5 year Market Outlook opinions
03-07-2022, 10:07 AM
#441
Gets Weekends Off
Joined APC: Apr 2007
Posts: 4,616
Oil producers are reluctant to further invest in explorations and production after having lost most of a decade not that too far back. Furthermore, green initiates have turned many banks away from lending when it comes to exploration.
If a deal is signed with Iran, they can generate almost 4m bbl a day. If someone shoots Putin in the head and all of this ends overnight there will once again be a major glut, but only if us producers try to fill in the near-term void.
So oil companies are going to sit on their hands and do nothing with the current, 9,000 unused leases. Oil is going to go to 150+. My .02, uranium and eV stocks are going to soar.
Will oil hit 150? Yes. Even if it did, the last time it did was 13 years ago at 147. There has been a lot of inflation since 2008-2009 and if you were to say the price of oil hasn't changed, effectively everything else has doubled in comparison. Maybe 150 is a baseline going forward. If you can afford a 100k diesel truck, you can afford to fill it. Most of the world isn't droning around solo in 8000 pounds trucks. This has been a privilege bestowed upon many by the miscalculation of oil companies in the past. Maybe this is the end of the $59 Bare Fare.
If a deal is signed with Iran, they can generate almost 4m bbl a day. If someone shoots Putin in the head and all of this ends overnight there will once again be a major glut, but only if us producers try to fill in the near-term void.
So oil companies are going to sit on their hands and do nothing with the current, 9,000 unused leases. Oil is going to go to 150+. My .02, uranium and eV stocks are going to soar.
Will oil hit 150? Yes. Even if it did, the last time it did was 13 years ago at 147. There has been a lot of inflation since 2008-2009 and if you were to say the price of oil hasn't changed, effectively everything else has doubled in comparison. Maybe 150 is a baseline going forward. If you can afford a 100k diesel truck, you can afford to fill it. Most of the world isn't droning around solo in 8000 pounds trucks. This has been a privilege bestowed upon many by the miscalculation of oil companies in the past. Maybe this is the end of the $59 Bare Fare.
EV stocks - not as confident. Graphite is a major component of EV batteries.
Ukraine holds significant reserves in Graphite, Titanium and Uranium. Natural Resources of Ukraine (ukrainetrek.com)
IMHO, Putin is being misread as a nostalgic old dictator looking to reunite the former soviet states. He is a gangster who plans on looting Ukraine for the natural resources.
03-07-2022, 11:21 AM
#442
Gets Weekends Off
Joined APC: Jul 2010
Position: window seat
Posts: 12,544
That said, if things get bad enough for long enough, the low hanging fruit is easier to pick.
Another consideration is segment/trip costs. Even if a given plane can't do it at a profit, and even if it loses more per seat in theory, if routes don't justify more seats then limiting losses per flight might be the directive.
03-07-2022, 11:37 AM
#443
:-)
Joined APC: Feb 2007
Posts: 7,339
Average ticket price is what $220, I think it could go to $400 easily before we see major passenger drop off. One thing we have going for us, is the pilot shortage will limit capacity, allowing fares to rise.
03-07-2022, 12:39 PM
#444
Gets Weekends Off
Joined APC: Jul 2010
Posts: 3,373
Time to get rid of the 50 seaters and bring more flying into mainline.
03-07-2022, 05:34 PM
#445
Line Holder
Joined APC: Mar 2007
Posts: 41
US shale is not the savior that some think. OPEC+ spare capacity is overstated. Russian oil has become "toxic" to markets, even though it is sanctions-exempt.
High oil prices are here to stay....
03-07-2022, 05:55 PM
#446
Gets Weekends Off
Joined APC: Feb 2007
Position: Big ones
Posts: 774
So are we back to ‘peak oil’ days?
03-08-2022, 06:30 AM
#447
Gets Weekends Off
Joined APC: Feb 2015
Position: LAX ER
Posts: 1,606
You can’t forget that oil is traded in the markets mostly on news and speculation, example is this week already pricing in US sanction Russia. While moves towards increasing production through OPEC, refineries, or imports elsewhere might logistically take a while it will still give the markets much needed relief. The pricing isn’t sustainable, clearly. You can’t tell us when something trades 30% increase in a matter of a few trading days that is sustainable and here to stay. And when discussing futures trading, yes it can give an indication but also a lot of the futures have oil declining from the current prices today over the course of the year. While not much, it’s worth noting. Either way the administration has tools to help reverse the course like we did in 2008 or 2013. The real questions are what decisions he decides to take since it appears so far we aren’t doing much and that’s giving more fear to the markets.
03-08-2022, 06:54 AM
#448
Line Holder
Joined APC: Mar 2007
Posts: 41
You can’t forget that oil is traded in the markets mostly on news and speculation, example is this week already pricing in US sanction Russia. While moves towards increasing production through OPEC, refineries, or imports elsewhere might logistically take a while it will still give the markets much needed relief. The pricing isn’t sustainable, clearly. You can’t tell us when something trades 30% increase in a matter of a few trading days that is sustainable and here to stay. And when discussing futures trading, yes it can give an indication but also a lot of the futures have oil declining from the current prices today over the course of the year. While not much, it’s worth noting. Either way the administration has tools to help reverse the course like we did in 2008 or 2013. The real questions are what decisions he decides to take since it appears so far we aren’t doing much and that’s giving more fear to the markets.
03-08-2022, 07:54 AM
#449
Gets Weekends Off
Joined APC: Feb 2015
Position: LAX ER
Posts: 1,606
what you should be watching for is an inverted yield curve, not energy prices.
03-08-2022, 08:23 AM
#450
On Reserve
Joined APC: Feb 2009
Posts: 23
5500 is next target for spx. Personally, I will be unloading 95% of my portfolio up there and using options to leverage very little principal for higher skews. Ultimately, 6000 is what expect before the fat lady sings, but I'm not waiting for that. Hallmark signs in the last decade, in particular now with low liquidity and dealer gamma imbalance running the show, that we are dangerously close to a lost decade. Right or wrong, better be prepared. And yes, oil is going higher.
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