The Critical Factors for Oil Prices

Published on
May 7th, 2019
Duration
48 minutes

The Critical Factors for Oil Prices

The Expert View ·
Featuring Diego Parrilla

Published on: May 7th, 2019 • Duration: 48 minutes

All this month, we are devoting our Tuesdays to looking closely at crude oil. In this first edition of our “Tuesday Trend” pieces, Diego Parrilla of Quadriga Asset Managers places oil within a wide-ranging network of alternatives that are helping to “flatten” the energy world. Longer-term prices have remained stable even as sanctions, inventories and OPEC have influenced the spot market. Parrilla outlines a bullish long-term outlook, albeit with rising volatility in spot prices as the number of influencers increases. Filmed on May 2, 2019 in Madrid.

Comments

Transcript

  • CM
    C M.
    11 May 2019 @ 16:55
    Interesting interview. Listerners should check out this week's Macrovoices podcast on energy. Some good stuff on the balance of supply between light and heavy crudes and how shale is producing an oversupply on the light side while an extreme shortage is developing on the heavy side. Alot of end products require heavy oil as part of the mix and this plays into the conversation about pricing.
  • GF
    Gordon F.
    11 May 2019 @ 03:46
    Once again, PLEASE voice over the questions. A great interview, but it's really annoying to have to try to guess what the question was that flashed up on the screen when I'm only listening to the presentation.
    • CM
      C M.
      11 May 2019 @ 16:53
      Totally agree. They have done this periodically. But I am usually listening to it like a podcast and have to rewind to find the questions. Seems like an easy fix.
    • RA
      Richard A.
      14 May 2019 @ 02:38
      They voice the question in the audio download. Just do the same damn thing in the video! We’ve only been suggesting this for 4 years RV. Is it time to listen?
  • SH
    Stephen H.
    9 May 2019 @ 14:56
    Excellent interview with Diego. A thesis that is well thought through and deeply researched, also delivered in a clear and engaging manner. Look forward to hearing more from you Diego.
  • gs
    gerald s.
    9 May 2019 @ 14:56
    This video was excellent! I would like a little more follow-up on the time spreads commentary in future oil/commodity videos if possible - how a generalist can track and interpret signals etc. Good work
  • AC
    Andrew C.
    8 May 2019 @ 03:31
    Great video, thanks Diego My question is regarding Shale Oil; can you elaborate on how shale producers can both a-technically turn off wells (I believe restarting production does take significant resources, even from fracked wells) and b-survive without the cash flow from constant production? A review of the house of cards shale oil is reputed to be (Saudi America) is essential, on any upcoming Tuesday
    • JA
      Jesse A.
      8 May 2019 @ 15:53
      I don't know about A, but the epiphany I had about B is they don't have to survive, I think Raul has mentioned it too, but if they buy a bunch of capX and then go bankrupt then they either resell the equipment super cheap or they get to write it all down and keep it if they are able to restructure. So basically our bankruptcy system makes it so that when a company dies it can just pop back up with a lower cost of production.
    • MD
      Murph D.
      9 May 2019 @ 01:04
      Dovetailing off of Jesse’s point, increased interest from the majors could also keep wind in the shale sails. Whether through normal m&a (ie Chevron’s bid for Anadarko), or scooping up assets on the cheap in a distressed/bankruptcy scenario.
  • HH
    HODL H.
    8 May 2019 @ 01:46
    Great video, more of these please!
  • GM
    Gregor M. | Contributor
    7 May 2019 @ 22:26
    Wonderful overview and a slew of clever and useful framings to understand the recent past, and how we arrived at today. Key concept: global economic growth will continue to call less upon oil, and more on a suite of other energy resources. I like to point out in my work that oil once composed a full 50% of total global energy demand from all sources. Ergo, the next unit of global GDP in that era (50 years ago) called heavily on oil. Today, oil composes just a touch over 30% of total global energy demand as marginal growth reaches for a collection of other resources, including wind and solar. Finally, I do hope people understand that new wind and solar generation has started to come into the transportation sector, at the margin, to supply growth of EV. Yes, we are still at the bottom of the S curve of EV adoption in the West. In China, they are starting to move up that curve. N.B. China road fuel demand (gasoline + gasoil) fell for the first time last year in many years. This is not a coincidence. The China car market broke hard to the downside (and is still breaking to the downside) as petrol vehicle sales fell and EV sales soared. This is not a one-off event. All best, G
  • oo
    olga o.
    7 May 2019 @ 16:53
    Great analysis. Thank you, Diego and RV. It is a refreshing break from a bunch of charts and repetitive tech commentary.
  • RA
    Robert A.
    7 May 2019 @ 16:30
    I wanted to make this comment after Roger’s introduction and before I viewed Diego’s segment (loved Diego’s “Anti Bubbles”). I REALLY like the format of using Tuesdays for a deeper dive using multiple viewpoints on current important topics that Milton curates for us! This is what RV is all about, IMO—RV’s ability to recognize and pick the current lynchpin topics and then roundup the Experts who can communicate succinctly the data and arguments surrounding portfolio positioning. No one does it better....can’t wait to hear what Diego has to say!
  • MC
    Minum C.
    7 May 2019 @ 16:22
    Nicely done. I really like the framework Diego is using to set up the discussion. Very interested in understanding the extent to which credit markets play a role in the ~$60/bbl ceiling created as a result of shale producer hedging. Looking forward to the rest of the series.
  • SH
    Simon H.
    7 May 2019 @ 16:07
    Not sure how anyone could vote this down.
  • GW
    Geoff W.
    7 May 2019 @ 13:42
    Why haven't small and medium cap oil companies benefitted from the increase and stability in oil price? It's been a widowmaker trade with energy equities hit hard on any energy weakness.
  • RM
    Richard M.
    7 May 2019 @ 13:01
    Wow, great start for this new Tuesday series! Diego did a fabulous presentation - excellent big picture overview of the future of oil/NG/alts and the various impacts of each on the other. Really looking forward to the rest of this series!