EIA Lowers Price Forecast

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USA EIA Lowers Brent Oil Price Forecasts

Highlights of the Podcast

00:00 – Intro

01:11 – USA EIA Lowers Brent Oil Price Forecasts

06:19 – EU Unleashes Sweeping Sanctions Against Moscow and Minsk

07:52 – Addressing Texas grid reliability: Time to go nuclear?

09:58 – Chinese firms to develop oil and gas fields in Iraq

13:21 – Markets Update

15:00 – US shale companies accused of collusion over oil price

20:13 – Outro

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

Michael Tanner: [00:00:14] What’s going on, everybody? Welcome into the Tuesday, May 14th, 2024 edition of the Daily Energy News Beat stand up. Here are today’s top headlines. First up USA EIA lowers Brant oil forecast. Interesting. Next up EU unleashes sweeping sanctions against Moscow and Minsk. Next up addressing Texas nuclear reliability. Is it time to go nuclear. And finally in the news segment. Chinese firms to develop oil and gas fields in Iraq. Stu. Then toss it over to me. I will quickly cover what happened in the oil and gas markets today. And in a. In a shocking news, U.S. shale companies accused of collusion over oil price. I will cover all that. And a bag of chips, guys. As always, I am Michael Tanner, joined by Stuart Turley. Where do you want to begin? [00:01:09][54.8]

Stuart Turley: [00:01:11] Let’s start with our buddies there with the EIA. The, they lowered their Brant Oil price forecast. Michael and I found this is because it’s their sto. Short term, energy outlook is what they normally produce it out in is quote however really daily crude spot oil prices have since fallen and the Brant spot price at 84 barrels per day. May 2nd said in the story, you know, geopolitical tensions are also supported by crude oil prices amid, conflict between Iran and Israel. Michael, where do you think oil prices are going? [00:01:51][40.5]

Michael Tanner: [00:01:52] Well, I mean, if I knew that, Stu, we’d be we’d be I wouldn’t be sharing that here and we’d be placing a lot more bets on the market. So the reality is, I don’t know. It’s clear there’s a floor between, as I mentioned on yesterday’s show, 70 to 75 and 85 to 90. There’s that bandwidth, that oil trade. The U.S. economy can’t support oil over $90, at least in the WGI standpoint. From a Brant standpoint, that would be oil over 100. As much as we all love in the oil and gas business, talk about $100 oil. The United States economy couldn’t support that, and it would be actually devastating to lower income, families. And overall inflation would be go rampant because a lot of the inputs that go into the inflation calculation are backed up by energy. So with that, I don’t believe we’re going to see oil, you know, much higher than 8590. If I had to guess we’re going to continue to trend downward. Between that 75 and $85 band. We’ve seen oil prices, slightly up today hovering around that $80 mark. I think what they mentioned specifically in this report, talking about how geopolitical tensions have sort of amped up relative to where I mean, that if, if, if the basis for oil prices being 85 to $90 specifically here at home have to do with geopolitical tensions, we’re not always going to have geopolitical tensions. And if we do, that’s not good. The fact and if and if you’re if you’re if you’re sitting there praying for war so that oil prices are higher. Lindsey Graham’s got a seat at the dinner table. You can go hang out with him later. [00:03:28][95.3]

Stuart Turley: [00:03:28] We know. And and he’s a loser. Did it. Well, did I just. You say that I was. [00:03:33][5.0]

Michael Tanner: [00:03:34] He’s listening in on this conversation. News. [00:03:36][2.0]

Stuart Turley: [00:03:36] He’s always welcome on the podcast because I have a few questions for him. The the one thing, though, Michael, is we sit here and we take a look at the long term. If President Trump is elected and our, one of our good buddies over there at the crude truth Paco’s operating in and, Trevino Family Resources, he has said if Republican gets in, there doesn’t have to be Trump. If a Republican gets in, oil prices go down. So if everybody wants lower prices at the pump, go vote for. [00:04:12][35.9]

Michael Tanner: [00:04:13] Yeah, I think you that’s a really good call out in the fact of, you know, this upcoming election is going to be interesting. Now, the Biden administration is going to do whatever they can to support lower oil prices, whether that’s letting out of the it’s. [00:04:28][14.4]

Stuart Turley: [00:04:28] Temporary and it does not work. [00:04:30][2.1]

Michael Tanner: [00:04:31] Well, is we know of course, you asked me where I think oil prices are going. So I’m giving you a reasoning on where I think they might go. I think if you’re talking about a bandwidth of 75 to 85 or 70 to 90, let’s just expand it. That 70 and 90 outside of, you know, a tactical nuclear weapon being launched in the Middle East, you know, or some crazy supply or, you know, bird flu, all of a sudden, I heard that’s going crazy. Now, we might all of a sudden and bird stew shaking his head for our podcast listeners. But if bird flu becomes the next crazy event, well, then we might see prices die below. But if I had to bet if $80 plus or minus is the the sort of the. The line. If you’re a gambler, I’m going to take the under. If only because I feel like as we move into election season, it’s going to be pertinent for the current administration to make sure prices are slow enough. And, you know, quite frankly, as somebody who drives, I don’t mind lower gas prices. [00:05:24][53.5]

Stuart Turley: [00:05:26] I don’t either. And quite honestly, I’m going to say this out loud. I think the EIA. Yeah. We don’t want H.R., jumping in on it. Let’s all let’s hold this thought. I personally think that the EIA will fudge the numbers in order to get the numbers down, for the Biden administration, because the job numbers have done. They have done that on the job number. Oh, we know they’ve done it as well. So I think you’re going to see the low end of this. And it’s because by hook or by crook, it’s going to be the low in cash. [00:06:00][34.7]

Michael Tanner: [00:06:01] You stew with conspiracy theory. Wouldn’t have, wouldn’t have. Didn’t see that one coming. [00:06:05][3.7]

Stuart Turley: [00:06:05] It. Michael, you know what the difference between a conspiracy theory and a fact is? [00:06:08][3.3]

Michael Tanner: [00:06:09] Two weeks. [00:06:09][0.3]

Stuart Turley: [00:06:11] Less than one week now because, we’re down to one week. [00:06:15][4.7]

Michael Tanner: [00:06:16] One week rate by what’s next? [00:06:18][1.9]

Stuart Turley: [00:06:19] Let’s go to the EU. Unleashes sweeping sanctions against Moscow and Minsk. I’ll tell you, this just absolutely drives me nuts. The EU proposes measures including restrictions on Russian LNG, trans shipment, ban on investing in key LNG projects and expanded liability for sanctions, and even more. And Michael, are you ready for this one? Germany just got caught with the Scooby moment. They went. We can’t invest in Russian. In the article, it goes down in here and Germany got caught investing in in Russian LNG. Go figure this out. You can’t make this kind of a story. [00:07:07][48.5]

Michael Tanner: [00:07:09] No. I mean, the the interesting part is that, you know, we’ve mentioned this multiple times in the podcast. Many years ago, Donald Trump came out and said, yo, EU, what are you doing investing in and relying so heavily on the Russian energy flows? If things ever go sideways, you’re going to be in trouble. And, you know, Germany is just, you know, according to this article, trying to have its cake and eat it too. The EU’s got to come in and put a stop to that. [00:07:36][27.1]

Stuart Turley: [00:07:37] Oh yeah. And so yeah, I just got really tell you there’s some serious, things in this article that I really had to give him a shout out. The military, between the two, it goes into a bunch of, different stuff. So it’s good article. Let’s get on to the next one here, though, Michael, as a summary going into addressing Texas grid reliability. Time to go nuclear. I always think it’s time to go nuclear. I think that this is an outstanding article. And, if we take a look at the, mix between solar, wind, nuclear and natural gas and Michael, look at chart number one share of the renewable in in Texas triples from 2010 to 2023. Solar is a little tiny. Purple wind is, it’s like an overbite. Then you have nuclear and it is rock solid. You have coal and natural gas. If you extended out nuclear, you wouldn’t have any grid problems. [00:08:46][69.4]

Michael Tanner: [00:08:48] Yeah. I mean, you know, we sound like a broken record. Nuclear is one of the few things that can replace coal and natural gas as a baseload energy. So the fact that Ercot is, you know, putting out this, this message of the fact that, hey, we need to do more investment into thermal energy sources. It doesn’t necessarily surprise me. I mean, you know, they they specifically said Ercot officials warn that they might need to resort to rolling blackouts to keep the system from breaking. I mean, we we we praise Ercot for low prices, but then we also hit Ercot from the fact of, hey, we might need to have rolling blackouts to prevent the system of breaking. So Ercot, is it all good in the fact that there is there is some need for a over, you know, a regulatory body that, you know, some sort of regulation into the energy grid is necessarily clear, especially with the growing number of data centers specifically around the DFW area. [00:09:46][57.9]

Stuart Turley: [00:09:46] Oh, absolutely. And then if you want data, you got a lot of nuclear. So if you want AI, you gotta have nukes. So scary. You gotta love some new. Hey, let’s go to this next one. Chinese firms to develop oil and gas fields in Iraq. Michael, most people don’t think of. China as a gigantic MP company. Geo. Jade Petroleum, a Chinese oil exploration production company, won a bid to develop Iraq’s cyberwarfare field in Waste Governorate Day in eastern Iraq. Here’s part of the big thing, Michael. That company is one of the main companies in, the Panama and the rainforest. And so when you sit back and take a look at the rainforest in South and South America, China is responsible for tearing apart a significant chunk of the rainforest and selling that to California. Here they are again. And guess who’s going to be buying this Chinese oil from Iraq? If you didn’t know who was selling to California, everybody would have missed that little tidbit in this article. [00:11:15][88.9]

Michael Tanner: [00:11:16] Yeah. So, another win for Newsom over there in California. Hopefully you guys can keep that that ESG. But, you know, China makes as part of the Belt and Road Initiative, they they’ve been doing this for for over 15 years now, scooping up and striking deals with international companies to go ahead and lock up. Oh, yeah. Up Pacific. You know, minerals all across the mineral value chain, whether it’s, you know, critical minerals or whether it’s oil and gas assets. So I’m not surprised that they gone in there. You know, it’s a lucrative field. You know, this is you know, as this article says, the billion dollar, a couple billion dollars worth of, profits sitting out here. [00:11:56][40.0]

Stuart Turley: [00:11:57] Oh, absolutely. And in fact, all it does is add more to the, Belt and Road Initiative. So back after you did. [00:12:06][9.6]

Michael Tanner: [00:12:07] All right, well, we’ll go ahead and, and pop over and do a little finance. Before we do that, guys, we’ll go ahead and pay the bills around here. As always, thanks for checking us out on the world’s greatest website, Energy News Beat.com The best place for all of your energy and oil and gas news. We appreciate everybody who has checked out. Our website’s doing the team do a tremendous job making sure that website stays up to speed. Everything you need to know to hit the tip of the spear when it comes to the energy and the oil and gas business. Hit the description below for all the links to the articles timestamps. And you can also check us out. Dashboard.energynewsbeat.com. And we’re also excited to announce, our, our news is being exclusively fed into, we’ve struck a new partnership with the digital wildcatters over there. Hey, they’re Collide GPT. It’s out. It was out 2 or 3 days ago. You can go ahead and check that out. You can see all of our RSS feed rolling in there. It’s pretty cool to see you log into the app and boom, energy news beats right there. So, that’s very cool. Is that it’s very cool. I highly recommend everybody checking out, collide GPT and their whole kind of collide app specifically over their digital wildcatters. You can get, you know, you’re never far away from energy news beat [00:13:21][73.3]

Michael Tanner: [00:13:21] So with that, let’s go. Like you were only to always. Whoa! He’s circling. Baby. Let’s go ahead and move over. Just and cover what happened in the in the markets today? We did see the S&P 500 stay fairly flat. It was down about, 0.02 percentage point. The Nasdaq up about a quarter of a percentage point two year yields ten year yield basically flat. We did see the dollar index down about a 10th of a percentage point. We did see Bitcoin up about two percentage points $62,000. Crude oil up about 1.1 percentage points 7912. Brant oil only up a half a percentage point 8378. Natural gas up five percentage points $2.38. You know back crude oil. Part of the reason why we saw prices move up mainly is on demand optimism. You know it’s China came out with some interesting data that is that is really kind of buoyed prices from the fact that, consumer price index is have moved positively in that realm which, which, which hopefully, begins to move some stuff. They’ve also announced that they’re going to do about, 138 billion economic stimulus. It’s about ¥1 trillion. But, so, I mean, any time there is some, you know, investment of that standpoint, you are going to see an expansion of demand. Considering China is one of the big buyers of American crude specifically for our light, sweet, crude, it could be very interesting specifically, to see what happens off the back of what you talked about this, this Iraq oil deal, but that that’s a little bit farther off market. So it’d be very interesting to see, what happens. You know, I just got one story, stu. It’s U.S. shale companies accused of collusion over oil price and normally don’t make a big deal about this. But this is, you know, this gas industry. Yeah. The oil and gas industry is getting pounded from all sense. Fresh off of the FTC blocking Scott Sheffield. From joining the Exxon Mobil board from the Exxon pioneer, merger, a new barrage of lawsuits alleging that some of the largest companies in the sector. And I’m reading now straight from the article, alleging some of the largest companies in the sector colluded to curb and output and raise prices after similar claims were made by US antitrust regulators. Okay, this is absolutely hilarious, stew. Okay. Talk about having your cake and eating it, too. The lawsuit takes aim at the industry’s model of capital discipline, in which producers have pivoted from rapidly building up production in response to high prices in recent years in favor of funneling cash back to investors. Let me get this straight. Let me just get this straight. So when we were pumping up production as fast as possible, people were jumping down the U.S. industry’s throats because they were responsible for climate change. And now, as they’ve pulled back on production, shift their focus into one shareholder returns. But also everyone’s out there talking about, you know, net zero, 2050, net zero, 20, 40. All that jazz. Now all of a sudden they’re in trouble because they haven’t rapidly increased production. It’s absolutely unbelievable stew. They’re attempting to have their cake and eat it too. Plaintiffs in New Mexico allege the group’s collective failure to open the taps as crude prices soared in wake of the Russian invasion of Ukraine, was a departure from the historical practice and rational IT independent self interest. Well, wait a second, wait a second, wait a second, wait a second. Guys. The goal of a business is to make money. Why were invest? Why were oil companies drilling like crazy and raising production? Any ideas? And this is a rhetorical question because we know the answer. Because that’s what investors wanted. And investors were pouring money to make that happen. Or when the investors shifted and saying, well, we actually realized that all of this production that you made didn’t actually benefit the shareholders, which is a business. Their explicit goal is to make money for its investors. Oh that’s true. Hold on. Let me finish this. Now all of a sudden, when they shift, when and when they continue to follow what investors say, but investors have changed their mind and say, we actually want a little bit of ESG. We want a little bit of, stock buybacks. It’s now the oil companies fall because they’re in cahoots with OPEC. I don’t understand. [00:17:44][263.1]

Stuart Turley: [00:17:45] No. Now let me ask something. Isn’t there this thing called ESG environmental, social and governance and governance is about being, responsible to your stakeholders. You mean the oil and gas companies? We’re actually following the credence of ESG. [00:18:06][21.4]

Michael Tanner: [00:18:08] I mean, one of the companies named in this lawsuit is Chesapeake Energy. But I don’t have to remind you the fact that they went bankrupt. So, I mean, what what do they want? What is this? What’s this guy’s name? Thomas Burt, a partner at Wolfe Howden. Steen. What a name. Okay. Quote. Not the first time people in the oil and gas business made it. Made a mess. That will take a lot to clean up. Damages are significant. Yeah. To shareholders. Trust me. Class is likely to encompass roughly four years of gasoline sales to two thirds of American consumers. Does he have any idea what he’s talking about? [00:18:46][37.4]

Stuart Turley: [00:18:46] Right. No. [00:18:47][0.8]

Michael Tanner: [00:18:49] It’s it’s it’s pretty. It’s it’s pretty crazy. You know, of course, you know. [00:18:53][4.6]

Stuart Turley: [00:18:54] Let’s see if we can get him on the claim. [00:18:55][0.9]

Michael Tanner: [00:18:55] The FTC’s allegation of collusive behavior between Exxon and Pioneer didn’t have anything to do with it. So I, I’m I’m just shocked. I’m just shocked, the lack and the incompetence that some of these people show, and a lot of this stuff is just hand wave. It’s just hand wave. [00:19:13][17.3]

Stuart Turley: [00:19:14] It’s despicable is what it is. I mean, just flat out, it’s like Sheffield is gonna go call up OPEC and go, hey, let’s collude on some prices. You gotta be kidding me. [00:19:27][12.9]

Michael Tanner: [00:19:28] Well, the problem is it, at the end of the day, a business is designed to make money. And if you have an issue with that, then you have an issue with capitalism. And your issue shouldn’t be with oil and gas. It should be with the overall framework of the United States economy. You can go have that battle. I don’t care. Go argue front of the Supreme Court that capitalism is bad enough. I don’t care, we won’t cover it on energy news because I can, you know. But but when you cherry pick the oil and gas business. And why do you do this? Well, because there’s a lot of money in it. So it it it it. Hey, it just cracks me up. They want to have their cake. They want to. They want to eat it too. They want it delivered to their house. They want it with little extra frosting on top. And they want to be spoon fed. It’s at some point you’ve got to do a little bit of work yourself. Oh well, what else do what do you got? [00:20:14][45.9]

Stuart Turley: [00:20:15] Oh, I don’t know. I’m pretty worked up. [00:20:17][2.1]

Michael Tanner: [00:20:17] Yeah. Well. Well, we appreciate everybody sticking with us here. Stu and I will be banging around Superdog Wednesday-thursday this week out in Fort Worth. So if you’re there, come by, say hi. Otherwise, guys, we’re going to let you get out of here, get back to work, start your Tuesday. Appreciate everybody checking us out here on the World’s Greatest podcast for Stuart Turley I’m Michael Tanner. We’ll see you tomorrow folks. [00:20:17][0.0][1173.3]

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