Member Info for epiphany121

Morning Romaron - that is indeed a good assessment of the state of play, IMO. The sabre rattling now is being done by the US, without consideration or care for the state of economic affairs of the rest of the globe, and that is what is making the market ever so nervous. The best case for me is that the US stock market drops a few more % points between now and 01/09 and Trumpster pulls back from the brink - that's the last hope for me, however unlikely that is.

Oil stocks investing is certainly contrarian - you only need to look at the self-inflicted pain with the Share stock prices in the past few weeks. ENQ's fall from 23 to 20 certainly looks like peanuts compared to that lot.

"The worrying thing at the moment is demand and one thing I'm sure we can agree on is that the market runs for cover when countries rattle their sabres, whether militarily or economically. Analysts and fund managers have to stay with the herd and that is dictated by the world economic powers. The US is playing a dangerous game and there will be unexpected consequences for sure. Holding oil stocks at present is certainly contrarian."

Morning Chilts,

Sure, the US economy is indeed circa 4/5ths Services, but isn't true that tariffs don't impact that part of the economy. The last round of tariff increase proposed last week on the final $300 bill Chinese goods, is now on key consumer goods and this is what hits the consumer and the services economy the hardest and this is what the market fears the most. If the consumer pulls back then a US recession is all but guaranteed. Agriculture is a side show and in the grand scheme of things, is insignificant for the US. That is Trump's biggest support base and that'll continue to get his support and subsidies. But taxing Chinese imports to create this whole mess with agriculture in the first place, and then using these taxes to pay the farmers, is the very definition of socialism that the republicans in the US decry on a daily basis. They're so blind that they don't see that their emperor is the biggest socialist right now in the US.

From the link you posted about Mercer and reading through it, what sticks out for me there is that Mercer is not at all a 'Nationalist'. He's all for minimal government and is in the classic Libertarian mould (think Ayn Rand and Atlas Shrugged) that advocates as little government as possible. Trump is anything but that. Sure, Mercer was maybe instrumental in getting Trump to the White House, and maybe is now privy somewhat to the decisions made in the White House, but to me it isn't clear that he's the one pushing for the China escalations.

I don't really believe in hedge fund conspiracy theories. The reality is that the global economy is teetering on the edge - we only need to look at global manufacturing PMIs to get a sense for how bad it's got since the trade war was ignited last night and the recent escalations may just prove to be the final nail in the coffin for the growth picture. This is what the market is trying to process, and price oil accordingly.

There is time yet to pull back from the brink, but Trump will need to suck up to his nationalist base and prove a point that America is so strong that it can survive this trade war with China without a problem, and hence he won't do it. Therein lies his delusion and why there's no real way out of this mess. He'll be seen as weak if he pulls back and the global economy/oil will get shafted if he doesn't. My base case now in terms of which way this is going to go - it's a 'no pull back'. Kudlow can talk up the economy as much as wants, but Dow transports are telling another story and so is the shipping freight index, which is at a multi-year low and doesn't bode well for US manufacturing. Services PMI index is not great either and dipped to a 3 year low in July. Unemployment is a lagging indicator and that'll catch up with a slowdown soon enough.

If you add up all of the above factors, you can form a picture as to why oil is behaving as it is in the past week since Numpty threatened to put on tariffs on all Chinese imports from 1st September. Barring a real incident in the Straits of Hormuz that can actually curtails supplies and pushes up oil price, bullish factors are rapidly vanishing. That's my macro-economic take on oil and it isn't great at this time. :-(

Luck is what we need...

Yes, Morgan Stanley has flagged the Iranian floating storage as yet another big risk for oil price, along with the Shale idiots going on about their merry ways, and that's without even bringing up biggest risk factor of all, the gorilla across the pond. Headwinds galore...

Nice one, Dol03. that's circa 12 days and back on track.

Oilers are now out of favour and until the orange buffoon backs down, I'm afraid that we'll continue to be hammered. Genel had a great update with plentiful FCF for their needs, and the SP has gone nowhere. That tells us all we need to know. The market is fearing the worst for oil is the best explanation I have. Sigh...

Shalers getting hammered yet again today and even really great reports are being met with a ho-hum. There's just no FCF in that patch and no matter how much these idiots increase production (and that's F**ing up the oil price anyway), there is no FCF. Most of them have not yet learnt their lesson I'm afraid...

That was sharp, Pelle. ;-) 2k SEK maybe a possibility? Lol..

That's just about 5 bucks now and in line with an article referenced here yesterday that mentioned this scenario was likely to happen with more Permian pipelines coming online and the supply finding a way to get to the export markets. There may also be the additional dynamic of production potentially starting to taper off in the Shale patch - we'll have to see. Shalers are still hitting new 52-week lows on a daily basis and there's been no let up on that front.

And the fact that Dow is now off nearly 900 points may get numpty to start thinking about his trade war disaster - that's about the only thing that may force him to change his mind. What a fu**ing disaster of a man he's been to the whole world.

Ponzi is a short term trader and has now gotten out - not a surprise to see 15p targets now. I've seen Ponzi slate Enq before going long and pumping it before today, and now looks like he's out, and hence the low ball targets. It takes all, KO.. ;-)

If there is genuinely a recession because of numpty's policies, then all bets are off for oil companies. It would first mean a shale washout and declining 2020 production in the US, with pain also here for Brent linked companies.

3 words - 'Numpty' and 'Trade deal'. If we can figure out when these 3 words can come together properly, that'll be when Brent will bounce.

Good spot, L7. There was a discussion on the FY18 results call, if I remember right, where it was confirmed that there were reduced (or even nil) rates in the event of a FPSO breakdown and this note provides a bit more colour.

Yes, that's not a big surprise for me, Romaron. However, these 2 oil majors only account for circa 17% of the total Permian production. It's the small to medium producers that account for the bulk of production and they're the ones that are suffering from the intense wall street scrutiny of late. More small and medium sized Permian focused producers will report next week and we'll see what their commentary is.

However, given the steep production rate drop-off after year 1, they'll need to keep throwing a lot of capex just to sustain production at these levels and therein lies the fundamental problem for the Permian and other shale patches.

L3 - a chill pill is in order for you. It was tongue in cheek to say ENQ could be bankrupt - a whole lot more companies will be bankrupt before ENQ gets there, assuming we go into sustained low price oil environment. Shale would have been butchered and that'll take some supply off the market too. Hindsight is 20/20 - everyone has an opinion about hedging and it's easier to sit on these boards and shout about how good your hedging advise is when you have zero skin in the game. I'd rather rely on management teams to execute on plans - whether they are production/investments/costs/hedging and let them get on with it. That's as much as I'd say rather than play along with you.

This article is a good read and lays bare the issues facing drillers in the Permian (and shale in general). Year 1 drop-off rates of 70% on a well is just mind-boggling and we can understand why they need to drill as much as they do, just to sustain production.

https://finance.yahoo.com/news/permian-doesnt-look-hot-producers-163956154.html

BHI's rig count came out just now and oil rigs are off 6. Just one in the Permian though, but that's after a couple of weeks up there. US Oil rigs are now at 770, down from 859.

Pleasantly surprised with how well ENQ held up today.

GLA...

Can't agree more, Spindok. I'm hoping that he'll forced out of office after the Nov 2020 elections. 10 years would mean that he has taken on the mantle of good old Adolf and has shot down the US constitution and any term limits that are imposed on a president (unless there's a national emergency - a la WW2 for FDR).

Hang in there. Spin. I'm very hopeful yet for ENQ, if not in 2020 then in 2021, after the numpty is booted out.

Yes, agree, Chilts. For now anyway, we have much support than say PMO, which seems more heavily leveraged to overall Brent price.

Dr. Copper is falling, which is not great. China, ex expected, is pushing back and why won't they? Therein lies the inherent danger of an escalation and it's impact on the economy. Fingers crossed.

L3 - I'm not worried about Magnus' performance in May, given that there was a scheduled maintenance shutdown in May. I'm sure that Magnus production will right itself in June. The bigger concern for me is something that AB or any CEO of an oil company outside of the US can even remotely influence, and that's Numpty's trade wars and the effect that'll have on growth and oil price.

GLA

Chilts - the Chinese are suffering a bit no doubt as there is economic uncertainty and a certain degree of loss of their main export market, the US. Given the size of their economy, year in and year out 6 plus % growth is just not sustainable in the long term. There is already too much credit in their mainstream banking system, leave alone their shadow banking system. Can they pump more credit into the system - sure. Will they - I think they will if the trade war shows no signs of abating and gets dragged out longer. Unlike numpty, Xi doesn't need to think about an election next year and can wait this out. If anything has the most impact on commodity prices, it's Chinese stimulus and this was true when it first happened in 2009/10. Fed QE (not the damn ECB) also has had a similar effect on commodity prices.

The oil market is currently pricing in all these variables - economic uncertainty/recession fears/US Supply/Demand forecasts - and hence the volatility in the past couple of months. I just fear that today's announcement may have firmly tipped the balance to the downside though, unless some kind of fiscal stimulus comes through from China very soon.

GL

L3 - I was testing if that was music to your ears, and sure enough it was.. ;-)

Yes, I'm getting circa 47.7 kbopd for May, down from 60 kbopd from April (excluding Malaysia) and pretty much all of that reduction was on account of Magnus. I'd assume there was the maintenance shutdown at Magnus in May..