Daily Energy Standup Episode #168 – Boom and Gloom: Bank Earnings Soar as Inflation Spikes, while Global Oil Demand Hits Record High in 2023!

Earnings season began last week, with 12 S&P 500 companies reporting. Banks and financial companies were a big part of the mix. Better news on consumer inflation (CPI) boosted stocks while lowering yields and expectations for […]

Global Oil Demand to Reach Record High in 2023: IEA

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

Michael Tanner: [00:00:07] What is going on Everybody, Welcome into another edition of the Daily Energy News Beat Standup here on this gorgeous July 19th, 2023. As always, I’m your humble correspondent, Michael Tanner, coming to you from an undisclosed location here in Dallas, Texas, rocking a solo show today as Stu is out on assignment doing some very big things that we appreciate his efforts filling in through the past two days. [00:00:30][23.7]

Michael Tanner: [00:00:31] I’ve had a a great day Sunday. I was just I just needed it was a scheduled day off for me and then at the last minute yesterday, I got the chance to go see the Texas Rangers, play a little baseball, so I appreciate Stu filling in for my absence. But nonetheless, I am back to bring you the news. [00:00:46][15.0]

Michael Tanner: [00:00:46] We’ve got a little bit of a shorter show, but I think two stories they’re going to be great to cover. First up, Bank Earnings and Inflation Start Earnings Season with a Bang. We saw on Wall Street, you know, pretty big roll out of earnings, I’ll cover a little bit about what’s going on with the early results. Next up, we have Global Oil Demand to reach Record High in 2023 according to the IEA, they’re out with their new oil market report. [00:01:11][25.1]

Michael Tanner: [00:01:12] I’ll then quickly cover what’s going on on the oil and gas side since we last talked baby, we’re at 75, 72, oil up 1.4 percentage points today so all is well with the markets. API comes out and actually has a little bit of a draw that looks like it could not even cut rates. So I will cover all that in the bag of chips, guys. [00:01:32][20.0]

Michael Tanner: [00:01:32] But first, again, all of the stories and analysis you’re about to hear, a courtesy of the world’s greatest website www.EnergyNewsBeat.com the best place for all of your Oil and Gas and Energy News. [00:01:43][10.3]

Michael Tanner: [00:01:43] Dashboard.EnergyNewsBeat.com is the best place for all your Data and Energy News Combo. We are hard at work at V2 trying to bring you guys a better thing. Hit the description below you can sign up for that to get early access to two to mainly a lot of the development features that we’re working on and then second off, you can hit and find all the timestamps, and see all the stories we are about to cover they come again courtesy of the world’s greatest website EnergyNewsBeat.com. [00:02:05][22.3]

Michael Tanner: [00:02:08] Let’s go ahead and look though, at earnings season. So title this one Bank Earnings and Inflation Start Earning Season with a Bang. Really what you’ve seen starting on Monday and today is you’re going to see a long over the next 3 to 4 weeks a huge swath of of 60 S&P companies that are about to report here. We had 12 S&P companies roll out today specifically banks and financial services were a better part of that we saw a lot of CPI data come out, increased in. [00:02:37][29.3]

Michael Tanner: [00:02:37] And really what you saw was on the back of some stronger earnings from these banks. What we saw Jp morgan face, Citigroup, State Street, Wells Fargo all beat earnings estimates that all of those guys posted better than expected net interest income as they earned more on lending versus what they paid to depositors, so that’s critical in the age of America. [00:02:59][21.6]

Michael Tanner: [00:03:00] To give you an idea, we’ll also we’ll get Goldman Sachs, Schwab, Bank of America, Bancorp, Discover, American Express, and Comerica, they’re coming later this week. But that early group I talked about, JPMorgan, Citigroup, state treat Wells Fargo better than expected net interest income which again in light of the whole SVP deposit that’s good to know. [00:03:19][19.2]

Michael Tanner: [00:03:19] And again big banks are going to do well with that everybody’s flooding cash into these banks specifically after again this article goes on to mention the Collapse of Silicon Valley Bank. Again, outside of earnings season part of what we’re seeing in this stock market rally, which is rally this all the way up to about 45,54 is really, you know, better than expected CPI data. [00:03:42][22.3]

Michael Tanner: [00:03:42] Again, I take that with a grain of salt because a lot of the time they don’t include energy in this, which is a cry, which is, you know, I won’t get riled up, but it’s a crime what they do over there. To give you an idea, Atlanta sticky fed inflation that they call a decline year over year from 6.1 to 5.8 so who were doing so much better, all that is sort of leading to what’s seen this rapid rise in stocks. [00:04:07][25.1]

Michael Tanner: [00:04:08] We’re going to see oil and gas stocks really rolling out next in the next two weeks. You’re starting to see them if you go look in any Barron’s newsfeed, you’ll just see that they’re all announcing or press feed, excuse me, they’re all announcing they’ve got them coming up here. [00:04:22][14.3]

Michael Tanner: [00:04:23] I think you’re going to see weaker than expected data coming out, considering we’re talking about quarter four of last year, I think you’re going to see weaker than expected. But I do think you’re going to still see strong numbers and I do think specifically because we’re going to see oil prices being a lot more bullish, I think you’re going to start seeing a lot of this reinvestment starting to look better. [00:04:46][23.8]

Michael Tanner: [00:04:47] I think what you’re going to see is a lot of reinvestment in Q4 you’re going to see a lot of reinvestment from companies. They spent a lot of money when they threw out that high oil price, you know, cycle back there in 2022 in order to attempt to again capitalize on some of the stuff going forward. So again with energy and specifically oil and gas earnings coming up there’s a lot to look for. [00:05:11][24.6]

Michael Tanner: [00:05:12] You know, I think it’s also important I want to look at here this IEA oil market report. So the title of this one, Global Oil Demand to reach record high in 2023 is just, you know, out of the IEA. Yeah, I’m going to read a lot here from the article, because what this is, is they’re what they call, as I mentioned, their latest oil market report out of our favorite energy analysts over at the IEA. 100% credible we subscribe to every word they do. [00:05:38][25.8]

Michael Tanner: [00:05:38] Topline numbers Global Oil Demand will increase by 2.2 million barrels per day to reach a record high of 102.1 million barrels per day in 2023, courtesy of our favorite data analyst. To dive into those numbers a little bit, China is going to go ahead and account for about 70% of global gains really off the back of their petrochemical use. [00:05:58][19.7]

Michael Tanner: [00:05:59] The quote out of the IEA says China’s widely anticipated reopening has so far failed to extend beyond travel and services, with economic recovery losing steam after a bounce back year yet there’s accounting for 70% of the global gains. So we’ll have a little marketing twist there IR guy of the weak right there, they do actually project some growth to slow to 1.1 million barrels per day in 2024. [00:06:23][23.9]

Michael Tanner: [00:06:24] The quotes there is saying the world oil demand is coming under pressure from challenging economic environment, not the least because of a dramatic tightening of monetary policy in many advanced developing countries over the past while months. Interesting. No mention renewables it’s all in the global financial. Interesting, Interesting little pivot there. [00:06:38][14.6]

Michael Tanner: [00:06:40] They forecast global oil production to rise by 1.6 million barrels to 101.5 million barrels per day as output from non-OPEC production nations is expected to increase by 1.9 million barrels per day, they also see global oil supply rising to 102.8. So they think fairly imbalanced with about 700,000 barrels over balance. That’s quote-unquote Interesting because we’re seeing prices rise right now. [00:07:05][24.8]

Michael Tanner: [00:07:06] What I find hilarious is that, you know, price is off the back of this rise when they show, well, maybe we’re oversupplied now. You know, when we see oil supply, quote unquote, outstripping oil demand. [00:07:18][12.2]

Michael Tanner: [00:07:20] But again, I think a lot of what’s going to is we’re looking at that refined product. And I think some of the environment that we’re seeing is the downstream capabilities. Observed global inventories rose by 19.4 million barrels to its highest level since September 2021. World oil demand. And I’m trying to just read down here a forecast for global demand, China, blah, blah, blah. [00:07:45][25.5]

Michael Tanner: [00:07:46] We also saw this is a separate IEA report, Fossil fuel investment are set to rise by more than 6% to around 950 billion for 2023, based on analysis from the announced spending of planned large and medium size oil, gas and coal companies. [00:07:58][12.6]

Michael Tanner: [00:08:00] So there you go again I think you’re going to I think this is a this is not specifically for quarter four, as I mentioned in segment one. But I do think you’re going to you know, there is a sentiment of there was a lot of CapEx spent, maybe more than people expected on the back of what was higher oil prices sort of the fleshing out of that process. [00:08:17][17.2]

Michael Tanner: [00:08:18] So all in all, the IEA seems to be sort of bullish, sort of not. I find it funny how they think we’re oversupplied everybody thinks we’re going to be undersupplied. So the IEA trying to come out and I don’t know, I think they’re using the same crayon Stu uses so we’re going to check their math on this one. [00:08:33][14.8]

Michael Tanner: [00:08:33] All in all, though, as we move into oil prices, the street really reacted positively. We were up about 1.4 percentage points, mainly again, off this report, but again off report in China that retail sales and mainly the fact that the Chinese government where’s where’s my little quote here out of China let me pull that up here, folks. [00:09:00][26.9]

Michael Tanner: [00:09:03] Yeah. Here we go, China’s top economic planner pledged it would roll out policies to, quote, restore and expand consumption throughout Delay probably means quantitative easing from the Chinese side. [00:09:14][11.4]

Michael Tanner: [00:09:15] So guess what? Hey, that’s good for oil demand because that means we’re going to need we’re going to need more oil. So, sure, now we’ve got print we’ve got money printing going on in China, fine but that’s going to boost oil prices so we got to love it. [00:09:26][10.9]

Michael Tanner: [00:09:27] You know, to run your idea after those CPI numbers came out last week and on the back of of of of a retail sales that are less than expected, there is a sentiment floating around now that we’re going to not need that another 25 basis points rate hike, which was widely expected at that July 25th, 26th meeting of the Fed, Governors Jerome Powell may come out and not do that. It’ll be interesting to what happens, but that’s part of, again, what leading to that 1.4% rise in sentiment. [00:09:56][28.9]

Michael Tanner: [00:09:57] We also saw the API come out today specifically and say we’re going to be about a million barrel drop point 790,000 barrels on that draw side so not terrible in terms of that. So again, I think all in all leading up to what is a bullish and what again, is the bullish back for oil, it’ll be interesting where things end up. [00:10:18][21.3]

Michael Tanner: [00:10:19] That’s really all I’ve got guys thanks for Stu for being on assignment, working hard for all of us, even when he’s not here. He probably meant I didn’t listen to his last two shows of he made fun of me I was really nice to him right here if he made fun of me screw him, he’s dead I’m just kidding. We will both be back tomorrow Guys, We appreciate it. For Stuart Turley I’m Michael Tanner, Well see you then. [00:10:19][0.0]

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