The conversation revolves around the oil market and its current state, with a focus on the role of Saudi Arabia and the Biden administration. The speaker discusses the impact of Saudi Arabia's decision to cut a million barrels a day, which has led to a tight balance in the market, especially as we approach the end of the year. The speaker also mentions the Biden administration's potential actions to influence oil prices, such as calling up Saudi Arabia or going there to request a decrease in production.
The conversation then shifts to the broader economic context, with the speaker noting the impact of the election cycle on the oil forecast. The speaker suggests that the Biden administration may try to reduce oil prices, but it's unclear whether they will do so. The speaker also mentions the challenges of managing oil prices in the face of rising inflation and the need to keep things tight due to the Fed's policies.
The speaker then discusses the role of institutional investors in the oil market, noting that these investors have been burned in the past but are now showing interest in the sector. The speaker suggests that these companies are different from before, able to pay down debt at $60 oil, and that they are not the same companies.
The conversation ends with the speaker noting the feedback from a conference on the energy sector, where it was surprising to see Brent oil above $90 despite the negative sentiment from oil specialists.
1. The economy is humming along, and the speaker is considering both options.
2. The next guest is going long on energy as it climbs higher.
3. Paul Sankey is on set and the speaker is greeted.
4. The speaker is unsure about the oil price, but it's expected to be above 19.
5. The speaker is back and they are staying in the same location.
6. The demand on governments and what's driven up the price is the Saudis.
7. Last year, the U.S. government was releasing a million dollars a day from the SPR.
8. Saudi Arabia has cut a million barrels a day, which is a significant amount of oil at the margin.
9. The speaker is unsure about what the Biden administration will do regarding the cut, or if they will do SPR.
10. The speaker is unsure about what will happen, but they advise being ready in case it's cold.
11. The speaker believes it will be a powerful situation at the year end.
12. Saudi Arabia wants $95 oil, which is the number they said they needed for their growth plans.
13. The speaker is unsure about the valuations of stocks, mentioning Marathon, MPC, and Marathon Petroleum.
14. The speaker believes that the new paradigm is that companies will pay back excess cash flow to shareholders.
15. The speaker believes that the election cycle will play out in the oil forecast.
16. The speaker believes that higher oil prices will be a challenge for the Biden administration.
17. The speaker believes that the election year makes it difficult for the Biden administration to take action.
18. The speaker believes that the institutions in the oil market are different.
19. The speaker believes that these companies are run differently and can pay down debt at $60 oil.
20. The speaker believes that the energy conference was incredible to think that Brent is above 90 and everyone is so negative.
21. The speaker believes that the oil specialists are reluctant.
22. The speaker believes that if the economy gets weak, Saudi Arabia has a double problem because they are at 9 million a day, and the oil price is going down.