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Oil Heavyweights Look Ready for a Showdown

Oil producers could be set for another showdown before the end of the year, with heavyweights Saudi Arabia and Russia holding different views on how to approach the halting recovery in oil demand.
Renewed restrictions on travel & social gatherings across Europe, along with the tapering of state support packages for companies, are having a chilling effect on crude demand, OPEC+, who cut 9.7 M barrels/day in May, contemplate the next easing of limits on their output.
The IEA and OPEC have both resumed cutting their forecasts for this year’s oil demand. In the past two months, the IEA has trimmed its forecast by 400,000 barrels/day, while OPEC has reduced its own by 500,000 barrels. And they may have further yet to fall.
Read 17 tweets
THREAD: #Libya #marsec update
The Marlin Shikoku, owned by a Chinese state-run company, is bound for Libya to lift oil after a blockade on oil exports is partially lifted. 1/5
#Maritime #Security #Shipping #ports #OOTT
Libyan oil fields and terminals had been stopped since January 2020 as the fight for the control of the oil revenue prevented any agreement between rival factions. 2/5
On September 18, a member of the GNA and the son of warlord Khalifa Haftar announced that the exports would resume. This announcement was quickly rejected by other GNA members and state institutions, raising doubt as to the feasibility of the agreement. 3/5
Read 5 tweets
THREAD - S&P #tankers #OOTT

Tanker operators in Vietnam appear to have embarked on a buying binge, snapping up four tankers across the size spectrum this week, according to brokers
The main beneficiary of this tanker charge appears to be Greece’s Minerva Marine, which Greek brokers said had sold the 309,000-dwt Pantariste (built 2002) for $26m and the 105,900-dwt Minerva Zenia (built 2002) for $12m, both to Vietnamese interests.
Minerva, which routinely declines to comment on vessel sales, has sold several tankers into Vietnam this year. In June it sold the 105,900-dwt Minerva Astra (2001) to a Hanoi-based company Golden Lotus Gas & Real Estate for $10.5m. It was delivered in August and renamed Explorer.
Read 14 tweets

Had a few comments about me asking whether peak supply may come before peak demand. So I thought i would write in more than one tweet what my theory is. And it is only a theory.

2. Over the last 6-7 years investment has been low and we have not seen its effect yet. Shale growth covered the demand growth but other projects covered the loss of crude oil as fields started to age and degrade.
3. The lack of investment means that at some point he projects needed to cover the degradation and ageing of fields will just not be there to cover these losses. Shale will grow but shale was a very specific period of time due to capital availability.
Read 10 tweets

Oaktree has upped its stakes in both Torm and Ardmore Shipping

majority owner Oaktree Capital has bought up shares in competitor Ardmore Shipping, which previously attempted to take over. The equity fund is now the tenth-largest shareholder in
Torm's main owner, US-based equity fund @Oaktree Capital has bought up shares significantly in one of the Danish shipping company's biggest competitors. During 2020, Oaktree has thus bought shares in Irish rival Ardmore Shipping .
According to data from Bloomberg, Oaktree now owns 71.2 percent of Torm and 3.38 percent of Ardmore. Oaktree's share purchases come at a time when the product tanker market has been through its best period in a long time.
Read 15 tweets

Spot earnings for product tankers are bottoming out in the Atlantic basin with the revival of naphtha and gasoline arbitrage movements, tanker experts suggested.

Clarksons estimated MR earnings on the TC2 northwest Europe-US Atlantic coast route @ $9,000/day on Monday, up from $6,400/day last Friday. The brief dip in TC2 earnings last week pried open gasoline arbitrage window at a time when many LR1s are transporting cargoes to W Africa
“With a shortage now of LR1 tonnage for the balance of the month MRs are likely to become the favoured size once again, helped by the fact that pricing has also reached near parity,” Gibson Shipbrokers said in a note.
Read 9 tweets
Hear a lot from the #OOTT friends on how green and renewable are the new shale. Thought I’d give some thoughts and maybe clarify some misconceptions in this quick thread. 1/x

#UFT $NEE $XEL $XLU $AQN $ $ $
Renewables are a relatively new & rapidly advancing industry when compared to E&P, by the time a project gets public notoriety it is years after COD, while projects being developed & contracted today are using forward curves for EPC pricing and 2023’s technology. 2/x
Resource – Wind & Solar resources have a reliable measured history and underwriters are comfortable, hard to manipulate vs. shale with well spacing. When a project is transacted on there is typically a back and forth negotiation on terms, including what yield is “correct”. 3/x
Read 17 tweets
THREAD. So, somewhere between the "business as normal" and "net zero by 2050" scenario there are a lot of investable opinions.

"Peak demand" cries are just as wrong as "peak supply" cries have been. Vitol seems to hold this opinion.

What happens if the majority of check cutters and project planners out there believe oil is done and they're just wrong? Perhaps not enough investment to keep up with consumer demand. Oil prices spike. Sentiment changes. Exploration. An energy transition is not easy to plan.
I think if you wanted to take a hedged approach, you'd consider all of the following with your own weights:

1) Oil production / transport
2) Raw materials
3) Alt energy infrastructure

A diversified oil major is thinking the same way. I think someone like is a good bet.
Read 6 tweets
1/ #oott #eastmedgas #riskarb
Before I get started on this thread it’d be great if you would respond to this poll on the impact of the Elliott offer:
2/ The Elliott announcement is a big deal. Consensus is that is a done deal and the window on an activist play is closed. From day 1 I was out here saying that the offer was a low ball offer and if focus was #eastmedgas that would have just lifted that out of
3/ If offer was about US assets then offer makes perfect sense. Step 1: Pay in stock for the #eastmedgas assets, get the US for free (enterprise value). Step 2: flip the #eastmed gas assets to the highest bidder for cash and sit pretty with the US for free.
Read 13 tweets
1. Thread

Lot of talk on the floating storage in China but it needs to be looked at more carefully than just the big number that is being posted.

The tweet below shows the problem is mainly in one area. Qingdao

2. When looking at the ships that have arrived there are different kinds
- cargoes waiting to unload
- distressed cargoes that are still looking for a buyer
- floating storage which are cargoes waiting for the price to go up before being sold.
3. Knowing what each cargo is important because many of those cargoes may not be unloaded for months (floating storage) nor belong to Chinese refineries (floating storage, distressed cargoes).
Read 10 tweets
Let’s talk #Venezuela and it’s never ending super hyper #inflation for a second
Thread 👇
1/ According to the consumer price index elaborated by the National Assembly, monthly inflation in #Venezuela jumped to 55.1% m/m in July – thereby taking it back above the hyperinflation baseline of 50% (!)
2/ Under widely accepted definition of hyperinflation proposed by Cagan in seminal study (1956) an episode of this extreme economic phenomenon begins when threshold is 1st crossed but only ends when monthly increase in price level drops below 50% and stays there for at least 1yr
Read 11 tweets
Now, that the fever of #Turkey's gas finding has cooled off (or not?), time for a (long) THREAD on challenges and implications #OOTT #ONGT

➡️ The gas is in ULTRA-deep waters: mark this term, it bears important outcomes

Tuna-1 well is located in 2115 meters water depth 1/
and the gas reserves were hit 1400 meters further, at nearly 3500 m water depth.
Total depth of drillings is expected to reach 4525 m where two more layers of gas are likely to be found (accord' to Fatih Donmez)

*Currently 500 m is considered the threshold for "deep waters" 2/
Depths over 1500 meters are considered "ultradeep waters"

👉Feature 1> in comparison with onshore projects, the offshore ones are considerable more expensive & involve long term deployments

👉Feature 2 > ultradeep projects are even more challenging
Since 1996, the oil & gas 3/
Read 16 tweets
آخرین اخبار درباره نفتکش‌های توقیفی 1/12
نفتکش‌های بلا، برینگ، لونا و پندی که حامل سوخت ایران برای ونزوئلا بودند چند روز پیش در میانه‌ی راه توسط آمریکا متوقف شدند.
محموله‌ی بنزین این نفتکش‌ها در مجموع احتمالا ۲ میلیون بشکه
#نفتکش #ونزوئلا #نفت #OOTT
(معادل ۳۱۹ میلیون لیتر یا مصرف ۴ روز کشور ایران) بوده که با توافق شرکت مالک آنها به نفتکش‌های دیگری منتقل شده تا به هیوستون تگزاس برده شود.

⛽️شرکت‌های مالک این نفتکش‌ها یونانی و پرچم آنها لیبریاست.

⛽️محموله‌ها بین دو تا سه ماه پیش از ایران بارگیری شده‌اند و مقصد آنها
ونزوئلا بود.

⛽️آمریکا اعلام کرده برای توقیف این محموله‌ها از هیچ نیروی نظامی‌ای بهره نگرفته است.

⛽️دادگاهی در آمریکا در زمان بارگیری این نفتکش‌ها دادخواستی را بررسی کرد که منجر به صدور حکم توقیف محموله‌ی آنها (کشتی‌ها توقیف نمی‌شوند) در صورت انتقال این محموله به
Read 12 tweets
#ThursdayThoughts : Today marks 4 months since **MAX Global #Lockdown** (Thread). It was achieved on April 6 when 76% of global cities had #traffic congestion down 40% y/y or more. Now, only 12% of cities have congestion down 40%. #COVID__19 #pandemiclife #OOTT
*Side-by-Side Comparison*: Top 30 Global Cities w/ Most Depressed #Traffic Congestion. April 6 (Max lockdown) & today’s release. Apr 6th (left) Smoothed data showed #Philippines & #Malaysia cities top 2. US - 7 cities. #India - 4. #Wuhan #Paris #Istanbul #Moscow included. #OOTT
Now, (chart on right): #SaudiArabia is in focus w/ 2 cities in top 3: #Riyadh & #Jeddah . #Cairo is top in smoothed data. #Honolulu (US) is still in the top. US has 15 cities included now. #Manila & #kualalumpur still included. #COVID__19 #SocialDistancing #OOTT #Transportation
Read 5 tweets
What are upstream operators saying about their proclivity to increase activity in 2H20 and 2021?

The following are quotes from several mgmt teams so far during 2Q earnings season:

- We don't envision returning rigs to the Permian unless oil prices recover well into the 50s.
- For prices significantly below $50, capital spending is more likely to be reduced from the $1B. If oil prices rise above $50, we will be very measured with our capital increases
- Strengthening the balance sheet is going to be much more important than growing production volume. To the extent that oil price exceeds $30 WTI we'll use any excess free cash flow that generates to reduce debt.
Read 13 tweets
Based on the data we have now reviewed along with an AIS playback, we have good reason to believe that a cargo vessel departing from #LaGuaira, #Venezuela has spilled its fuel oil following a possible failure. Vessel is currently broadcasting "not under command". #OOTT #OilSpill
The video shows free-flowing oil, which is not typical for Venezuela's heavy crude. Satellite imagery shows it spread rather quickly and shimmers in sunlight. This is more typical of a refined product; in this case most likely fuel oil.

The cargo vessel's name is NAUMA (9362827) ImageImage
What the @MarineTraffic data tells us is that the NAUMA departed La Guaira dock late night of July 29th for Guyana and set an ETA date of August 1st. Two and a half hours later, something happened. Speed dropped from 11 knots/hour to just 0.3; and then she drifted for two days.
Read 5 tweets
While the purchase of @Nblenergy
makes @Chevron a dominant Permian player, its international component is also a big development in East Med gas markets, and potentially a turning point for Israel's threatened #natgas market. Lets dive in (Thread) #lng #energy #oott #energy
Noble operates the two largest #natgas fields in Israel, Leviathan and Tamar, which hold a combined capacity of 2.4 Bcfd—well above Israeli’s domestic demand. ~70% of this production is locked into long-term sales deals, with an average sale price of $5.50/MMbtu
It has not been smooth sailing though. Noble and Delek have been hit hard by COVID, both selling assets & cutting capex to meet financial obligations. Further, production from Leviathan/Tamar has been capped at 50% cap in 2020 due to demand destruction & infrastructure issues
Read 9 tweets
Thoughts & Observations

Week of 7/5

As usual, everything somehow related to energy

Equities & commodities. For the first time in a while, upstream looks cheap to a rising crude tape. OFS lagging even more. Refiners finally catching down to weakening cracks.
Rig count continues to slide vs plummet. Frac spreads down w/w after recent uptick. Good. The longer these numbers stay down here, the better it bodes for ‘21+
Read 70 tweets
1. Thread: the decision of Saudi Arabia to start a price was is probably the worst decision they made because they really did not understand the implications of their actions.

2. First they failed to realise that Trump and The Us had a floor to the price they were willing to accept oil. I believe Saudi thought a price war would please Trump as it brought down the price of gasoline. Huge mistake as can be seen by their back tracking.
3. It showed that Saudi maybe the biggest producer and with the most spare capacity but the swing producer is the USA not because of shale but because they can make Saudi increase and cut their production.
Read 9 tweets
1. We often hear that Iran is headed for a "Venezuela-style" economic collapse. We are rarely offered data to back-up that comparison.

Looking at data for the oil sector, it's clear that Iran has yet to enter the kind of sustained decline that Venezuela has experienced. #OOTT
2. A "Venezuela-style" economic collapse is preceded by long, uninterrupted declines in oil production (since 2006) + consumption (since 2012). Iran has faced big shocks, but remains on a different path because of a capacity to readjust within 1-2 years. Here is the indexed data.
3. Venezuela has only recently faced direct sanctions pressure. In this way, it's an interesting comparator with Iran. Sanctions proponents often argue that most of the economic dysfunction in Iran is attributable to mismanagement/corruption/inefficiency. That's true. But...
Read 5 tweets
1/Thread: Freehold Royalties-Overlooked, but not forgotten.

A real asset investment tied Canadian Oil & Gas production where you pay trough multiple for trough Revenues/FCF - significant expansion opportunities for both.
I have paired this with a short on the #OOTT
2/ "Energy" has been a dirty word in the investment universe for the last half decade. New technology met central bank largess and collided with irresponsible management teams & capital stewards to create the global shale oversupply of the last decade.
3/ With a transition to cleaner alternatives in the distance, economically vulnerable demand and shalecos willing to pump irrespective of capital returns, investors have left the sector. With COVID, the valuations of many E&Ps are insanely rich @ forward strip for the underlying.
Read 27 tweets

Vitol: the inside story of the oil crash

The top oil trader has been dogged for months by rumours it lost big in oil crisis.

Here’s what really happened:

* Losses on derivative bets Feb/Mar
* Q1 net income down 70% to $180m

W/ @humenm #OOTT…
Some of the company’s traders thought the worst of the oil demand hit was over by mid-February as China appeared to be getting coronavirus outbreak under control.

We all know what happened next.

* Saudi-Russia price war
* Coronavirus goes global
* Oil demand crashes #OOTT
A rumour ripped through market about massive losses, likely given some credence by a headhunter emailing it to a rival. The headhunter retracted it.

The fact Vitol ultimately had positive Q1 net income pours cold water on number. People familiar say grossly exaggerated #OOTT
Read 6 tweets
Black market thread:
The tricks used in #OIL trading with sanctioned countries and why it can be stopped. Sanctioned OIL trades with a massive discount to benchmarks. #OOTT
1. Going Dark
A common method to transport Iranian oil or North Korean coal with stealth is to turn off the AIS, an electronic device that pinpoints a ship’s location. Known as going dark, a vessel flicks the switch before berthing and typically reappears days later
2. Ship-to-Ship Transfers
A method that often goes hand-in-hand with going dark. A first vessel will take its clandestine cargo away from the country in question before transferring it to a waiting ship, all of this happening out of sight.
Read 7 tweets
Irving Oil is buying the refinery in Come By Chance, NL, along with a heap of other North Atlantic Refining Corp. assets. #oott #oilandgas Image
On a related note, MAN I love place names in Newfoundland. When I lived there it was an absolute delight to go on road trips to other parts of the rock.
This move comes after Irving's plan to ship oil all the way from Western Canada to the company's New Brunswick refinery... via the Panama Canal. Or as I like to call it, the scenic route.… #ableg #oilandgas
Read 3 tweets

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