Member Info for Boyobach

It’s sometimes useful to think about Shel’s sp as basically responding to two things: OP and Everything Else.
Today OP was marginally up on yesterday’s LSE close but the ‘other stuff’ dragged Shel down by about 45p. Here’s the comparison since last Friday: https://invst.ly/-m98u

I don't think £20 looks likely unless OP drops to $68, Char . Just keep an eye on Brent. $75+ is good for everyone: not too cheap and not too dear. Cheap oil is bad for green transition and expensive oil is bad for economic recovery.

You are quite right about the Fed. They refused to accept that their COVID injection of cash triggered inflation which occurred, text-book style, after about two years. The BoE made much the same schoolboy error and we’re all paying the price now. The levers at their disposal are crude and have a delayed action with greater consequences eventually than they anticipate. Higher interest rates now - with inflation already falling along with energy prices- would seems like a bad idea.

£20 looking less of a risk since last Friday as Shel has stayed ahead of Brent during trading hours, reaching 31x OP which is about the best it has achieved for the last couple of years. However, Brent caught up with it this afternoon, so the result?
https://invst.ly/-lw6u
Shel and Brent were level pegging again at the close on a reduced ratio near 30.3x

I see PhatStyle has posted under his headline ‘Results will show huge losses’
I don’t see the content - it’s filtered’ - for good reason:
Here’s Phatstyle posting here on 27th October:
‘Just had an email to confirm JV’s signatures will be in q4, so once it lands this share will rocket’
Really?
In February, he told me ‘You obviously have no clue what’s going on here’.
Well, what are the clues here today? He plainly hasn’t entirely walked away from his interest in CWR’s sp movements and how his posts might influence them.
I know what that suggests to me.

Having topped back up after selling 50% of my holding near £26, I added more as it dropped below 2170 last week. So when it ran rather hot against OP today (getting back to 31x Brent ) I decided to take that quick ‘bonus’ profit:
https://invst.ly/-lixo

I’m sure it will return to previous highs, although its relative dependency on OP does not make it easy to predict when. I think a return to $86 Brent could be a while off, though I do anticipate supply tightening over the next few months. And if supply does not tighten and WTI falls much below $70 then I believe the US SPR needs to be built back up, which will absorb some of the excess: https://www.reuters.com/business/energy/us-sell-26-mln-bbls-oil-reserves-mandated-by-congress-2023-02-13/

The results on 28th Feb have effectively knocked a third off the sp to date and it has since levelled out for the last week despite all the market turmoil. The Retail statement next week may trigger a further significant move: https://invst.ly/-ljad
It’s ‘wait and see’ time, meanwhile.
I did add a few speculatively today as, from this 15' trading view, it seems to be moving sideways out of the recent downward trend - all assuming that next week's news is adequately 'priced in' , of course.

Just an update on that last chart: https://invst.ly/-lixo

Shel continued to strengthen against Brent during the day, getting up to 31p per $1/bbl before then dropping back . I also revised the scale on the right to make it a bit more accurate.

This article suggests that US Shale production - the thing that drove OP down from 2014 onwards - has plateaued and may have peaked:

‘The EIA sees a long plateau in US oil production. I think it is more likely that we'll see the beginning of an erosion in supply from 2024.’

https://oilprice.com/Energy/Crude-Oil/Did-The-EIA-Finally-Get-Realistic-About-US-Shale-Output.html

And there’s this, from an earlier article this month, with a similar message:

The days of exponential growth in U.S. oil supply from before the pandemic are over, as capital discipline, returns to shareholders, supply-chain bottlenecks, cost inflation, and lower well production combine to hold back production increases.

https://oilprice.com/Energy/Crude-Oil/OPEC-Is-Back-In-Control-Of-The-Oil-Market.html

At the moment, it depends very heavily on OP.
Since last Friday, Brent (orange) is up and Shel (red) has risen by slightly more. This 15’ chart shows their respective moves:
https://invst.ly/-lfmg
The current ratio to Brent - which does vary - is about 30.3p per $1

OCDO has remained substantially flat for six trading days now despite general falls in the market. Monday’s auction pulled the price down below 420 but the volume for it, and indeed the whole day, was below recent averages: https://invst.ly/-l9rd

Will OCDO remain at this level and pass through the red downward trend by Wednesday’s close? It would be a good indication if it does.

Yep!

OCDO did well on Friday, surviving the market pressure during a ‘down’ day in which it fared only slightly worse than Amazon: https://invst.ly/-kx9b potentially, but not decisively, bottoming out during a testing week for the wider market:
UBS absorbing Credit Suisse may not be the panacea everyone is hoping for, so markets may not be calm next week and Valueplay may be proven correct.
The John Lewis story isn’t helpful either - although it’s not exactly relevant. So, in a nutshell, if OCDO is set to go lower then we should see it swiftly.

....absorbing Credit Suisse will calm the markets, right?
What do investors and shorters here think?

Getafgrip: I found this piece which supports my ‘social media’ thoughts perfectly:
The collapse of SVB was the second-largest bank failure in the history of the United States. The largest, Washington Mutual in 2008, took place over the course of eight months. SVB’s collapse played out in barely two days.
Anxious Twitter posts and WhatsApp exchanges, coupled with the ease of access that online banking provides, are seen by analysts as a serious catalyst for the current crisis. Experts suggest that in the social media age, the psychological behaviour behind a bank run – mass fear from depositors of losing their savings – may be amplified and go viral quicker than bank officers and regulators can successfully respond.
Michael Imerman, a professor at the Paul Merage School of Business at the University of California-Irvine, says that what happened to SVB was, “a bank sprint, not a bank run, and social media played a central role in that.”
https://www.theguardian.com/business/2023/mar/16/the-first-twitter-fuelled-bank-run-how-social-media-compounded-svbs-collapse

Amid the gloom cast by the current week’s collapse in sp, it’s worth remembering that, for the five years prior to 2020, a Brent price of over $70 was extremely good and $86 was exceptional - just two days over the entire period.
https://invst.ly/-kp1y
It was generally associated with an sp in the region of 2400p:
https://invst.ly/-kp5b
But, on the cautionary side, the black line at 2240 is probably still a relevant marker today.

There was tight synchronism between Shel (red) and Brent (orange) during their common trading hours over the week:
https://invst.ly/-klcu
Both were ultimately down by around 12% between close of play at the LSE last Friday and today. This 15’ comparison chart covers all Brent trading periods for the seven days up to this afternoon’s LSE close
They were never separated by much during their common trading hours: perhaps 40p maximum in Shel sp terms.
The ratio of Shel (p) to Brent ($) in the chart = 30.77:1, so 31p per Brent$ is a good rule of thumb to estimate sp moves at the moment.

Back to Brent and Shel:
A quick glance at the long-term Brent chart spells out why this week’s drop could be more ominous than many might appreciate. Suggestions that it is financial not supply/demand driven are hopefully true because, ordinarily, the price would be expected to dive further after it crashed through the blue somewhat prematurely leaving red intact as a barrier to future recovery: https://invst.ly/-kivm
OP continues to struggle today and Shel has dropped even further than Brent in percentage terms over the week. It’s not pretty.

Gossip is powerful with social media isn't it, getafgrip? Fact is that all banks would probably collapse if everyone withdrew their deposits: the system relies on money moving from bank to bank and staying within the overall system.

For those who’d like to check - and I certainly did - this 15 minute chart, re-based to last Friday’s close, shows Brent’s price (orange) over all it’s traded hours so far this week against Shel (red):
https://invst.ly/-k6xo
Obviously, the Shell line is flat between LSE sessions whilst Brent is still being traded.
It’s clear that Shel has edged slightly lower than would be explained purely by oil price and I’ve measured that difference as 45p out of the entire drop of £3.33

Ha! Getafgrip - like OP isn't volatile enough so let's get into banking as well??? Great stuff!

The last couple of days have indeed provided me with a sharp reminder that the relationship between Shel’s sp and OP cannot be overlooked, even when the sp moves ahead strongly.

My 30 day moving average for the ratio of sp (p) to Brent ($/bbl) is currently 30.3x , which would place the sp at 2240 for an Op of $74, about 10p below actual as I type.
Prior to results day, the MA was running at 28x, which suggests that today’s sp is benefitting from around £1.50 of lift provided by the results.

The bad news, on that basis, is that the sp remains vulnerable to any further drop in OP and we may not see a return to an sp of £26+ for a while unless OP recovers to around $86.