“You Can’t Jawbone a Physical Oversupplied Market”

Published on
April 16th, 2020
Duration
24 minutes


“You Can’t Jawbone a Physical Oversupplied Market”

The Expert View ·
Featuring Warren Pies

Published on: April 16th, 2020 • Duration: 24 minutes

Oil has been front and center this past week, and in spite of a historic production cut from OPEC+ and other G20 countries, prices have again dipped their heads below $20 a barrel. Warren Pies, chief energy strategist at Ned Davis Research, has returned to help viewers separate the signal from the incessant noise. Pies reiterates that it is in fact COVID-19 related demand disruption that is the driving force for low oil prices and not a price war. He also explains why talk is cheap in a physical market like oil and provides a roadmap for investing in the post crisis recovery. Filmed on April 14, 2020.

Comments

Transcript

  • TS
    Thomas S.
    23 May 2020 @ 22:17
    Enjoyed the interview .. lots of great info. Here we are about a month later .... assuming the "recapitalization" of the shale players has started and is reducing production, and possibly other non-economic players have reduced production; has there been any measurable impact on the supply imbalance ? Also, albeit at a slow pace, lock downs have been coming off and presumably demand is improving. Noticeable yet ?
  • dw
    douglas w.
    16 April 2020 @ 06:51
    "For Oil, there's strong support at zero"..classic.
    • CL
      Chad L.
      16 April 2020 @ 14:56
      Made me chuckle too.
    • NG
      Nelly G.
      25 April 2020 @ 19:14
      Lul, haven't watched the video yet but I hope he didn't recommend buying the support.
  • FD
    Federico D.
    22 April 2020 @ 01:49
    The two videos by this guy have been so far the best, most actionable content on the platform for me. Appreciate his honesty and generosity sharing his knowledge in a straightforward way.
    • AS
      Arpat S.
      23 April 2020 @ 15:26
      I agree. Amazing guest! Please have him on RV more often.
  • AS
    Arpat S.
    20 April 2020 @ 19:15
    Amazing Guest! When he talks about tankers, he says there is a real risk of reduction in ton-mileage in the future. Can someone expand on that?
    • JW
      Justin W.
      21 April 2020 @ 12:44
      Anybody?
    • TS
      Tor S.
      21 April 2020 @ 21:31
      Ton/mileage refers to the time equivalent a unit of oil is in transit. A barrel of oil in a ship from US to China travels twice as long in sea, than a barrel from AG (Arab Gulf) to china - and therefore longer in time. More ships needed. The increase in US export led to under supply in shipping capacity due to this. This is/was one of the big drivers for the predicted shipping boom (together with other factors such as IMO2020) For shipping, the outlooks for reduced tonn/mileage is ofset by the contago. They now haul in cash, providing storage capacity for the players in oil future market.
    • AS
      Arpat S.
      23 April 2020 @ 15:24
      Thank You for the explanation, Tos S. So, in the future when shale production reduces, the US export reduces and hence the reduction in ton-mileage.
  • SS
    Sam S.
    19 April 2020 @ 13:37
    Things will open up pretty soon. Then next flu season starting in September, the news media, will blast us with more Covid-19 sickness and death to disrupt the election in November. We're killing the patient to cure the virus. Backasswards. CDC put out the numbers regarding regular flu and high death tolls, but no dog and pony show for that. All markets and populations are having to deal with this, whether real or not. Sweden has not locked themselves down. If China and Asia have now opened up and are running, their oil demand should be seen as moving up? They got a lot a cars and industry.
    • JW
      Justin W.
      21 April 2020 @ 12:40
      1 day before oil went negative.
  • AS
    Ananth S.
    20 April 2020 @ 22:03
    I had to find this video.. STRONG support at 0 indeed!! Spoken like a psychic
  • EC
    Evan C.
    20 April 2020 @ 18:25
    Well apparently, there goes the firm support at zero for crude...
    • CT
      Chris T.
      20 April 2020 @ 19:02
      So how does one trade that? Etc despite all contango?
  • JG
    Jory G.
    20 April 2020 @ 17:46
    The oil industry execs may be dumber than the paper industry guys used to be. Two of the three or four major producers don't even have to worry about anti-trust laws as we have in the US. Over time the paper industry has consolidated to the point that there has evolved into some self discipline and prices over time have stabilized at a level where well run companies can make a reasonable profit. Today about 70-80% of the capacity to make paper that is used by box makers is owned by 3-5 major players. The oil industry might learn something here and we as consumers might also learn to not be so consumed with buying everything at the lowest possible price. Low prices very often come with very high costs down the road and many of us can't seem to figure out why.
  • SC
    Sean C.
    20 April 2020 @ 16:32
    A week later, Crude breaks below $10 and Tanker Stocks back to near term highs which is 30-50% above 3 week lows!
  • XF
    Xavier F.
    18 April 2020 @ 03:09
    Just wondering if a robust summer driving season would have any affect on oil prices...
  • PB
    Paul B.
    17 April 2020 @ 00:54
    Yeah this Dude is in the Know 4 sure...Need him back on Regular
    • ST
      Simon T.
      18 April 2020 @ 02:45
      Agree - crystal clear and honest - buy tankers with good cash and equity / debt ratios
  • MS
    Mark S.
    17 April 2020 @ 04:41
    What day was this filmed?
    • WP
      Warren P. | Contributor
      17 April 2020 @ 23:30
      Tuesday AM
  • MG
    Miguel G.
    16 April 2020 @ 16:27
    Nice call in WMB and EPD Warren, your insight is always appreciated. There seems to be some real value in this sector so having Warren share his time with us in to what he's thinking is always appreciated.
    • JW
      JW2 W.
      17 April 2020 @ 06:12
      Need to re-check but I am pretty certain he said last time that it's OK to take some nibbles at CVX, WMB and ET but wait before taking a position in SLB and EPD in order to see how the sector responds to the uncertainty enveloping it in these times. Things re dynamic. Hope he comes back to for regular updates. I like how he explained his rotation play: tankers >>> refiners >>>upstream.
  • FA
    Fadi A.
    16 April 2020 @ 14:01
    I heard him talking about tankers, what stocks were suggested
    • IO
      Igor O.
      16 April 2020 @ 17:48
      EURN, STNG, TNK
    • ns
      niall s.
      17 April 2020 @ 01:28
      also DHT
  • HE
    Henry E.
    16 April 2020 @ 22:17
    Warren is a real person. This guy knows his sh*t... Thanks RealVision for keeping him in front of us...
    • HE
      Henry E.
      16 April 2020 @ 22:18
      You gotta love a guy who makes his bed..... ;-)
  • JW
    JW2 W.
    16 April 2020 @ 20:25
    Love the way Warren reasons this all out. This may be an odd question for an oil man, but I wonder whether warren has a view on alternative energy and specifically whether this demand shock will accelerate investment and adoption. This should benefit things like the TAN ETF, for example. In the meantime, I am adding to my Tanker portfolio.
  • PJ
    Peter J.
    16 April 2020 @ 19:51
    Strong support at zero didn't happen for interest rates! Great slogan for T-Shirt.
    • PJ
      Peter J.
      16 April 2020 @ 19:52
      great piece by the way
  • rr
    rlw r.
    16 April 2020 @ 16:03
    Warren has great insights, keep it coming dude.
  • FB
    Fred B.
    16 April 2020 @ 14:43
    does anyone watch HomeLand on Showtime? If not, check it out, next to last episode is this Sunday at 9pm. Thanks, La La
  • MC
    Michael C.
    16 April 2020 @ 07:18
    Such a relief to listen to a video that doesn't mention the Fed. The Fed isn't buying oil or any commodity and they are all clearly still signalling deflation.
    • KI
      Kelly I.
      16 April 2020 @ 13:16
      But the Fed may buy junk debt of us energy companies. Also oak tree.
  • JV
    Jan V.
    16 April 2020 @ 08:54
    I can't keep up with all good content being published!
  • HS
    Hugh S.
    16 April 2020 @ 08:29
    Oil, one of the few remaining real market.
  • BP
    Bryce P.
    16 April 2020 @ 06:39
    Always enjoy listening to Warren.