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Strategies & Market Trends : Dino's Bar & Grill -- Ignore unavailable to you. Want to Upgrade?

To: Goose94 who wrote (95992)	10/16/2020 2:25:20 PM
From: Goose94	Read Replies (1) \| Respond to of 202919

Crude Oil: Eric Nuttall on BNN.ca Market Call Oct 16th 2020 The oil market continues to heal from the COVID-19-induced demand shock. Demand is currently down about 6 million bbl/d, largely driven by a reduction in global jet fuel demand as well as regional weak spots for gasoline/diesel (predominantly in North America). While 99.9 per cent of the market’s attention is on demand loss, it is transient. What the market is totally missing is the impact on supply growth going forward. Already, the global oil industry was underinvesting in new production which is required to both satisfy demand growth and offset declines. Looking forward, we believe the era of U.S. shale growth is largely over (Occidental yesterday said U.S. supply will never again hit 13 million bbl/d); this is a watershed event for the energy market as the U.S. was responsible for 100 per centof non-OPEC supply growth over the past five years. Additionally, over five years of insufficient investment in new offshore projects and the final harvesting of projects that were sanctioned back when oil was $90 will result in flat/declining global offshore production. In the nearer term, the IEA is guiding for stock draws of 4.1 million bbl/d in Q4; if proven accurate, this will completely eliminate the inventory builds from earlier this year as well as eliminate almost all offshore storage resulting in a balanced market. The market is simply too pessimistic about the outlook for oil and worries around peak demand will ultimately lead to peak supply due to insufficient investment (global supermajors investing more in renewables) and the depletion of economic U.S. shale reserves. We remain bullish and still think oil could rally close to $50/bbl by year-end. Even at $40 we have investments in Canadian oil companies that have current free cash flow yields in excess of 10 per cent offering free optionality to better days in the months ahead.