Oil Prices DROP 4%

NEW YORK, June 3 (Reuters) – Oil prices tumbled by $3 a barrel on Monday to their lowest in nearly four months, as investors worried that a complicated OPEC+ output decision could lead to higher […]

Crude oil prices (CL=F, BZ=F) are falling after OPEC+ announced it will extend its oil production cuts into 2025. Traders widely expected this move, but some of those production cuts will begin to be phased out […]

Highlights of the Podcast

00:00 – Intro

01:22 – U.S. House Passes Bill Banning Federal Reserve From Issuing a CBDC

03:53 – Saudi Aramco’s $12 billion share sale sells out in mere hours

06:15 – Russia Has a New Hotspot For Ship-to-Ship Oil Transfers in the Mediterranean

07:52 – The renewable green energy disaster off the northeastern US is getting worse

09:35 – U.S. Shale Mergers Could Bring Steadier Oil Prices

12:58 – Oil prices fall as OPEC+ extends oil production cuts into 2025

14:11 – Oil hits four-month low as OPEC+ decision fails to allay demand worries

16:28 – 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, June 4th, 2024 edition of the Daily Energy News Beat stand up. Here are today’s top headlines. First up, U.S. House passes bill banning Federal Reserve from issuing a Cbdc. Unsung article love this one. Dive into everything crazy the Federal Reserve is doing. Next up Saudi Aramco IPO $12 billion share sale sells out in a mere hours. Hungry hungry for some Aramco. Next up Russia has a new hot spot for ship to ship oil transfers in the Mediterranean. Good old Club Med. Next up, the renewable green energy disaster, off in the northeast is in the United States. Northeast is getting much worse. And then find the U.S. shale mergers could bring steadier oil prices. I’m gonna probably push back a little bit on this one. Stu will then toss it over to me. I will quickly cover what happened in the oil and gas markets today, mainly talking about the nosedive that crude oil prices took after OPEC decided to extend production. Cuts will cover all of that. And a bag of chips, guys. As always, I am Michael Tanner, joined by Stuart Turley. Where do you want to begin? [00:01:21][67.5]

Stuart Turley: [00:01:22] I for sure I would have buddies over there. U.S. House passes bill banning Federal Reserve from issuing a CB. DC I’ll tell you what, I am not speaking clearly today for our podcast listener, which is normal, but I’ll tell you the the bill is the anti Surveillance State Act, introduced by, Majority Whip Tom Emmer. Go, Tom, I am all in. Nothing’s going to happen out of this because it’s going to get dead. Probably won’t even be brought to the floor of the Senate. But the it’s important to understand Thursday’s vote count was a far cry from the vote the day before, when 71 Democrats joined 208, Republicans in voting for the financial innovation and Technology for the 21st Century Act, a crypto market structure bill that would give the US commodities futures trading commissions greater spot market authority over digital assets, and spells out of Hill and other key market regulator in the securities and Exchange, can commission on that sector. I am not for a digital U.S. dollar period, and I think this was a great at least step in trying to make sure that we didn’t do it. If you are a U.S. citizen right now, move to a state that will support their own state currency. Just personal opinion. [00:02:50][87.8]

Michael Tanner: [00:02:50] Yeah. I mean, we could go down a lot of different rabbit holes with this one because, I mean, America originally tried to have their own state currencies, and it makes hard for interstate commerce to take place when Minnesota’s got their own currency and Texas has their own currency. So there’s a need for a federal currency that allows you to do business and commerce across state lines. The issue is the digital dollar comes into effect with some of the stuff that we’ve been worried about, government control. We see how this stuff is playing out in China. So I’m on board with this. I find it interesting that this was just really cut across, political lines. You talked about 300, 213 Republicans, along with three Democrats, voted for the bill and 192 Democrats voted against it. That’s a little well, I don’t know why this falls along political lines. [00:03:37][47.0]

Stuart Turley: [00:03:38] I can tell you you can go look at those three, Democrats that voted with it. I guarantee you they’re in a battleground. They’re about to be in a very tough election. Oh, I. [00:03:50][11.9]

Michael Tanner: [00:03:50] See, well, interesting. All right, let’s move to Saudi. What’s up? [00:03:53][2.8]

Stuart Turley: [00:03:53] Okay, let’s go to our buddies over there Saudi Aramco I really like the way they manage things over there. 12 billion shares sold out shortly after the deal opened. Isn’t that kind of cool? I mean, what’s a few billion between friends? The books were covered within the range of 26 royals to 29 royals. What minute? How much the how much? They’re not telling us where the demand came from. But, you can’t go wrong with it. Aramco shares fell 1.9% on Sunday. Evaluating the company about 1.8 trillion. The stock dropped about 14% since the start of the year. Since Bloomberg, first put out the report, Saudi government. Michael owns 82% of Aramco, while the kingdom’s, wealth fund holds a further 16%. Wow. [00:04:48][54.9]

Michael Tanner: [00:04:49] Yeah. You have to realize, though, one of the reasons why this could be an attractive offer, you know, for foreign investors is the fact that, you know, you’re talking about the dividend over the course of a year, like $124 billion dividend payout, which means their dividend yields about 6.6%, which is pretty good. Now let’s see. Foreign investment attraction. Hasn’t been much. We’ve. A lot of it is local purchasers. And how much of this is leaving Saudi relative to how much is staying between, you know, the Saudi government and their wealth fund, which you can kind of consider the same thing. So I think this is obviously a quick play to raise some money. They’re going to use this money to kind of diversify again away from oil and gas funds, some of their other economic progress, and projects specifically, but there’s a bunch of different, banks working on them. You know, we it’s it’s super interesting. You know, it’s. [00:05:44][55.4]

Stuart Turley: [00:05:45] Interesting in I would do this in a heartbeat in order to get out of other, financial markets with the US oil dollar, I wouldn’t get out of the US oil dollar. And this is. [00:05:56][11.8]

Michael Tanner: [00:05:57] Do went from advising Putin to now he’s advising MBS. So it’s a miracle the world traveler you. [00:06:02][5.8]

Stuart Turley: [00:06:03] Are I am and you know I wasn’t you know just kidding. But no I love it. [00:06:08][5.3]

Michael Tanner: [00:06:08] What’s next. [00:06:09][0.3]

Stuart Turley: [00:06:09] Okay. [00:06:09][0.0]

Michael Tanner: [00:06:10] Oh speaking of your buddy Putin. [00:06:11][1.0]

Stuart Turley: [00:06:12] Yeah. Speaking of Putin, a hey, Russia has a new hotspot for ship to ship oil transfers in the Mediterranean. My. Michael, there’s another story that came out today. On a side note, and that’s, sanctions on LNG now are going to come rolling around. And you heard me talk about the dirt fleet on LNG tankers. It is real. So the Dart fleet on LNG. So, yeah, this is in the, Club Med. Club Med is alive and well. You know, I’ve been talking about this for years. Greece ship to ship transfer of Russian oil have moved further west in the, Mediterranean, just off the edge of Morocco’s coast. Via, according to vessel tracking in Bloomberg, the Greek may be held exercises in the Latian Gulf of southern Greece and effectively banned all ship traffic. It’s been, shipped to ship transfers in Russian crude and products since the EU slapped the embargoes on it. This. [00:07:13][61.6]

Michael Tanner: [00:07:14] Club Med keeping. It’s keeping its name. [00:07:16][2.0]

Stuart Turley: [00:07:16] I’ll tell you what. You gotta love them for it. You know, if you read it. I also saw a great, heartfelt story of diesel barrels that they were trading, used diesel, oil barrels for, fresh fruit. So, you know, just because you’re doing, trading in gray or, you know, gray market, oil doesn’t mean that you can’t feed the natives, you know, and work out some decent money there for the natives. [00:07:46][30.0]

Michael Tanner: [00:07:47] Yeah. Good point, good point. All right, let’s move on to the next one here. [00:07:50][2.8]

Stuart Turley: [00:07:52] Let’s go to the the renewable green energy disaster off the northeast. Your U.S. is getting worse. This is out of the Telegraph by David Blackman. This is a quote, wind turbine maker Siemens Gamesa announced even bigger layoffs, saying it would cut 15% of its global staff to adjust for the slowing market. Well, our current situation demands adjustments that go beyond organizational changes. We will have to adapt to lower business volumes, reduced activity in non-core markets and streamline portfolio, said outgoing CEO Joc in Ecuador in a letter to his staff. In other words, oops. [00:08:37][45.6]

Michael Tanner: [00:08:39] Yeah. Yikes. Oops. You know, talk about a big oops. I mean, again, is the problem with, again, the the renewables market has been hit by the fact that they are highly, highly subsidized. And when you start layering off those subsidies, you then all of a sudden have to deal with the underlying economics of the business, which as we’re seeing, is not great. [00:09:00][21.6]

Stuart Turley: [00:09:01] No. And, as we talked about it on the energy realities with Doomberg, with David Blackman and Tammy Neiman at this Morning, the wind farms, have really pulled a fast one on the public by using the Inflation Reduction Act in, double and triple billing folks by pulling in their turbines even before they were end of life. So the public ought to be glad that they’re laying people off and it’s not doing well. Your electricity bills are going to go higher. Let’s go to the other one. U.S shale mergers could bring steadier oil prices. Three bullet points here. The key driver for the industry is now returning to more shareholders and preparing for inventory stacked up for years of production ahead. Last week, bullet point number two the last week, the U.S oil industry saw its latest announcement of a big merger after Conoco Phillips said it had agreed to buy a marathon oil number three deal value this year has already surpassed the total deal value of 69 billion recorded. For the entire first half of 2023. [00:10:12][71.3]

Michael Tanner: [00:10:13] The bigger ball was just going to say stu. I think the overall premise that these mergers, which are happening, I think is going to is not necessarily bringing steady oil prices. I think it’s setting up these shale companies to be able to endure lower oil prices, because as you increase economic, you know, economies of scale, it allows you to produce at a lower and lower margin. And the inventory that you have is easier to evaluate under the given oil price. So I you know, I love our our friend over at Oilprice.com, Irina Slav I’ll, I’ll, I’ll thickened a little bit with the underlying thesis here. I think it’s going to allow them to produce at lower oil prices, assuming things like today, what we saw happen, which is an absolute bottom fall out on oil. We’re down four percentage points overall. [00:10:58][45.0]

Stuart Turley: [00:10:59] Right. I still think it’s a good thing and some mergers, but I think that this would, open the credence to having Congress start accusing Big Oil of working with, OPEC again in trying to do, price, fixing in a global market. [00:11:17][18.1]

Michael Tanner: [00:11:18] Yeah, in a global market that they have no control over. Yeah. I’m sure Scott Sheffield was behind today’s drop. [00:11:23][5.2]

Stuart Turley: [00:11:24] So I’m I’m still worked up about that one. Don’t even talk to you. [00:11:28][4.4]

Michael Tanner: [00:11:29] All right. Well, we’ll go ahead and, and dive into what happened, with oil prices today. But before we do that, as always, check us out on the world’s greatest website, energy newsbeat.com The best place for all your energy and oil and gas news. Doing the team do a tremendous job making sure that website stays up to speed. Everything you need to know to be 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 timestamps, links to the articles, and all that search. You can also hit us up dashboard.energynewsbeat.com [00:11:57][28.2]

Michael Tanner: [00:11:59] Overall market today a little crazy story. Saw roaring Kitty come out last night and reveal about a $200 million net long position in GameStop. A lot of that is through options, but we saw meme stocks kind of go crazy today. Overall, the market’s only up about a 10th of a percentage point. Nasdaq only up about 3/10 of a percentage point two. And ten year yields dropped tremendously. About 1.3 percentage points for the two year yield. Ten year yield down 2.5 percentage points. Bitcoin up 2.2. Percentage point. Crude oil folks down 3.8 percentage points on a WTI basis down to 7406. Currently trading has been record. It’s about 345 here on Monday. That’s down $2.93. Brant oil only down about a quarter of a percentage point 7848 natural gas spike six percentage point all the way up to $2.75, mainly off the back of some revised forecasts, which increase our ability for natural demand, natural gas demand. But really guys, OPEC what drove markets today was was pretty complex. So you know then you know the next story we have the OPEC plus extends deep oil production cuts into 2025 was something that the market expected. We talked about on yesterday’s show. We expected this to happen. the 2.66 million barrel per day cut, that was already in place was extended well into 2025. And then the 2.2 million barrel a topper. So it’s three points. Excuse me. The numbers were 3.66 million barrels per day of cuts were extended till the end of 2025. And the topper, the Saudi topper of 2.2 million barrels per day, was extended just by three months to the end of September 2024. OPEC plus did announce that they’re going to gradually phase out those 2.2 million barrels per day, over the course of a year from October 2024, all the way through September of 2025. Some interesting, interesting quotes here. Saudi Energy Minister, Prince Abi’s saab. We are waiting for interest rates to come down in a better trajectory when it comes to economic growth, not pockets of growth here in there. Interesting couple quotes from Armida Sen, co-founder of Energy Energy Aspects, a think tank out of, the Middle East. The deals should be the deal should align market fears of OPEC, plus adding back barrels at a time when demand concerns are still rife. Another, quote over here. And this is mainly about the overall markets. This is from John Cutcliffe partner over at Again capital. These are hard numbers. That the the hard numbers are that the market is well-supplied. If we do not get a spectacular number on Memorial Day in the US, that’s going to be game over. Mainly talking about how okay, OPEC was going to do this already. Now the fact that we have weak demand forecast, you know, OPEC could only do so much because we’re we’re still here if with these cuts we’re already oversupplied. Well these cuts aren’t going to help unless you increase the amount of cuts. Nothing’s going to change from a demand forecast side. It’s pretty simple. It’s that balance of supply and demand. So I think the market is looking at this from a standpoint of okay, we know the cuts are going to stay. They’re actually now going to unwind this 2.2 million barrels. Sounds like because the UAE is pushing them to be able to put some. Those barrels back on the market. Because remember that Saudi topper that I call that 2.2 million barrels. It’s a little bit more than just Saudi. You had Saudi and UAE are really the two big players in that. So UAE wants to start pumping a little bit more oil because again, they’re going to make more of that way. So this oversupplied market that we have right now, you know, layering on top the fact that it looks like the, you know, there is some toning down in the Gaza war, you know, on Sunday, the Israeli prime minister confirmed on Sunday that Israel had accepted a framework of a deal being advanced by the US for winding down the war in Gaza, even though they did end up coming out today. Well, as you listen to this on Tuesday, on Monday, Israeli did call it a little bit of a flawed deal. So kind of some conflicting sides there geopolitically. But yeah, going to be super interesting. One way or the other. What do you think about what OPEC did do? [00:15:58][239.1]

Stuart Turley: [00:15:59] I don’t think they really know, to be honest with you. I think it’s just because Russia is pumping out everything that they can. They went over their production last time, and they said, oh, we’re bad. We’re sorry. I don’t know that they have control over their members anymore. So absolutely. I don’t know how you can price it anymore now. [00:16:21][22.0]

Michael Tanner: [00:16:21] I don’t know, know, I don’t know exactly how you do it all but absolutely unbelievable. So, what else do what should people be worried about coming up? [00:16:31][9.8]

Stuart Turley: [00:16:31] I will just buckle up for some serious entertainment. The one story that kind of hit the desk just a minute ago is our chemical facility zone, vulnerable to attack. That would be the downstream market is now under, really some serious, concern. Not only the grid, but our refineries. [00:16:49][18.4]

Michael Tanner: [00:16:50] Yeah, absolutely. No, we need to make sure that we, we stay up to speed with that. We appreciate you keeping it up. But with that, guys, we’re going to let you get out of here, get back to work, start your day. We appreciate everybody checking this out here on the World’s Greatest Podcast for Stuart Turley I’m Michael Tanner. We’ll see you tomorrow folks. [00:16:50][0.0][976.6]

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