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Strategies & Market Trends : Dino's Bar & Grill

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To: Goose94 who wrote (99657)	12/11/2020 2:00:40 PM
From: Goose94	Read Replies (1) of 202704

Crude Oil: Eric Nuttall Oil has entered into a multi-year bull market. Already, countries including China, India and Brazil are back to pre-COVID demand levels while other regions more affected like the U.S. and Europe are imminently rolling out numerous vaccines. We can now look through to a post-COVID world in 2021, but what does that look like for energy investors? Prior to COVID, certain bullish trends were already in place and have now been accelerated: loss of U.S. shale production growth due to a need to prioritize return of capital over drillbit spending, a global offshore plateau/decline due to over five years of insufficient investment in new projects and limited OPEC spare capacity (adjusting for curtailed production that will be brought online in 2021 as demand continues to normalize). The global oil inventory surplus has already fallen by about 33 per cent from its high and we see normalized oil inventory levels by the 2H/21. While much of the market’s focus remains on the temporary COVID-induced demand destruction such as business jet travel (1.4 million barrels per day out of a pre-COVID demand of 102 million bbl/d) energy investors should be focusing on the structural impact on supply as that will be much longer lasting. The era of U.S. shale growth is largely over, global offshore production will struggle to grow for the next four years and OPEC by the end of 2021 will have very limited spare capacity. The oil price was at $62 before COVID struck. We see a tighter supply/demand reality in 2021 than the beginning of this year, so why can’t oil get back to $60? For a more thorough, discussion listen to my presentation here. With that backdrop, despite the 50 per cent rally in energy stocks over the past month if one believes in $50 oil, many energy stocks are still at least doubles and at $60 they offer multi-bagger status. If you do not have a full weight towards the sector, there is no reason not to add exposure now. BNN.ca Market Call Friday Dec 11th @ 1200ET

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