Daily Energy Standup Episode #226 – Energy Turbulence: Oil Prices Surge, Gulf of Mexico Impact, and OPEC’s Forecast

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Video Transcription edited for grammar. We disavow any errors unless they make us look better or smarter.

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Michael Tanner: [00:00:15] What is going on, everybody? Welcome into another edition of the Daily Energy News Beat Standup here on this gorgeous Tuesday, October 10th, 2023. As always, I’m your humble correspondent, Michael Tanner, coming to you from an undisclosed location here in Dallas, Texas, joined by the executive producer of the show, the purveyor of the show and the director and publisher of the world’s greatest website, energynewsbeat.com, Stuart Turley, my man. How are we doing today? [00:00:39][23.9]

Stuart Turley: [00:00:39] It’s a beautiful day in the neighborhood, Mr. Tanner. How are you today? [00:00:42][2.6]

Michael Tanner: [00:00:43] It’s I’m I’m doing good. It’s it’s it’s finally starting to cool down here in Texas, which is nice. I got to wake up this morning and put a hoodie on. I felt like I was in the Twilight Zone. [00:00:52][8.5]

Stuart Turley: [00:00:52] Yeah, me too. In fact, I’ve had my man cave barn door open all day today. It’s been actually wonderful getting calls done. [00:01:01][9.1]

Michael Tanner: [00:01:02] Well, you’re in central Texas, so you takes a little bit for for central Texas to cool down. But you still have an excellent show lined up for us. First up, we’re going to stick with Israel. Oil price energy stocks surge after attack on Israel. Here’s what comes next at the next article. To follow that up, investors look to oil prices. Israel-Hamas conflict risks unnerving global markets so as always do will take a comprehensive look at what’s going on in the Middle East and how that’s affecting energy. Next up, this is out of the American Petroleum Institute study. Gulf of Mexico restrictions never really impact U.S. oil and gas production, according to the oil and gas lobbyists. So I’m glad they’re getting their job done. Next up, OPEC boost demand oil demand forecast to 2045. The the ball that keeps on rolling QE2. This is the fencepost that never stops moving. It’s in a constant outward shift. Back, back, back, back, as Chris Berman would say. Back, back, back, back, back. Done the home run. So we’ll cover everything that’s going on with oil back, pushing back their oil demand, their peak oil forecast. And then Stu’s going to really toss it over to me. I’ll quickly cover what’s going on in the oil and gas markets. Mainly we saw prices up to about 86 a 30 as we are as we cover this, that’s up over 4% really off the back of, again, some of the stuff going on in Middle East and again, really showing the weakness in the supply and demand underlying it. Then we’ll kind of wrap it up with some musings from around on the energy space. I still have not heard any word on Exxon’s potential takeover pioneer, but we did see some interesting Exxon news drop out quite lightly. The match at the end looks looks like they blew it all on Pioneer, folks. I’ll tell you that much. [00:02:48][106.1]

Stuart Turley: [00:02:48] Oh, my goodness. [00:02:48][0.5]

Michael Tanner: [00:02:49] But before we do that, guys, again, as always, the news and analysis you are about to hear are brought to you by the world’s greatest website, www.energynewsbeat.com The best place for all of your energy news. I’m Stu in the team do a great job of curating that website making sure it stays up to speed with everything you need to know about the oil and gas business. Just like we say, you’re on the tip of the spear. If you follow us, check us out. Also, dashboard@energynewsbeat.com. It’s our news data combo. Please give us feedback there. The best way to support show is to go on YouTube right now and subscribe at Energy News Beat that subscribe button, Hit that like button. I won’t give you my 15 year old YouTuber impression. I’ll spare that for another episode, but that’s where you can. That’s the best way to keep supporting the show. You can also listen to us on Apple Podcasts, Spotify, wherever you get your podcasts, hit the description below, links to the articles timestamps you can get in contact with the show that way or email us questions@EnergyNewsBeat.com. I’m out of breath Stu where do you want to begin. [00:03:47][58.3]

Stuart Turley: [00:03:48] I’ll tell you what I want to give a shout out to Secretary Yellen because the treasury secretary because she listens to the show. You and I talked about just having down the crack down on evasion of russian oil price cap as effectiveness wanes. We were on it all along. And then there’s an article that came out today. Oh, she didn’t really say it, but she implied that she listens to us now. [00:04:13][25.5]

Michael Tanner: [00:04:14] She’s she’s a frequent listener to show. So we appreciate you Secretary Yellen for reach out you you that sponsorship the official United States Treasury sponsorship that we signed last week. We haven’t gotten that check yet. So now our air department will be reaching out to you very oh. [00:04:30][16.3]

Stuart Turley: [00:04:30] Yeah in our middle name is not Ukraine or. [00:04:32][2.0]

Michael Tanner: [00:04:34] Ukraine. That’s why we’re worried about where our money is. We figured in cash quicker. [00:04:37][3.4]

Stuart Turley: [00:04:38] Oh, yeah. Okay, let’s start off here, dude. Let’s put, you know, espousing oil prices and energy stocks surge after attack on Israel. Here’s what comes next. This is a pretty nice little article kind of following up from yesterday. Right out of the article, U.S. listed energy stocks were set for a positive open. Among them were Exxon Mobil, up 3.9 in trading, Chevron was up three, ConocoPhillips was gained 4.4. Occidental was up 4.2. And Michael, a lot of the investment houses around the U.S. were saying how even Halliburton was 6.1 formally short. Schundler, Schundler, Jeb Bush, Governor Jay, we’re. [00:05:31][53.8]

Michael Tanner: [00:05:32] Not even a show. That’s unbelievable. Schlumberger for all you folks listening. [00:05:35][3.5]

Stuart Turley: [00:05:36] Well, I am such a dope. 4.3, that is Oklahoma State graduate, by the way. Okay. These events are really here’s where I want to just kind of give it a shout out to our show yesterday, Michael. Yesterday on the show, we said that it was a 300% increase back on the first Israeli Yom Kippur War, $5 to $50. Right now, we don’t see it going that way because it’s a different market. Several different things are going on. On last, because the Secretary Yellen out there saying about the Russian crude going out, the Iranians sanctions don’t work either. If Israel goes out and takes out the Iranian oil wells, you will see a huge spike. And there’s two reasons for this. Yeah, I’ll. [00:06:34][57.7]

Michael Tanner: [00:06:34] Also be getting drafted if that happens. So let’s hope that doesn’t happen. [00:06:38][3.8]

Stuart Turley: [00:06:38] It doesn’t. But here’s why. There are two stories going out there as to why Iran allegedly. For our podcast listeners, I’m holding up the quotations allegedly is not funding Hamas buy the $6 billion that the Biden administration put in. I heard great things that it was not great things that they did it, but the amount of oil that they’ve been selling to China, just like Russia at that $80 mark above sanctions and outside of OPEC plus production quotas has, they think $70 billion has been the revenue stream. So $70 billion funded the attack on a good portion of it instead of the 6 billion. Loved all that analysis. Here’s where I think it’s going to really go on. Does all that make sense, Michael? [00:07:40][61.9]

Michael Tanner: [00:07:41] No, it makes sense. I invite you. Can you find it interesting? In the midst of an oil price shock, the stocks that are up more so are Marathon and Oxy and Conoco, which are more pure play operators than you see Exxon and Chevron only up 3.93 percentage points. So you could you can see where the the difference comes in. I think the the article that you have next investors look to oil prices. Israel slash Hamas conflict quote unnerving global markets points out that obviously oil prices are going to continue to rise. But I think what’s going to exacerbate the commodities boom issue is the fact that interest rates are about to spike. I mean, we’ve seen the odds for interest rates here at home to increase have basically doubled since this year, not doubled. I think it’s about having increased about 25% in the next Fed meeting after these results. So I personally do think that’s going to be the biggest hit when it comes to Wall Street. Just the fact that now interest rates are going to continue to stay high in this commodity style boom in order to help hopefully curb inflation. [00:08:43][61.8]

Stuart Turley: [00:08:43] I would agree, and this article is outstanding from Bloomberg. There are some very great quotes in there in that article. It is you know, the investors look to oil prices, Hamas, Israel, Hamas. [00:08:56][12.9]

Michael Tanner: [00:08:57] I want to go quick shout out your photo you have in their rig i 35. That’s actually a Zion oil and gas rig that it’s a little closed on my eye. A good friend of mine in my day job, he came over and was working at Zion before this man. He he was he did not have a great look on his face today. And it sounds like they’re sorry. A lot of those people had to get evacuated. There’s a lot of stuff going on over there. So thoughts and prayers go out to everybody, specifically at Zion Oil and Gas. We know it’s a tough day for you guys, but everybody over in Israel right now, especially the American man, is tough. [00:09:29][31.8]

Stuart Turley: [00:09:29] A while you gave that shout out. I want to give a shout out to Elon Musk because on Twitter spaces, I’ll tell you what that live features. I was listening to some of the worldwide news around there, and I just want to let you know some of my sources to hear them live and they hear them talk about this war situation, talk about nuts that we’re sitting here listening to all this and people are jumping in and saying, confirmed, not confirmed. Here’s a rumor. Confirm this mosque was just taken down. Boom, boom, boom. Talk about real time news. Hats off to Elon for kicking this thing into high gear. [00:10:05][35.6]

Michael Tanner: [00:10:05] All right. Yeah, absolutely. What’s next year? [00:10:07][1.7]

Stuart Turley: [00:10:08] API, American Petroleum Institute, Gulf of Mexico Restrictions Negatively Impact. U.S. oil and gas production analysis shows this is from their their API. The analysis was submitted to the National Marine Fisheries Service in M. F. S and Energy Energy Alliance. Quote unquote, Energy production in the U.S. Gulf of Mexico is critical not only for meeting current and future energy demand, but also supporting conservation programs while driving state and local economies, helping the U.S. to meet our emissions and reduction goals, said Abe API, vice president of Upstream Policy Hallie Hopkins. She’s Class ACT. She is out there right on the front of it. So if you want to take a look at average, oil and natural gas per jet production is projected to decline under 2 million barrels a day, a 24% reduction between 2023 and 2040 because of regulatory and the issues that she’s. [00:11:16][68.6]

Michael Tanner: [00:11:16] Just in the Gulf of Mexico, by the way. [00:11:18][1.6]

Stuart Turley: [00:11:19] And that’s a gigantic chunk of what gets produced. [00:11:22][3.6]

Michael Tanner: [00:11:23] Did. No, I get what you mean. No, I think it’s a it’s an interesting research paper. I always do find it funny, you know, with the API’s going to go out and, you know, write a research article trying to tell us that new regulations are going to impact oil and gas pressure. Well, duh. I’m glad all our our hard earned money is going into researching, in my opinion, an obvious fact that if you’re going to restrict it with oil wells declining, if you legislate deregulation, you’re going to see declining oil wells. I do find it interesting, though, they do talk about specifically the jobs that are going to be cut. That’s a drop. 13% of the jobs it would be out. And that’s specifically when you look at these regulations. That’s something that I think moves the needle when you talk about. [00:12:06][43.6]

Stuart Turley: [00:12:07] Less huge. [00:12:07][0.3]

Michael Tanner: [00:12:07] Policy makers. [00:12:08][0.6]

Stuart Turley: [00:12:09] Exactly. Because those 30 that 13% of the jobs are high paying jobs out of the Gulf. [00:12:15][6.1]

Michael Tanner: [00:12:15] I’m glad the API’s on it. Let’s what’s next? [00:12:17][1.8]

Stuart Turley: [00:12:18] OPEC’s boost oil demand in that demand forecast to 2045. Michael, it is absolutely a hoot to see what’s going on out there. We’ve been consistent that you’re always going to need fossil fuels, period. You like your iPhone, need the plastic, you need the stuff out of there. Fossil fuel or renewable energy and nuclear energy can get you only so far. You’re still going to need a certain amount. Now, OPEC raised its forecast for global oil demand through the middle of the century. And the EIA, which we know is a EU excuse me, a U in lapdog. This is from the OPEC secretary. There has been pushback against the opinion that the world should see the back the back of fossil fuels as policies and targets and other energies falter due to costs and more nuanced understanding of the scale of the energy challenges. He really doesn’t address that in there. But Michael, it’s because physics and fiscal sustainability matter. I applaud them for saying that. [00:13:26][68.5]

Michael Tanner: [00:13:27] Yeah, so there’s a couple of things here. First, there are three things guaranteed in this life death, taxes. And Stuart Turley can’t reading a title when it comes to energy news. The fourth thing that’s coming in true here, though, is that we continually see this oil demand, peak oil demand getting pushed back. It was originally in the mid 2020s. Now it’s 2030. It was then 2035, now it’s 2045. How would you want to bet this time next year? We’re looking at 2050 when it comes to peak oil demand. Now, the interesting part is going back to the API. Of course, OPEC is going to say peak oil is for out because they have a interest in saying that. But I do think that when talking about when peak oil will happen, you have to realize where do they represent? Where do they represent this coming from? Lot of it is transportation, petrochemicals and aviation basically are going to be driving all the growth. They also say that India is expected to double its consumption from 6 million barrels a day, all the way to 12 million barrels a day, followed with China, only about a 26% gain with about 4 million a day. So China and India, India is where the majority of that expansion will come from. [00:14:37][70.4]

Stuart Turley: [00:14:38] And guess, guess where they’re buying their oil? Russia and Iran. [00:14:41][3.0]

Michael Tanner: [00:14:42] Yeah, no fun. [00:14:42][0.8]

Stuart Turley: [00:14:43] That goes back to my other article. [00:14:44][1.1]

Michael Tanner: [00:14:46] It’s fine. [00:14:46][0.2]

Stuart Turley: [00:14:47] I just thought I’d share that. You know, most of the world’s oil is going to go to pay for Hamas. [00:14:52][4.8]

Michael Tanner: [00:14:53] We don’t want. [00:14:54][0.4]

Stuart Turley: [00:14:54] That. I do. That goes back to the Israelis. I’m not trying to hone in on you, but they’re all all these stories are related. [00:15:02][8.2]

Michael Tanner: [00:15:03] Yeah. No, I’m I’m I’m we’re. [00:15:05][1.6]

Stuart Turley: [00:15:05] Not from Arkansas. [00:15:05][0.4]

Michael Tanner: [00:15:06] But no. Thank goodness. Thank goodness we are from Oklahoma State, though. All right. You got anything else to. [00:15:12][6.0]

Stuart Turley: [00:15:12] Oh, no, our. Prayers go out to everybody over there. This is just a sad day. [00:15:17][4.1]

Michael Tanner: [00:15:17] Yeah, no, really sad day. Well, we’ll kick it over to the finance segment here, guys. Not much going on in the global markets that don’t really involve the fallout from Israel, the Israel, Israeli terrorist attacks. Stocks were actually up about 6/10 of a percentage point. Nasdaq traded up about half a percentage point, mainly because we saw US bonds fall by by about a quarter of a percentage point. That’s the front 30 year year. Ten year yield still was down 3.47%. So my money market account strategy has been taking a hit today. I was getting five, six, seven a half percent in my money market account. And then now days of that is all over. So thank you, Hamas. But I think really what you’re going to see still is the fallout from this this this Iran led terrorist attack is most likely, again, going to be in the commodities market. We saw natural gas did get up above 340 today, settled at $3.37. You know, oil prices started again yesterday, trading at about 81, 82, 79, opened all the way above $84, currently sitting 8642. You know, the macro drop behind this stew really just has to focus that as we talk about everyone’s going to compare this as we talked about yesterday, is the Yom Kippur War. Do I think we’re going to see a huge fluctuation from 5 to $50 like jumps, as we will know? I don’t think we’ll see that. I do think, though, this could be the catalyst that will begin to have the fundamental shift to the point where we could see $120 or $150 oil. Now, do I think that’s possible? Do I think it’s going to be sustained? No, but I do think we’re in for a long sustained period of oil prices being above 85 and most likely above 90. Brant currently sitting at 8862. Not much else happens. Do I’d be remiss if I didn’t say that that ExxonMobil had a little bit of a situation this morning there had a shale got arrested for some not so fun stuff they were. This is according to Bloomberg. ExxonMobil’s corporate head of shale remained in a Texas jail Sunday after he was arrested for sexual assault at a hotel bar near Houston last week. His name is David Scott. He’s a senior vice president of their upstream shale division. He was arrested at KIPP. This to a lucky to in in suites blew it all in the pioneer deal I guess man yeah look in in suite that’s where so that’s where we have to get Petra we book your motels? [00:17:45][147.7]

Stuart Turley: [00:17:46] No, that’s a lot bigger upgrade. I’m going to the Midland International Midland Permian Basin Show next week, and then I’m going to be there again to interview with all of the American Oil, Oil and Gas Association people the following week. So now I’d like to stay at the La Quinta. [00:18:07][20.9]

Michael Tanner: [00:18:08] Yeah, we got you at the Motel six right now. So just for all you people wanting to work at Exxon, when you get to that coveted senior vice president of Exxon upstream, you book yourself a lucky day and baby. That’s what it all comes down for. [00:18:21][13.5]

Stuart Turley: [00:18:22] The Christmas. [00:18:22][0.1]

Michael Tanner: [00:18:23] Party. Yeah, this guy ain’t going to be gone any more Christmas parties. Trust me, This guy is going to this guy’s gonna be in the bread line. So this guy to go get the bread line, you remember this? This guy is probably he’s made his last shale deal, I’ll tell you that much. You got anything else for the H2? [00:18:37][14.6]

Stuart Turley: [00:18:38] Oh, no. It’s just there is so much going on in the news desk, dude, And it’s all related. Everything. It’s energy. It’s not just oil and gas. [00:18:47][9.2]

Michael Tanner: [00:18:48] Yep, absolutely. So with that, guys, we appreciate you checking us out. I’m here on this Tuesday. For Stuart Turley, I’m Michael Tanner will be back in action tomorrow House. [00:18:48][0.0][1081.9]

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