Oil Today . . . It Just Got INTERESTING

September 1, 2023

There’s always been this one particular phrase in the TV show Friends that stood out to me. I’m not sure why my brain fixated on that episode, or that phrase in particular, but it did.

Season 5, Episode 23 (and no I’m not a Friends aficionado, I had to look that up). Monica (Courtney Cox) and Chandler (Matthew Perry), who are dating, go to Las Vegas, and before they’re about to leave, they start playing craps.

Soon, Monica’s on a hot streak, and can’t seem to lose. At one point, in the heat of the moment, Chandler says . . .

Chandler: I'll tell you what. You roll another hard eight and we get married here tonight.

[crowd starts cheering]

To which Monica replies . . .

Monica: SHUT UP! IT JUST GOT INTERESTING!

Now for some reason my friends that phrase popped into my head today as I watched the market.

You might’ve also found yourself cheering lately if you’re an energy investor. When exactly?

Well, when . . .

Watching oil on water tumble down our table like a pair of hot dice . . .

Looking at US inventories begin their slide as the Saudis starve the most visible barrels in the world . . .

Waiting with bated breath as Russia and the Saudis announce whether they will or will not maintain their “voluntary” supply cuts into October, which’ll affect inventory levels in November and December (pssst yes, they likely will) . . .

Watching as US rig counts continue to decline despite oil prices increasing, which tells you a lot about the economic reality E&P companies are facing in the US. So battered by ESG, shareholders, or overdevelopment that it’s no longer feasible, or desirable to increase production despite the economics.

Wondering how offsides the paper market seems to be, as positioning looks awfully low despite the inventory drawdown, and thinking about if and when the physical market will discipline the financial one. Maybe the recent rise in oil prices already is, but even if so, the positioning is still low.

Thinking about these articles in which “sources,” Saudi officials, and “other people familiar with the plan,” has Saudi Aramco (Saudi Arabia’s national oil company) contemplating a $50B sale of its shares.

As we posited years ago, if you’re about to sell off a portion of your national gas station, doesn’t it help you if oil prices are higher? (Yes, that’s a rhetorical question).

So like we said. Oil prices are up . . . they’ve not yet reached the $90s where “funky things” happen . . . but . . . . this . . .

this bounce to a 6 month high . . . .

this . . . is . . . happening, and the momentum may continue in the coming months.

So yeah. It’s been an interesting few weeks, and we’ll find out next week if the Saudis and Russia keep the hot streak alive. We think they do as they hold all the dice now.

For what it’s worth, Monica ended-up rolling a hard 8.

So you see?

IT JUST GOT INTERESTING.

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