Official (Alberta) Oil Discussion Thread

[nik-]

Originally Posted by Slava

Not sure about WCS, but Brent is up 17% at this point!

What site are you using for futures?

[Slava]

Originally Posted by nik-

What site are you using for futures?

I've got it live, but it's basically everywhere online right now.

And in the US, some gas prices at $4.99/gallon!

[nik-]

Originally Posted by Slava

I've got it live, but it's basically everywhere online right now.

And in the US, some gas prices at $4.99/gallon!

yeah, WTI up $6.66 currently according to oilprice.

ARMAGEDDON.

[_Q_]

Originally Posted by Brewmaster

Oil prices are definitely going up on the back of this morning's drone attack on Saudi Arabia's key facilities.

https://www.reuters.com/article/us-s...-idUSKBN1VZ0OJ

The Houthis can nuke all of Saudi Arabia and oil prices can spike to $700/barrel, still nobody will be buying Alberta oil.

[guzzy]

it would be a damn shame if Saudi oil stopped flowing to the Canadian east. I a sure JT's pocket will take a big hit from this.

[GullFoss]

What are people thinking about buying today? I have my MEG shares, so I'm not in a rush to get to buy anything else.

That being said, ATH at 0.69 seems like a real steal.

[Fuzz]

Originally Posted by GullFoss

What are people thinking about buying today? I have my MEG shares, so I'm not in a rush to get to buy anything else.

That being said, ATH at 0.69 seems like a real steal.

Weapons manufacturers...Who sells the most stuff to Saudi, anyway?

[OMG!WTF!]

Originally Posted by GullFoss

What are people thinking about buying today? I have my MEG shares, so I'm not in a rush to get to buy anything else.

That being said, ATH at 0.69 seems like a real steal.

I don't think it matters what you buy today, everything is correlated to the recent macro news. ATH is pretty much the same as every other stock in its sector over the past year or so. If you're really looking to just buy the news then maybe a more liquid stock in that sector would be a better buy. If you're looking for alpha there I'd maybe let the news shake out a bit then see what moves above the peak of this little run. But to me it always seems really hard for a single oil stock to break out of the over all oil market correlation.

[afc wimbledon]

Originally Posted by Fuzz

Weapons manufacturers...Who sells the most stuff to Saudi, anyway?

The UK

[Fuzz]

Originally Posted by afc wimbledon

The UK

So you are saying I should go all in on the UK right now? OK, done!

[GullFoss]

I don't think it's a short term event. I would be looking for alpha right off the hop

[DiracSpike]

Originally Posted by GullFoss

I don't think it's a short term event. I would be looking for alpha right off the hop

Just curious, why not? I'd love for you to be right as someone who's levered to the tits on this stuff, the news seems to be the Saudi's believe they can get it fixed, plus release some from storage, plus the US releasing from storage and Russia pumping more. What drags this out, are there reports that the damage is more credible than the Saudi's are letting on?

[burn_this_city]

Saudi is highly secretive, only recently have they even told the world how much they produce from each field. The chances they can repair their sulfur treating trains in a few days or weeks seems highly suspect. I think this is a few month outage, and when storage draws down below the 60 days of consumption level oil will keep climbing. Just look at how long Husky's Superior refinery is offline, fire in April 2018, not due back online until 2021.

[DiracSpike]

Well hopefully this isn't a super long term outage. I know we're happy in town that oil is up a bit and our well run companies stocks are bouncing from being criminally undervalued but a spike in oil like this is not good for a fragile world economy. Could push into a recession which brings us right back down. Hopefully it's a bit of reality check to everyone that the world supply isn't as secure as thought and maybe we should get pipelines built out from stable responsible countries...like Alberta.

[FLAMESRULE]

Originally Posted by burn_this_city

Saudi is highly secretive, only recently have they even told the world how much they produce from each field. The chances they can repair their sulfur treating trains in a few days or weeks seems highly suspect. I think this is a few month outage, and when storage draws down below the 60 days of consumption level oil will keep climbing. Just look at how long Husky's Superior refinery is offline, fire in April 2018, not due back online until 2021.

Definitely agree it'll be longer. Not sure on impact to global storage etc with the ability/likelihood to divert the crude to other desulphurization / vapor stabilization plants.

https://twitter.com/user/status/1173638998457290753

[GullFoss]

Originally Posted by DiracSpike

Just curious, why not? I'd love for you to be right as someone who's levered to the tits on this stuff, the news seems to be the Saudi's believe they can get it fixed, plus release some from storage, plus the US releasing from storage and Russia pumping more. What drags this out, are there reports that the damage is more credible than the Saudi's are letting on?

1) There is a huge supply deficit and no more spare capacity globally. The world was short 0.7 mmbbl/d since 2Q19. The spare capacity of gulf countries (ex Saudi) and Russia is maybe 0.7 mmbbl/d. Most remaining spare capacity was Saudi and this spare capacity was also hit in the attack. The only major unplanned outage globally is Iran.

Conclusion: the only way to plug the huge supply-demand gap is with inventories...

2) there isn't a lot of inventory in storage globally. Analysts who say there is don't get it. The cheapest area to store oil is USA, which is why oil builds up in US first and draws out of US last. Oil has drawn massively since May 2019 and is going to be at extremely tight levels by year end. Given that US inventories are mostly light and Saudi losses production was mostly light, US inventories are going to draw hard in November and December as they get exported to asian and European countries.

The SPR can only be drawn in event of actual shortage, so it won't kick in until after inventories get drawn down!

3) this should take weeks or months to repair. Whatever Saudi say...it's much worse. Saudi wants to downplay the issue because (a) the truth reduces their IPO valuation (b) the truth loses them market share (c) the truth loses them credibility on the world stage (d) the truth makes them look more vulnerable to their enemies

4) the geopolitical angle is ramping up. See the headlines about attacking Iran. Imagine if Saudi or US hits Iran's oil infrastructure in retaliation. Imagine if Iran stikes again while the facilities are under repair! The risks are huge!!!!

5) no one is going to try to grow into this for a long while because they don't know how long it will last. Also shale producers have no access to capital. So supply won't come to the rescue.

[iggy_oi]

Originally Posted by DiracSpike

Hopefully it's a bit of reality check to everyone that the world supply isn't as secure as thought and maybe we should get pipelines built out from stable responsible countries...like Alberta.

Good old DiracSpike always passive aggressively pushing the separatist agenda

[Rutuu]

Our fund had oil exposure before the event yesterday and it was our hedge on inflation, with the news on the weekend we topped up with an oil etf as we expected residual effects to lift prices as more news came out. Back in late Jan/early Feb Vale had a tailings dam collapse that took 10% of the world's iron ore off line. The iron ore guys rose for weeks after despite recession fears. We expect a similar result with oil.

Iron ore has come off now as production has been restored, so it is a cyclic story. As a footnote Bloomberg ranks/tracks every analysts predictions and the vast majority of analysts tracking Canadian oil and gas stocks in their universe are underwater 30%-40%+ on their predictions over the last 5yrs, so be wary of anyone calling a return to certain multiples/or a price recovery long term, because the reality is multiples have been shrinking for years (even in the US) and Goldman Sachs models shown you need 4mmbbld of demand growth or supply destruction to hit $80/bbl long term. That's a tough proposition when OPEC was holding back 1.3mmbbld as at Friday and venuzuela and Iran were 2mmbbld under capacity.

... But for the next few weeks enjoy the crap out of the old time boom... Doublé meat at Subway... Engaged.

[GullFoss]

Originally Posted by Rutuu

Our fund had oil exposure before the event yesterday and it was our hedge on inflation, with the news on the weekend we topped up with an oil etf as we expected residual effects to lift prices as more news came out. Back in late Jan/early Feb Vale had a tailings dam collapse that took 10% of the world's iron ore off line. The iron ore guys rose for weeks after despite recession fears. We expect a similar result with oil.

Iron ore has come off now as production has been restored, so it is a cyclic story. As a footnote Bloomberg ranks/tracks every analysts predictions and the vast majority of analysts tracking Canadian oil and gas stocks in their universe are underwater 30%-40%+ on their predictions over the last 5yrs, so be wary of anyone calling a return to certain multiples/or a price recovery long term, because the reality is multiples have been shrinking for years (even in the US) and Goldman Sachs models shown you need 4mmbbld of demand growth or supply destruction to hit $80/bbl long term. That's a tough proposition when OPEC was holding back 1.3mmbbld as at Friday and venuzuela and Iran were 2mmbbld under capacity.

... But for the next few weeks enjoy the crap out of the old time boom... Doublé meat at Subway... Engaged.

This isn't wrong. However, Alberta doesn't need $80 for things to get better.

Assuming meaningful construction takes place with TMX through the fall and winter, US$65 WTI for 6m-9m would be sufficient to see a few companies do some meaningful projects (CNQ, SU, IMO, CVE, MEG). If each of these companies sanctions a brownfield/Greenfield project and conventional companies pick up rigs, the province would probably see unemployment drop 2%-4% in short order given associated spin-offs and economic multipliers.

[Rutuu]

Originally Posted by GullFoss

This isn't wrong. However, Alberta doesn't need $80 for things to get better.

Assuming meaningful construction takes place with TMX through the fall and winter, US$65 WTI for 6m-9m would be sufficient to see a few companies do some meaningful projects (CNQ, SU, IMO, CVE, MEG). If each of these companies sanctions a brownfield/Greenfield project and conventional companies pick up rigs, the province would probably see unemployment drop 2%-4% in short order given associated spin-offs and economic multipliers.

I agree. Not really something that will drive big returns for our clients, so we'll sell off after we feel prices have peaked, but it'll be nice to keep people back in Alberta employed for a few more years if some projects get ok'd.