Loved the personal section. I too grew up in the 70’s in New Jersey and traveled then even less than you. Turn the clock up a few decades and I now live in Hong Kong and have a small business in mainland China.
Excellent,morsel rich article and comments,as usual.I too remember extensive travel as a commodities broker,albeit somewhat earlier in the 80;s,and enjoying the experience and noting cultural and economic differences.One country I did not visit was Suriname,and I note very few mentions of their increasingly significant production.Do mtheir increased production numbers tilt any balances?
Thank you Robert. XOM has long done a great job with their outlook, which, mercifully, is not a scenario but an actual outlook. to me, their oil demand number still looks low, but it is at least directionally better than most others (OPEC research the other one that looks reasonable).
Should it be 'under-supply' rather than 'under-demand' in the sentence
"That said, the sheer magnitude of under-demand for oil in a world where everyone is energy rich—which we peg as on the order of a 250 million b/d total addressable market (TAM) for oil—suggests it is foolish to believe that nothing will be invented over say the next 50-75 years that could result in oil eventually receding in importance."?
Thank you Saunders. I did mean "under-demand" and used it to suggest that there is a strong desire for ROW to demand oil and become richer. Probably would have been simpler to say "unmet" or "yet to be met" demand.
Thanks for the weekend post! Goering and Rozenzwaig (sp?) have written some interesting articles about the macro energy sector. They largely agree with you. The Chinese EV question whether it will replace ICE vehicles, probably not. I think growth will continue but more slowly, other countries will continue to grow. The F150 EV was always a dumb idea. Those suckers are working vehicles. EVs are more for city and passenger use. Ford basically wrecked its most popular vehicle. Have a good day!
It will be interesting with the drop in crude prices if the Permian Producers drop rigs and associated gas starts falling helping Natural gas prices, as in Murphys law about the time all the extra capacity comes on stream you don’t need it . Already looks like there are some Producers struggling Apache , Oxy !
John, big Q to your point is that what is the price that really hits the rig count. Most have much better balance sheets than last down cycle and the consolidated positions speak to durability of rig count. But obviously if things get weak enough we lose rigs. I suspect it takes a 5-handle to really hit the rig count.
Great note Arjun. The shift in importers from USA/Canada to China/India tells it all. And thank you for making the point that crude oil is used for more than just gasoline … one question: If China and India increasingly pay for imports in currencies other than the US dollar, how do you think this impacts the US$ price of oil? Would seem to me to make it go up over time as the US $ weakens …
Thank you Pyrrho! It sure seems, at least thus far, that even if countries are using other currencies, the trading is still very much US$ based. There are others likely have better insights on this point, but this to me seems more of a "political" nature rather than a substantive shift away from US$. My 2 cents on that point.
I have been doing this with and without LPGs. This is ex-LPGs, but the pie chart inadvertently excluded "Other Products" which are 25%. Thanks for pointing out and have updated on Substack. As Koneko, shows below, one can of course include LPGs as well and gasoline % (which was key point of exhibit) falls to 22% on IEA data I used.
Loved the personal section. I too grew up in the 70’s in New Jersey and traveled then even less than you. Turn the clock up a few decades and I now live in Hong Kong and have a small business in mainland China.
Excellent,morsel rich article and comments,as usual.I too remember extensive travel as a commodities broker,albeit somewhat earlier in the 80;s,and enjoying the experience and noting cultural and economic differences.One country I did not visit was Suriname,and I note very few mentions of their increasingly significant production.Do mtheir increased production numbers tilt any balances?
Great article. Have you had a chance to look at or comment on the recent XOM Global Outlook?
Thank you Robert. XOM has long done a great job with their outlook, which, mercifully, is not a scenario but an actual outlook. to me, their oil demand number still looks low, but it is at least directionally better than most others (OPEC research the other one that looks reasonable).
Thx, great article.
Should it be 'under-supply' rather than 'under-demand' in the sentence
"That said, the sheer magnitude of under-demand for oil in a world where everyone is energy rich—which we peg as on the order of a 250 million b/d total addressable market (TAM) for oil—suggests it is foolish to believe that nothing will be invented over say the next 50-75 years that could result in oil eventually receding in importance."?
Thank you Saunders. I did mean "under-demand" and used it to suggest that there is a strong desire for ROW to demand oil and become richer. Probably would have been simpler to say "unmet" or "yet to be met" demand.
Thanks for the weekend post! Goering and Rozenzwaig (sp?) have written some interesting articles about the macro energy sector. They largely agree with you. The Chinese EV question whether it will replace ICE vehicles, probably not. I think growth will continue but more slowly, other countries will continue to grow. The F150 EV was always a dumb idea. Those suckers are working vehicles. EVs are more for city and passenger use. Ford basically wrecked its most popular vehicle. Have a good day!
I am a big fan of G&R and their research. we don't always 100% agree as would be expected, but I always find their articles to be interesting.
It will be interesting with the drop in crude prices if the Permian Producers drop rigs and associated gas starts falling helping Natural gas prices, as in Murphys law about the time all the extra capacity comes on stream you don’t need it . Already looks like there are some Producers struggling Apache , Oxy !
John, big Q to your point is that what is the price that really hits the rig count. Most have much better balance sheets than last down cycle and the consolidated positions speak to durability of rig count. But obviously if things get weak enough we lose rigs. I suspect it takes a 5-handle to really hit the rig count.
Great note Arjun. The shift in importers from USA/Canada to China/India tells it all. And thank you for making the point that crude oil is used for more than just gasoline … one question: If China and India increasingly pay for imports in currencies other than the US dollar, how do you think this impacts the US$ price of oil? Would seem to me to make it go up over time as the US $ weakens …
Thank you Pyrrho! It sure seems, at least thus far, that even if countries are using other currencies, the trading is still very much US$ based. There are others likely have better insights on this point, but this to me seems more of a "political" nature rather than a substantive shift away from US$. My 2 cents on that point.
China Crude Oil Demand Mix: The pie chart does not add up to 100% I am confused Source :IAE
I have been doing this with and without LPGs. This is ex-LPGs, but the pie chart inadvertently excluded "Other Products" which are 25%. Thanks for pointing out and have updated on Substack. As Koneko, shows below, one can of course include LPGs as well and gasoline % (which was key point of exhibit) falls to 22% on IEA data I used.
Should be:
LPG 16%
Naptha 15%
Gasoline 21%
Jet/Kero 5%
Gasoil/Diesel 22%
RFO 4%
Other 17%
https://iea.blob.core.windows.net/assets/a04f62be-0136-47a1-a280-0045d0d45f99/-12JUN2024_OilMarketReport.pdf
On the subject of LPG, India is apparantly making a hard push to swap in LPG to replace diesel for commercial heavy trucks.
Believe it is LNG-fueled trucks to displace diesel, which China is also doing.