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Rory Johnston

lines on the record: 119
first: 2022-09-29
most recent: 2022-09-29
sittings or episodes: 1
sources: podcast

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“Yeah, yeah, exactly. Exactly. So I think all that together, I think that I would say that as a general rule that Oil Twitter remains very bullish. But I do think that it comes down to a question of timing. I think that my job is to interpret the data as it comes along. I don't put much effort or emotional kind of effort into holding a view long term. That's kind of my view.”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“Were cheery, yeah, that would be bad. Like, that would mean that the data can only get worse from there, which means we have even more downside. I think the fact that July was the most oversupplied market since the beginning of COVID, I think is comforting in a way because it's like, okay, well, that makes sense. That's why the oil market collapsed. And it's mostly China. And we're going to include...”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, this will probably get me in trouble with someone, but I think that, I mean, as a great example, so on Tuesday I published my latest global oil data deck by my numbers, it was the most oversupplied market in July since the beginning of the pandemic. That's a pretty bearish headline, right? And I think I got people kind of attacked me for it. They're like, oh, you're just parroting fake data or something like that. And that, I think, is I think is just annoying and I think it just belies a sense that I think a lot of people don't spend that many hours trying to build up kind of accounting models of this market. And that's fine, right? But I think it's also, I'm kind of in the camp ironically and kind of counterintuitively that thinks like bad data in many ways is good news because if oil prices were collapsing and all of my data said things”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“On kind of a weekly kind of wrap up of what's happening in the oil market, this one's going to be pretty depressing, unfortunately. And top of that, I also have a monthly report that goes out, which the global oil data deck, which is kind of my version of something like the IEA's oil market report, kind of a monthly wrap-up of data and goal balances, and also a monthly on North America that delves much more deeply into Canada, US, and Mexico. And then most of my pieces are kind of thematic dives into whatever weird is going on in the market right now. And my last one yesterday was on China. So, you know, one to three posts a week on a range of topics trying to kind of bring a fundamental perspective and hopefully kind of transparent understanding to what I still think is a fascinating commodity market in North.”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so I started commodity context as a free publication in June of 2021 and did that for a year. My background is as a commodity bank economist at Scotia Bank here in Toronto. So my work is much is not the same kind of like it's not strategy work. It's not equity research. My goal is to really look at the commodity as like a holistic economic kind of sector and kind of complex and kind of bring together what we're seeing on the economic side, on the fundamental side. So I'm like what you'd call a barrel counter. So I like to build up these kind of big balance models to see what's making sense and how it kind of comes together. As of the last, as of this past June, I've switched over to being partially a paid platform now. And I'm publishing weekly. So I have a piece that should be coming out after we got off this call.”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“That's exactly why I'm so cautious right now. I think that anyone who says Let's say we go into a deep depression and to get out of it, you know, the governments around the world basically spend trillions to completely overturn the energy economy. Yeah, that could have an impact on oil demand. But I think a normal recession that we're seeing right now with kind of limited and kind of constrained fiscal kind of solutions to it doesn't to me sound like we're going to change the fundamental path of oil demand growth coming out. So it's just a matter of time rather than, I think, a matter of scale.”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“Exactly. I think that's the other thing. Yeah, there have been recessions that started with the unemployment rate at like less than 3%, but those are very rare. But I'm saying it's the rate of change is going down. The rate of change is, you know, we're still growing, but the rate of change is going down. And in those environments, it seems like that's when oil gets hit really, really hard. What do you think about that?”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“Unemployment is still so low, right? I mean, it's a It's a weird recession in the United States if it is. Exactly. I think that's the other.”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“Okay, I guess I want to final question ask you about the economy, looking at things like yield curve inversions or PMIs, there actually is a pretty clear pattern of, you know, once the economic growth peaks and it starts to go down, it's likely going to go down more and more, and then you're either going to have a mid-cycle slowdown or you're going to have a recession. So recession is extremely likely in Europe, China already in recession. by some definitions in recession i don't think us is in recession um yet because you got to look at a broad based uh you got to look at like incomes you know production investment”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“Eventually that will begin to normalize, and that's where we start to get these big, huge demand boosts to the upside without, and I just don't see where that supply is going to come from. So I would say I'm a medium-term bull. I'm a near-term cautious. I won't even call myself a bear, but I think I'm near... Cautious, okay”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“Call it year to three year bay says, I still remain very constructive to the upside on crude because of this fact that I still don't think that China's COVID zero policy is sustainable in the long run, and eventually the global economy will find balance and begin growing again. We still have very, very low levels of international air travel as a great example.”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“And that's the thing I actually would say on a general disposition basis, I'm still reasonably bullish about crude oil. I just think that you have to be very, very cautious in this environment where China doesn't, you know, four months ago I was like, oh, this is unsustainable. China can't keep locking it down its economy like this, but they kept going and they are continuing to go. So even if we see a headline like yesterday that they're reopening certain areas, they haven't changed the policy disposition. They just cracked down and it got better and they're going to crack down again. So I think until that changes, we're going to be in this kind of environment where you're going to always have these big downside risks. But on a kind of a like.”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“To lower, I think. I think we could have a scenario where we do, I mean, if we see large degrees of displaced Russian barrels after the December 5th deadline, that could be a trigger to the upside. But I think the biggest trigger we're still waiting for is China's reopening, which I still think at this stage looks like probably more of a Q123.”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so definitely choppy. That I can get almost guarantee. I don't have official price targets, but what I will say is I do think that coming out, I think that we're probably going to be in reasonably meh conditions for the rest of the year. I'm going to say just broadly, we could go a lot to low.”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“So we've talked about this extremely nuanced topic for over an hour. Now I have to ask you the very basic question. Do you think oil's going up? Do you think it's going down? What's your sort of price target and price target and maybe volatility target? Do you think it's going to be choppy?”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“Will be the US shale batch because OPEC is basically tapped itself out. That, I think, is the scenario of concern right now. And we were talking earlier about the SPR. That's a scenario where I think there could be more pressure to do a second round of SPR releases if you have a moment where all of a sudden three, four million barrels a day undersupplied because all this demand has jumped back up, but supply hasn't moved. That's the kind of concern. The best case scenario we can have for oil market balance in my mind over the next year, two years, is a kind of a slow burn recessionary conditions that kind of holds demand flat-ish or at least reduces demand growth to such a level that supply can manage to keep up. I don't see supply growing by more than kind of one and a half million barrels.”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“What does the future hold? Is this just like a crappy market now for the next little while? I think if you, you know, historically over the last 10 years, the majority of my career in this space, every time the main times you had oil price collapses, it was because of too much supply. Whereas now what we're seeing is the price collapsing because you've seen demand across the world, particularly in China, fall off so that kind of demand line has fallen back below the supply line. But the supply line is still not growing very quickly. So if when we finally do come out the other side of this macro haze, and particularly as China kind of moves on from its COVID zero policy, well, then demand is going to jump to the upside much faster than supply is going to be able to, particularly because at that stage, the only source of fast supply in the world left.”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“There's definitely It's a fantastic time for the oil market. It's up in Canada, for example, not only are you seeing insane levels of like headline revenue, but you also have very, very low costs relative to history because you're not growing. And in Canada as a basis, it's not as true in the United States for the currency reason. But because of the strong US dollar, Costs are deflated here, and our revenues are inflated. So all of this that's happening is just, it's a boon time for anyone producing crude right now. So I think that's the fact that we still can't get growth, that's the concern. Going forward, and I think just to close on this kind of like, what is the...”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, well, exactly right Similar kind of argument that you use that people kind of employ, like Matt Levine has employed this magnificently when it comes to The index fund owners and like the passive managers and things like Pfizer during the pandemic. So Pfizer shouldn't have wanted wild excess profits because that would hurt the rest of the economy. And the owners of FIFA. Want the rest of the economy to do well as well. I think the same thing is happening underlying in oil where it's like actually no one grow because then it'll hurt everyone. And I think that's very much what we're seeing right now. So anyone like fund managers particular, which are, you know, they talk about this a lot right now is we want to see returns, we don't want to see growth, either paid own debt, buyback stock or issue. Well,”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“Are making so much money right now, but none of them are kind of investing in new production. Now, it's weird in some ways, right? Because if you look at it from like a classical kind of market, The ownership of these companies, very, very few people own just a single oil stock. They own a basket of companies.”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, exactly. And that's exactly it, right? Yeah, the Oilfield service companies are not going to own any of the production. But yeah, and Pioneer is printing money at $100, let alone three of them.”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“And operation. We're in short supply. Labor is in shorts supply. Everything On top of that, you also have a, so the oil industry itself had cut down to the bone for the last decade because of just terrible, terrible returns. Even more so, the oil field service companies had cut to the bone over that period of time. So there's also less general capacity for things like pressure pumping and everything else. So you have like this multi-stage bottleneck on top of this already question of cash flow discipline. And if you're an oil field service company thinking, hmm, oil prices are high, should I invest more in capacity? Oh, no, no, no, no. All of my clients say that they're not going to grow any faster. Like pioneer, the classic Scott Sheffield, you know, sage, you know, voice of the shale patch basically said that it doesn't matter if it's $200 or $300 crude. They're not going to grow more than 5% this year. That's a really confusing message for oilfield service companies.”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“Communicate he will like US shale is growing at nowhere near the pace it was, it's still growing faster than literally anyone else. And I think that's the crazy thing about it, right? So what's happened is that there's this big talk about the conversion of these oil and gas management teams to the religion of cash flow discipline. So they're only going to grow profitable barrels. On top of that, the one thing that's challenging about this period is to really disentangle how much of that lessened growth pace is because of cash flow discipline and how much of it is because of the rampant supply chain bottlenecks we've seen through the entire economy and specifically to the US shale patch. Now, to give a couple examples, the sand that is used in fracking operations was in short supply. The pipes that were used in drilling.”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“Add there's this weird reality where the US will still be the single strongest source of supply growth in the world. By a long shot, even under this kind of lessened growth regime, it's just growing at like half the pace that it was before. So just like in 2018, just for a reference point, when Brent was averaging for the year about 60 bucks, U.S. production growth on a total liquids basis grew by something like 2 million barrels a day year over year versus total demand growth for the world of like 1.41.5. This is why OPEC needed to cut during that period U.S. shell growth was just insurmountable. It was wild. Now this year we're looking at maybe like a million, million, you know, 1.1 million barrels a day growth. Still huge. I think that's the thing that I always try to.”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so just to put that number of that unprofitability, I think, into perspective, it depends on which number you use and which kind of, whether it's public or private or everything, but it's somewhere in between $300 billion and half a trillion dollars of capital destroyed in the decade prior to COVID, which is just, you know, I like to almost liken it as the kind of blitz growth, kind of the Uber-esque Blitz growth kind of pace. And I think, you know, as a good millennial, for the majority of my life have dramatically benefited from subsidized Uber rides and subsidized Uber Eat fares and everything else. And the world in total benefited from effectively subsidized oil production from the US shale patch for a full decade. And what we were saying now about like how much will”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“Not prioritizing production. They're prioritizing profitability. However, with that new mindset, they wouldn't rush to produce natural gas and oil with the same frenzy that you saw in 2013 and 2018. So, yeah, I guess the key question is how much is American shale going to add to the oil supply?”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“Thank you, Rory. For the final topic, I want to return to American shale. So American shale or shale oil and shale gas, the key feature of it is that it has a much faster decline curve, particularly for oil. So you constantly have to reinvest, reinvest. So oil in particular can really devour capital. So you had a shale revolution starting in, let's say, 2009, starting earlier, from 2009 to 2014, where production exploded higher, so it was good for the economy, but people did not make money. You made money if you sold a well to a shale, but so many companies went bankrupt and there's kind of a speculative bubble, and Wall Street was just giving them all this cash, debt financing, equity financing. So now one would like to think that these shale oil companies, shale gas companies, they have learned their lesson. They've been humbled.”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“A firm price cap in Europe that would actually even give Indian and Chinese buyers more leverage to extract even deeper discounts, even if they didn't go all the way down to, let's say, the $60 level. And kind of in Washington's mind here is any less amount of money going is good. So it might not be a perfect kind of drag net, but it puts pressure in the right places. But again, I think that argument kind of falls apart in the current permutation of the plan, which just seems impossible to enforce.”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“I would have three, four months ago said it was a very low likelihood. But now maybe a bit higher, which is maybe Russia, maybe Putin is just spiteful and says, okay, well, we're shutting in all the oil then. Which is a possibility, right? I mean, it wouldn't theoretically be much different than a really firmly enforced embargo, because that's the idea of kind of what that would do. But I do think that the risk now that, you know, Moscow engages in fairly extreme self-sabotaging behavior despite enemies now seems like something that they might do because they've done it with gas. So I think that is the concern now that Putin has said we're not going to sell to anyone that is enforcing a price cap, but they've already been selling for $30 discounts to India. So obviously there's some wiggle room in the middle as to where they'll accept it. The other argument would be if there was a”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“So China definitely could. And I think it's not a perfect answer. My argument is that it's a better answer than is currently being proposed because the reason why the bad trader, if you will, in Europe, it would be much harder for him to buy a straight rote kind of Iranian-style sanctions barrel than it would be to say, I'm going to buy this for $60, Wink. Here's 20 bucks a barrel around the back. It's that kind of behavior that this idea could theoretically. The argument for them to participate is they're actually getting something out of the deal, right? They're actually getting cheaper crude. So that's a benefit for them. The big risk here, and this is, I think, something that.”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“That's That sounds good. Two questions. What would stop it? Let's say you're a good person. You're the good entity who's going to buy it at 60 bucks. I'm the bad oil trader who I do all the shady dealings. Why couldn't I just buy it at 70 bucks? Why couldn't China buy it at 70 bucks and sort of push the price up? What is going to cause us to sell specifically to you”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“The arbitrage, you still allow a free flow of dollars, and then the government can flip that arbitrage into energy subsidies or aid to Ukraine or any number of things at very expensive.”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“Want Yeah, particularly true for a lot of these conventional levels, because, I mean, it's actually the opposite. So shale, you're actually creating artificial pressure, essentially. You're fracking it, you're kind of pushing down and you're kind of allowing it to come back up. Whereas in a conventional well, you're actually kind of boring down into a reservoir that has a lot of natural pressure built up in it. This is like kind of like the Beverly Hillbillies kind of the gusher, right? That's like natural gas and oil pressure that's built up. That's what you really don't want to shut in because that's what you have a tendency of potentially kind of damaging. So that's, again, this is the physical reality for why it could work. Now, I had said a little earlier that if you set up an entity that acted as a middleman, that could be the only entity allowed in the EU, let's say, to purchase Russian barrels, and then it could turn around and sell those barrels to other participants in the market. Thus, you would guarantee that the government”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“It's worthwhile to continue producing. I think that's that kind of critical physical reality of the market that the price cap attempts to leverage. And it's basically like, okay, Russia, you know, Moscow, you can sell us your crude or you can shut it in the ground and it might never start up again, particularly not without our Western kind of oilfield service company help. Yep.”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“I think that's the challenge. So that's the challenge. And to this prior point I was saying about how it's hard enough to guarantee kind of compliance with Iranian sanctions where there's no barrels. Well, I can't imagine the bureaucracy that they need to create of forensic accountants that will kind of need to peer through all of these kind of way bills and figure out. It's not really plausible, right? And I think that's the most obvious kind of criticism of it. On the flip side, there's a reason why this could in theory work. And the reason is that typically you don't want to shut in oil production. It has this tendency of damaging the reservoirs, reducing ultimate recovery, et cetera, et cetera. So even if you aren't making as much money as you could, but you're making more money than zero.”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“Exactly. So this is where we enter, let's say, our first challenge, which is allocation. Normally in a market economy, how you decide on who gets what good is someone pays more for it. If you remove the ability for the market to determine who gets the allocation of the crude, then you leave it up to other things. So either this is people under the table saying, sure, on the invoice, it'll say 60, but there's actually like 19 bucks a barrel equivalent going to you around the back or whatever. Like that's the very obvious concern. The other concern is if you don't have that and you should have two people offering you 60 bucks and you're Moscow, well, then you get to choose who gets it. And that will likely end up going towards kind of favored partners, people with, you know, let's say a history of shady dealings with Moscow. So that's, I think, and then that kind of thing, you know, it's an instant arbitrage for the commercial participant.”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“Okay, so the obvious problem is. Russell produces at $40, they sell it at $60. You want to cap it at 60. But even with a huge decline we're seeing today, it's still at 79. So how do you get from 79 to 60?”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“So the actual price level. Now, obviously everything is still completely loosey-goosey, but the price levels I've seen proposed are $40 to $60 a barrel for the price gap. $40 a barrel being the rough cost of production for Russian companies and $60 a barrel being kind of this historical norm for Russia.”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“Everyone thinks it's stupid. And I like to be an optimistic guy. I'm a charitable guy. And I also come from a policy analysis background. So, what I appreciate about it is the creativity. I think that, you know, we've thought about sanctions in one way, which is kind of like a heavy hammer. Like, no, no more sales, where you always had this challenge of like there was an implicit trade-off that we can sanction Iran, but it might push up oil prices heading into the primaries or whatever, right? It was always going to be a challenge. Whereas with this, theoretically what you're doing is you're allowing the same amount to flow. So you're having no main price impacts on the market while you're reducing the amount of money that's going. How is that possible?”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so I'm going to give you what I out the gate here. What I'm going to call my charitable interpretation. I've actually been on record as almost everyone in the sector hates everyone.”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“People pull back on, you know, using natural gas to run crypto regs or, you know, like, you know, there are economic switch-off valves. Normally you'd assume that would actually be reasonably, LNG would be reasonably low on that switching list, whereas now I think it's actually probably at the highest level and the kind of the most inflexible.”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“First being proposed. A lot of people said, Well, doesn't this expose us to kind of globalized risks to the kind of gas mix that, you know, could we import higher prices from Europe or Asia? Which is happening right now. At the time, the thought was, no, not really. And the reason for that is that liquefaction is so relatively expensive and onerous that if you did, you know, if prices in the US started to rise to such a high level where it became a problem, well, it wouldn't be economical to liquefy it and then ship it anymore. But I think In some ways, even worse environment where it's actually now the least price sensitive piece of the demand stack in North America. Because whereas, you know, in North America, let's say prices go too high and then maybe people heat their houses slightly slightly less or people pull back on.”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“That's Exactly, exactly. Right, and I think that's you know, it's really kind of hard to build a pipeline across the ocean. I think where we draw the line on kind of physical project viability. So we've started inching towards a more globalized system because of the large buildout of LNG kind of liquefaction capacity, particularly, I mean, the largest historically has always been Cutter, but US is now kind of stepped into that kind of leading role because of just a massive buildout in capacity there. Australia as well. So what we're seeing right now, and in many ways Henry Hub prices have been ranch or ratcheted higher by what we're seeing in Europe. And the reason that's happening is that you're basically maxing out LNG kind of export capacity. That in a normal environment, I talked about this honestly a year ago where normally you would think about LNG because when they were”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“Exactly right. And the reason for it is kind of what you were saying earlier and gas are very different markets in that oil is very much a globalized market, particularly over the last kind of 30, 40 years, whereas natural gas up until very, very recently was almost an entirely balkanized market. You had a European market, you had a North American market, you had an Asian market, et cetera.”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“Rory, help me understand this. So there are natural gas companies that are producing natural gas at maybe $2 per million BTU or sometimes $3 per million BTU. Henry Hubb, where they can sell out in the future's market, something like $7 or $8 BTU, it was higher. And then you see prices of TTF, Dutch natural gas, which I know are priced in slightly different things. But there was one time I did the conversion and it was priced at about $60. You can make natural gas in the US at $3. You could sell it in Europe for $60. Yes, you have to sell it to a liquefaction plant, something like Chanier. They're going to liquefy it. They're going to make a bunch of money too. But yeah, just how is it that the spread is so wide there?”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“I mean, at that stage, you just probably wouldn't get any gas. It would just go back to Europe, or sorry, just go back to Asia because, you know, part of the reason the prices have gone so high is that Europe has effectively needed to outbid Asia for these LNG cargoes.”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“Ameliorate, soften some of the sharp edges of the situation we find ourselves. The one thing that just bothers me, and I would say you've seen, and you can see that European policymakers are now at like this, like, throw anything at the wall and see what sticks kind of face of policy formation. And you see everyone, you'll see like, oh, and we're considering capping. Like, okay, we're going to consider capping Russian oil prices or Russian gas prices. Oh, maybe we're going to consider capping all natural gas import prices. I'm like, well, see, there you've gone well beyond what could even possibly be considered reasonable because that's just how you get no gas. Yeah, I think it's...”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“What is worse for the government or the overall economy? Is it an expansion of the debt or even in a kind of an environment of rising rates? Or is it losing the entirety of your kind of entrepreneurial class? I think losing the entirety of small business is actually a bigger problem for an economy. So that's why I do think it makes sense to stand in front of it. Now you can quibble about the best way to structure the policy, but I think it's, you know, don't haggle over the price of the hose when your neighbor's house is on fire, right? Like I think we're very much in that environment right now. So I have tremendous sympathy for European policymakers in this environment because there really are no good options. It's you're really, the best option would have been to not build up, you know, 10 years ago, 20 years ago, not build up an overwhelming dependence on Russian gas. But that ship has sailed. And now it's kind of like, okay, well, now your emergency trying to...”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“What we would have said like historically all-time high kind of rescue packages if we didn't just come out of COVID, but like we're having like a second round of historic all-time large kind of rescue packages, locking consumer rates. And we just have this in the UK. And you're seeing as far as a bunch of other countries that you're moving the kind of burden from consumers to the government. And I think in a similar way where it makes sense from like a COVID policy lens where it's like”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT
“And again, full disclosure, I've spent so much time looking at crude that I haven't had a lot of time looking at the kind of gas and power markets. But I think it is something similar. It just becomes a one-directional trade and no one has the kind of wherewithal to kind of stand in front of it. So I think to your point, like is it viable for the economy? No, I don't think so. I think that's why we've seen governments embark upon kind of”
2022-09-29 · Forward Guidance · Oil Will Trade Flat To Down Until Biden Backs Down & China Re-Opens | Rory Johnston · IDENTIFIED FROM THE TRANSCRIPT