharmas were kind of 'COVID' proof. Even if they don't come up with a vaccine or test, they are still selling plenty of paracetamol and handwash.....I think the trick is to buy several, not just focus on one. And play it safe by going for the big boys, unless you want sleepless nights....
I'm curious, what's wrong with pharmas?
I started selling the FTSE and CAC in early February, but hedged myself by buying pharma.
At first the pharma performed as badly as everything else, but in recent days (about the last 10) they have done very well, just surprised it took so long for the market to realize that the solution to this crisis lay within pharma companies.
Oil by contrast is a far riskier bet.
coffeecups - each to their own, and i guess the longer you hold the share without looking, the less you need to know.
But many on this board are actively discussing the oil price, some I feel, with little knowledge of how the market actually works.
For example I wouldn't sleep at night if I bought (or shorted) Glencore, Rio Tinto etc. as I know little about mining, copper, platinum etc.
If someone thinks oil will be at $100 by year end, he simply has to buy Dec Brent at 37$ and make himself a fortune.
Unfortunately it's not as easy as that.
No probs.
I honestly think everyone into this share should have at least a basic understanding of how oil markets work.
For example, I wouldn't invest in a horse breeding company as I know nothing about it, even if I could see the company stats looked OK.
Still debating whether or not to take a punt on this....perhaps if there is some weakness next week.
Anyway, does anyone here know what type of sales contracts Tullow has?
i.e. is all their production presold? Or do they have some to sell spot?
If the latter, it makes sense to reduce production as much as possible, simply not sell, and collect the money from the hedges they put on.
However, if they are contractually obliged to sell then they have no choice.......although most contract s have a +/-10% flexibility, so they could minimize.