JJ - for me, this is your best piece in recent memory. All of the analysis is priceless. Yet, in this missive you clarify again your very solid reasoning. Importantly, you note that the futures markets would reflect different supply situation if there was one.
Here in Dallas there are a huge number of energy professionals. There is no lack of "views". None of them that I have heard from or heard about have explained their views in the detail you have laid out.
JJ -- when it comes to oil, you and Doomberg are pretty much the only ones I listen to. I learn something new every time I read it. MV, along with a very small handful of others, is one of the rare jewels in a sea of slop.
This is one of my favorite things to read so keep going! - one thing I want to point out is that, in my experience in the oil business, the most difficult thing is knowing the time scale you are dealing with: Trading deals with one time scale, capex decisions are in another and longer term trends are on yet another time scale. I have known Currie for 30 years and he always is talking about capex cycles - one cannot trade crude based on his time scale in the short run - Doomberg deals with long term trends and if you made capex decisions based on his thesis as a producer you would give up and get out of the business! The tank bottom stuff is just hyperbole to try and wake people up to the fact that they are way underweight energy at a time when AI is creating a massive energy margin call for the world. In that I think Jeff is correct but would not trade short term crude on that advice!
Gm .. I agree with timing and crude. Decisions today don’t change inventory for many weeks… that’s why futures are so important. The curve always knows. Not so much Dec Red but the front 6 especially the front spread and the 1st 6 flys…if prices don’t validate a narrative something’s not right !
The sad part is that JC’s most interesting point is that worldwide there is a big move to more offshore production, even for the ME, that means that the most hated part of the oil industry (offshore drillers) are going to be a big focus in the next capex cycle. With inflation running rampant and drill ships disappearing into the scrap heap the remaining equipment is going to be very valuable - HAL/Brown &Root survived the early 80’s with two pipelay barges in the North Sea because they were the only game in town!
Appreciate you and your writing JJ. I always wondered if Alyosha was referencing that book... one of my favorites! I did not renew my subscription not because of any complaint with you or your work, I'm just struggling to have the bandwidth to keep up with all of this every day and moving to more passive investing. Keep up the good work and sharing your knowledge with everyone! I'll stick around for free posts whenever they pop up.
JJ - for me, this is your best piece in recent memory. All of the analysis is priceless. Yet, in this missive you clarify again your very solid reasoning. Importantly, you note that the futures markets would reflect different supply situation if there was one.
Here in Dallas there are a huge number of energy professionals. There is no lack of "views". None of them that I have heard from or heard about have explained their views in the detail you have laid out.
THANK YOU.
Hugh
Ty sir. My best regs to Dallas! I filled orders for Caltex in the 90s… good guys.
Caltex is a name I have not heard in long, long time. The family tree of these oil companies is long and complex.
Your writing has kept me sane and saved me money I would have lost chasing false narratives. Many thanks!
Beat me to this comment!
Great stuff!
JJ -- when it comes to oil, you and Doomberg are pretty much the only ones I listen to. I learn something new every time I read it. MV, along with a very small handful of others, is one of the rare jewels in a sea of slop.
Thank you. Heartily.
To summarise it in one sentence:
Fear sells on X, but it doesn't make you money in the markets....
exactly
Wonderful to be heading into the weekend reading this shotgun analysis. Integrity is a rare commodity today and I am very grateful for yours.
" ... because you pay me to be honest way more than to be right."
100% Sir. 100%
(as crude crosses into the $86 level on the biggest supply shock the world has ever seen... )
excellent
This is one of my favorite things to read so keep going! - one thing I want to point out is that, in my experience in the oil business, the most difficult thing is knowing the time scale you are dealing with: Trading deals with one time scale, capex decisions are in another and longer term trends are on yet another time scale. I have known Currie for 30 years and he always is talking about capex cycles - one cannot trade crude based on his time scale in the short run - Doomberg deals with long term trends and if you made capex decisions based on his thesis as a producer you would give up and get out of the business! The tank bottom stuff is just hyperbole to try and wake people up to the fact that they are way underweight energy at a time when AI is creating a massive energy margin call for the world. In that I think Jeff is correct but would not trade short term crude on that advice!
Gm .. I agree with timing and crude. Decisions today don’t change inventory for many weeks… that’s why futures are so important. The curve always knows. Not so much Dec Red but the front 6 especially the front spread and the 1st 6 flys…if prices don’t validate a narrative something’s not right !
The sad part is that JC’s most interesting point is that worldwide there is a big move to more offshore production, even for the ME, that means that the most hated part of the oil industry (offshore drillers) are going to be a big focus in the next capex cycle. With inflation running rampant and drill ships disappearing into the scrap heap the remaining equipment is going to be very valuable - HAL/Brown &Root survived the early 80’s with two pipelay barges in the North Sea because they were the only game in town!
My hope, not yet validating.
Such a good piece! Invaluable insights from one of my favorite traders. Keep it coming, sir!
Top Work JJ.
Respect,
"Be careful when you follow the masses.... sometimes the "m" is silent..." from one of my favorite bars... Buddha's @ Spanish Wells, Bahamas
https://www.tripadvisor.com/Restaurant_Review-g5785959-d6725864-Reviews-Budda_s_Snack_Shack-Spanish_Wells_Eleuthera_Out_Islands_Bahamas.html#/media/6725864/?type=ALL_INCLUDING_RESTRICTED&albumid=101&category=101
Keep 'em coming JJ...
😅
Well done, JJ. And, by the way, now that I’ve gained a little understanding of your “Points of Control”, I see them everywhere!
You are a gentlemen and a street wise scholar born of the greatest generation.
Appreciate you and your writing JJ. I always wondered if Alyosha was referencing that book... one of my favorites! I did not renew my subscription not because of any complaint with you or your work, I'm just struggling to have the bandwidth to keep up with all of this every day and moving to more passive investing. Keep up the good work and sharing your knowledge with everyone! I'll stick around for free posts whenever they pop up.
That’s a great piece, thank you. Subscribing to you and Doomberg is all I need. I can ignore all the rest x