YouSaid · the spoken record

Paul Sankey

lines on the record: 87
first: 2023-05-22
most recent: 2023-05-22
sittings or episodes: 1
sources: podcast

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“Everybody is working to try and become even smaller. So if the companies embrace that, what they should do is spend as little money as possible while maintaining production and generate free cash flow and pay that back. And what we've been looking for and the companies that have succeeded in doing is to bring their break-evens, which is the operators they need to cover their dividend and their capex down below 50 and therefore be long-term investable. And that's essentially what we've seen the companies do over the past couple of years. They didn't really listen to me in 2017, quite frankly, but with COVID, they got it. You know what I mean? I had the idea and they got the same idea by a different route, which was what happens if oil goes to minus 37, which is what we did. And they had to basically embrace the idea of capital discipline.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Pretty much. The history was that because it was such a struggle to grow in US EMP, any growth equaled returns. And so actually the managements were incentivized to grow. And literally, they made more money pay if they grew better. And so all the pay metrics of the companies were distorted. So in the 2017, though, what we said is, look, you stop, stop, stop, stop. You've got to stop spending. We called it the Renaissance of USMP. And we laid out a very simple roadmap that had demonstrably worked for the refiners, which was if you all stop spending too much money, you'll tighten the market. Margins will be better and you'll make excess profits and you'll become more attractive. I promise you there have been times when I remember Valero at $15 a share. I think it hit $150, where these companies just transform themselves in what is ostensibly a deteriorating market because obviously you're looking at a mature oil market.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Fast forward to 2017, I was looking at a relatively what I thought was at the time okay oil price, which was actually $50 a barrel in 2017 with $50 flat on the strip. You had the Permian opportunity, which was the biggest and best industrial opportunity that you'd seen for the U.S. oil companies almost in their history. Basically, the biggest oil field in the world in Texas, which obviously is a huge advantage, not least because it's next to all the major refineries. And you couldn't give away an oil stock. And so the question was, you know, what is the problem with oil stocks when actually this is a kind of an okay, if not very good environment? And the answer was your strategy sucks. And the strategy was to grow as fast as possible, really with the rule of thumb was that for every dollar these companies got, they spent $1.20. And that's why you saw the oil service companies traded a premium, because this assumption was high oil prices. The drunken sailor E&P.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Of a million would be another very good example where you could have said buy that thing, it's on two times EB to EBITDA and it turned out to be on 10. So that's a real challenge. And what we've encouraged the companies, in fact, we've really challenged the companies, starting actually with refining because years ago in 2010, I was so frustrated by the performance of the refining sector that we said, look, all you've got to do is stop spending CapEx, focus on your operations. Stop hedging. They were awful at hedging and just focus on spending as little money as you can while operating safely because the first principle of refining is run the refinery. And the market, you know, if you hedge, the market wants the leverage and risk of refining. But if you hedge and margins for whatever reason go crazy, you give that away and you make your stock very unattractive. Make the business model able to withstand the volatility of the commodity cycle.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Company is the difference between $50 profit per barrel, which for an Exxon would be sort of $2 million barrels a day of oil and four million barrels a day of production. It's an enormous amount of money that effectively goes to zero. And that's why the multiples will obviously tend to very much discount high priced environments. And anybody who says they're cheap may not be thinking straight. Additionally, what we saw at very high prices, I mentioned governments getting involved at the wrong point of the cycle. They came in and added, for example, in Europe, major windfall taxes. I mean, fall taxes. Affected ExxonMobil by hundreds of millions of dollars, not to mention Shell and VP and more extreme examples of the North Sea names and some.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“I would just add in terms of everything that we sort of zoomed around looking at what we saw over the past two years was that a high oil prices, extremely high natural gas prices are fundamentally unsustainable. So we showed that however dramatically cataclysmic the environment is. And if you think about, again, keeping in mind that Russia is not only the largest oil exporter but also natural gas exporter in the world, is staggering how fast the market reacted, whether it was through low earth consumption. It's very damaging for the economy, everything else. But what it showed you is that anyone who ever says to you, hey, oil is going to sustain 200 because we run out of supply in the future is talking nonsense. We just proved that you won't effectively. And it's just, you know, take that as a given. And then as we also referenced previously in the conversation, you know, the difference between $100 oil and a $50 oil is not a 50% change for an”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“As the energy transition became heavily pursued, particularly in Germany, Russia saw its opportunity because Germany had become so dependent on Russian natural gas. And there's no question that was a huge contributing factor to the invasion of Ukraine. So all these things distort the cycle.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Yeah. So that's also another major complication. Of course, one of the problems with the ore cycle is that exactly at the wrong time, the government gets involved and that hugely distorts the cycle. And it may not necessarily just be the US government getting involved with regulations and taxes and everything else that they do or subsidizing, which is the crazy thing that the Biden administration did basically over the past year and a half. Subsidy example would be releasing the strategic petroleum reserve to artificially lower prices, which is odd for an environmentally so-called environmentally driven administration to do. It was kind of venal in many ways in terms of you do need higher prices in order to get people to switch away from oil and they don't want those because in the short term it doesn't suit them. So basically governments tend to get involved at exactly the wrong moment. Another good example would be obviously Russia invading Ukraine, which is the”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Which more or less is at the moment, as you know, is more or less Tesla. But, you know, I think penetration of electric vehicles is going to struggle. And as you get to either lower income consumers or more urban consumers, for example, me here in Brooklyn, I can't have an EV. And when Hertz try and give me an EV, the rental company try and give me an EV, I don't want one because I can't charge it. The Hertz here in Brooklyn Heights, the local Hertz, doesn't have a charger themselves to give you an example how far behind they are. They have to take it to a more in Queens to charge it. Believe it or not, so you're so far from getting widespread huge penetration of EVs is quite remarkable. There's one thing that we haven't talked about in the US side, which is the IRA and the impact of particularly more renewable diesel, sustainable aviation fuel, all of these things that are going to be heavily.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“China is always the biggest thing. The US tends at the margin isn't actually, I mean, it's a huge base amount of oil that's consumed. But this is a very mature, obviously. And the long-term questions become the extent of EV penetration and everything else. And those are looking bullish. It looks like we'll be on oil for decades to come in terms of demand. I really question the next leg of EV penetration.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, yeah, that's my job. So, yeah, long term, you're constructive, you know, a cautious way of saying bullish. And then short term, you're cautious, you know, a way of saying bearish. You said four factors, one, whether two, Russia, three, China, four SPR. So Russia and SPR are on the supply side, whether in China, I guess, are on the demand side. Which of those factors are the most important to you? In other words, what is motivating your cautious outlook the most?”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“I've been listening to you. I know you're very clever at getting the guest on the spot and then avoiding the spot yourself. Yeah, yeah, that's my job.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Oil. So that's why people are bullish long term. And then you have these short term factors, which is like, you know, how high are O, ECV inventories, how high is US gasoline inventories, how is the US economy looking? Where's US unemployment? All these short-term factors, this sort of noise, weathers, and other obvious example. It's actually freezing in the northeast at the moment, by the way. I think it's almost record cold in certain places, which is kind of weird. So, you know, all of those are the short-term factors. And of the short-term factors, they're simply not looking that bullish at the moment. You know, the question is we're teetering here a little bit into potentially getting very weak. But Jack, I'll leave it to you to tell me exactly what's going to happen to the U.S. economy next. And then I can give you a better answer.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“I mean, it's all quite muted, to be honest with you. I mean, everything's sort of not crazy in either direction. That's why we're struggling to trade it. Demand's pretty good. Intervies are somewhat tighter on the distillate side. The refiners are very efficient now, very good companies, actually, and they don't want to hold a lot of inventory at these more elevated prices. Because, again, you have to remember that the current oil price is actually quite good by historic standards. It might not be as crazy as 2022, but this price environment is actually pretty good. And the company, as you say, should be able to make decent money at these prices. One of the big issues that's offsetting that is productivity. And we can talk more about that. And the mega cycle, because what we're doing here is we're conflating the long-term cycle that I talked about, which is the product cycle, the productivity cycle, which is a 10, 20 year cycle of up and down. And we're in a declining productivity cycle right now, which is bullish.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“The US gasoline market, you said, is somewhat strong. What are you seeing on the supply side factors there? I know you've done a lot of work on the inventories of gasoline, not just in the US, but globally.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“And gasoline actually quite weak, so we felt that if diesel got weak, it would be a very bad oil market. What's propping us up a little bit here is the fact that you do still have low US unemployment. People are still driving a lot. And as a result, gasoline is holding up well. And that's, as I said, big enough to actually hold up the entire global oil market.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Exactly. And that was my rule of thumb going into the global financial crisis. What happened in the global financial crisis is that it turned out to be 1910. So in fact, gasoline demand during the global financial crisis was more or less flat actually in the US because the price was so low. And diesel demand absolutely collapsed. I mean, it was down sort of 15, 15 plus percent year over year. And so what we've discovered, what we discovered by real-time testing was that diesel is much more economically sensitive than I would have imagined and gasoline in the US remains very much price sensitive. At the moment, as you know, you've got low unemployment in the US and relatively lower prices for gasoline. And gasoline is acting very well. On the other hand, diesel is really, I wouldn't say it's a disaster, but it's certainly quite weak. A concern for refining profitability in oil is that diesel's been very strong for the past two years.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Especially in the context of US population being 333 million people out of 8 billion, the fact that US cars alone is one in 10 barrels consumed is extraordinary. And of course, is why Tesla and EVs are such a huge deal for global oil. So the gasoline side is doing well. Now, if you go back to the financial crisis, I would have said going into the financial crisis in 2008, I'm old. If you go back to then, before that, I would have said to you, US gasoline is about 60% price and about 40% GDP unemployment. And diesel is the opposite, about 40% price and about 60% GDP. You mean what drives?”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Looking weak, and there's almost a trucking crisis if you listen to the trucking conference calls. Old dominion talked about potentially the first sequentially lower Q2 to Q1 from Q1 that they, I think they've ever seen. And you've got very significant reductions in trade through the port of Los Angeles and other negative indicators economically on the heavier side of the US economy. But then on the same time, the single biggest component of the global oil market, which represents 10 million barrels a day out of the hundred.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Data which looks good, but on the service side versus industrial side of China, as you know, they've made a huge move from sort of $100 per capture income in 1980 when Deng Xiaoping originally opened the economy to sort of, let's call it $8,000 or $9,000 per capita income, depending on how you count it, but an enormous early move was essentially industrially driven. Now the Chinese challenge is to develop the service and consumer economy. And of course, that's less oil consumptive. And so the intensity, the oil intensity of the Chinese economy should be reducing over time relative to GDP. And that's basically what we're seeing. And so this year, Chinese oil demand on the industrial side has been more of the sort of 1% to 1.5% type growth rate. And that's been probably the single biggest disappointment. US is a mixed picture on the desolate side.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Is going to Africa or Brazil. And if we do, we don't then know what happens within Africa and whether it goes to industry or whatever. So there's an enormous amount of uncertainty of which obviously the largest component is going to be China, where you just kind of, yeah, okay, fine, whatever they tell you. So that's the problem with the overall market. But of course, it's highly traded. So the price is hugely indicative. I would say that, yeah, demand has disappointed. I mean, I think we mentioned that I was talking to you that China aviation was an obvious major bull argument for this year because of the COVID lockdowns, obviously last year. And that's working as an argument. The specifics of China industrial recovery are weak-ish. And as I mentioned, China's exports in Q1 were dominated in growth terms by oil product exports. So the Chinese are importing, that's the Chinese aviation.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Now, what I said is the only good number in the oil market is the oil price. And even worse is the demand data. And the only real way of telling what demand is doing is by looking at refining margins. So, you know, they're both market prices. We simply don't really know where a huge amount of oil that's produced goes. Where's it used, especially when we look at diesel, what we call distillate as the bigger group, essentially you have two major, what we call light ore products. One is gasoline, one is distillate, of which diesel is the biggest component. And whilst we have a very good idea of sort of where the ore barrels come from in terms of Saudi Arabia or the US, and while we know where the refineries are, because they're huge, once it comes out of the refinery, the traders really don't want you to know where it goes, right? Because they're trading. And so we don't have a very good handle on whether the tank.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Are making money, but obviously the difference between 80, 60, and 40 isn't that percentage change. It's the fact that the cost of producing and delivering a barrel of oil is about 40 or maybe even 50. I mean, most of these companies say that they can cover their dividend at 50. So the $10 between 50 and 60 is essentially the difference between zero profit and $10 profit and so on. And so, yeah, I mean, they are making money, but you're talking about probably for the group, you know, a 3% or 4% dividend yield, which is against the Treasury giving you 5%. So it's hardly exciting”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“At best. Okay, so you said 40 is something of a hard floor. Viewers may note the price of oil very briefly went negative. I think in April of 2020 and remained below $40 for a month or two, but it was not below $40 for long. And since then, it went from $40 to $120 in a quite strong rally. So between $40 and $120 is your range. You think probably the more conservative floor will be $60. Are oil companies making money at $60?”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Printed. So then you're in more of an inflationary environment, which is more bullish for oil. Typically, you get to a peak in Memorial Day, which is why I specifically call for 120 at Memorial Day when I was wrong. But this is about as good as it gets because through summer you typically plateau oil prices and then from Labor Day you fall. So I would say for the rest of the year, it's going to be one of the lamest calls you've had on your show. We would expect oil to average about $75,000, $80 a barrel for the rest of the year at best.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Go from here if we assume that supply does have a significant limitation, which is particularly the end of growth in the US production side, which was the huge story of the last 10 years, combined with Russian declines, the potential short term for some cuts from Saudi, we have an OPEC meeting coming up in early June. And then, of course, how weak does the economy get? And it's very interesting listening to your podcast because, of course, this is the sort of waiting for Godo recession, right, where everybody's expecting a recession that never quite comes. And in terms of the big picture of financial challenges that you talk so much about in terms of too many dollars, too much debt, the government just as of yesterday, as you know, was talking again about no debt ceiling crisis between Biden and McCarthy saying we're not going to allow it to happen basically implies more dollars are going to be”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Marginal source of supply. SPR has kind of gone away as an issue. China is kind of working, but not as much as might have been hoped. And we can talk more about that. Russia is still producing a lot. And my conspiracy theory is that the administration, US administration and probably Western Europe are sort of tolerating at the very least tolerating, if not encouraging, certainly allowing Russian exports of world to continue because of the inflation problems and the other issues that obviously you would exacerbate if you were to really crack down on Russia. And so you're seeing, for example, an extreme case of India importing very discounted Russian barrels and actually exporting Indian refined product to the US to give you an idea of the marginal impact of Russian barrels continuing to come. Now, Russia has to go into decline and over time that will happen. And you're sort of left with, okay, where does the world economy?”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Difference we would expect oil to be around 80. Then within that, according to crises, whether they're economic crises on the downside or supply crises on the upside, you can be as high as, as I said, 120 or as low as 40. I think for the remainder of the year, I had called for 100, to be, to be honest, I had called for 120 by Memorial Day of this year, which next week, I'm obviously going to be wrong. But that was last year's call, and there was a number of uncertainties. The first was how cold would win to be globally, the second would be how severe would Russian sanctions impact Russian supply, and the third would be how strongly China would come back. And those are the kind of big moving parts. The additional distortion was the release of the strategic patrol.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“From the demand point of view, I think that 60 is really a flaw on oil. How high can you go? You saw sort of 120, 130 during the Russian crisis, which in case you didn't know, Russia is the third, one of the three big oil producers alongside Saudi and the US. And so losing Russia in some way, shape or form was an enormous supply shock to the market. And in that context with demand recovering from COVID, an asterisk next to China in terms of what happened there with COVID, you saw 120, $130 a barrel peak pricing, not average for the year. Call it an average of $100 last year. So, you know, you've got your range, right? It's going to be somewhere between an extreme low of 40 and call it an extreme high of 120. And, you know, if we split the...”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Growth in non-OPEC because of the higher oil prices. So there was a huge productivity gain that really ran from 1980-ish right the way through to the lows of 2008, sorry, 1998, 1999. You then had an upcycle driven by Chinese demand and the fact that productivity didn't improve from that point because you'd sort of maxed out non-OPEC supply, which would be things like the North Sea, the North Slope in Alaska. You didn't find more of those and the oil companies really struggled to find supply. And then in 2012, the cycle again changed shortly after the peak oil price of 2008, when, of course, you had the US unconventional revolution. So to answer your question finally, and you've asked it several times, and I wouldn't say I've ignored it, I've talked around it, basically, I think that we saw 40 as a low in COVID, right? So that's an extreme low. That was a really extreme situation.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I mean, I hate to do the old thing of I'm enormously bullish long term, but of course, you know, but expecting a pullback, which I've always said is a great way to have a career as an analyst on the sell side of Wall Street, which you kind of can't be wrong. I think that we really have to go back to some long-term dynamics and then some short-term dynamics. The long-term dynamics is that oil tends to be set by, has been set in history by productivity. So as productivity is improving or declining, so you'll be in a long-term bull or bear cycle. And those cycles essentially ran into the formation of OPEC. You had increased productivity and oil prices under pressure through the 50s and 60s. The formation of OPEC then reduced productivity because the major oil resource was nationalized by OPEC. And that was the massive boom that we saw in first great oil shocks of 73 and 79. From that point on, actually had tremendous...”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“So WTI Western Texas Intermediate Crude right now as we record around 72 bucks Brent, I imagine a few bucks higher than that. You said you're bearish on the market. So what is sort of your forecast for oil? And I mean, do you think we will have a quite severe crash or are you just cautious rather than truly bearish?”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“The first quant traders, if you read back to the Simons of the World and stuff, first got into oil trading because of its liquidity. And so there's an enormous amount of quant trading, electronic trading, and everything else that goes on with oil, which obviously has a major impact on the market.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“High, but now they're above that curve, as you show in the chart. So essentially the market and the analysts have been disappointed by what's transpired this year. One of the old lines is that the future strip is a terrible predictor of oil prices, but it's better than analysts. And that's pretty much a mathematically proven fact. So you just have to sort of respect the market in oil and keep in mind, of course, that it's very, very highly traded. It's the most traded commodities, basically the biggest market in the world in real terms. That is to say, there's real oil being traded 100 million barrels a day, more or less, is demand. That's an enormous market that essentially is traded every day in real terms. Real people are using real oil. It's not a theory. And so the market should be very efficient. The other thing to keep in mind, Jack, briefly, is that”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“I think at the moment we're quite bearish actually, so we're not seeing the potential. Essentially, this is a seasonally bullish time of year for oil. It's driven basically by the US driving season and the way the refineries have to turn around in order to meet what we call summer-grade gasoline. So you shift the requirement of gasoline to be technical to have a lower reed vapor pressure, which means that it evaporates less during the summer and reduces smog. That chart, just to be clear, shows you the 2023 future strip, right? So that's not the oil price. That's what the market thought the oil price would average in 2023. So that's how you got to a point, as you mentioned, where last year people were thinking that oil would average over $100 in 2023. That was both the strip at which point the analysts were behind the curve. And then, of course, what the analysts thought would happen. And they got pretty...”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“So let's put up a chart of Brent, the cost of Brent crude in blue. And then it's the analyst consensus, what folks such as yourself think oil is going to be in orange. So you see we had a huge run up into June, July of 2022 above $100. Now it's, you say it's, as you say, it's range bound. But the trend is a little bit down if you sort of just draw a line from that peak in 2022 to now. It's mildly pointing a little bit down and the actual price is below the analyst consensus. So the consensus is a group of many analysts, you are one analyst. What is your view on where Brent should be?”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT
“Well, really, that it's not going anywhere in a hurry, as I mentioned to you. We hit $71 WTI back in December of last year, and obviously that was a significant low relative to where we got to at the peak of the Russia-Ukraine invasion, which was above $120 a barrel. And we've really been range bound since that time. And if you combine that with the S&P being range bound over the past five, six weeks. It's tough for the hedge fund community, particularly long short hedge fund community, to make money in a tape that doesn't have a strong direction. So that's basically the idea. As you know, the volatility in oil means that big moves can be very, very big. And at the moment, we're not getting that. And so it's just tough to trade, basically.”
2023-05-22 · Forward Guidance · Bull Market In Oil Is Over (For Now) | Paul Sankey · IDENTIFIED FROM THE TRANSCRIPT