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How this is not front page news right now is baffling. This is it folks, canadian oil has virtually nowhere to go coming soon...

https://www.bloomberg.com/news/arti...d-at-u-s-gulf-coast-could-push-out-canada-oil
Many Gulf coast refineries are configured for Canadian dilbit so refineries would take a process (and cost) hit swapping out dilbit for Saudi crude. Inland refineries rely on Canadian imports. I suspect there will be some effect but I think your headline is a little misguided. If Canadian dilbit is backed out, it will be the crude-by-rail portion that Cdn producers can no longer ship by rail to begin with.

I suspect the Saudi tankers are designed to target Permian producers, crudes of somewhat similar quality.
 

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How does this all end? Keep hearing noone is making $ yet they all keep drilling lol
Existing rig contracts for the most part, e.g. a company may contract for 20 wells with one rig. And in most cases, companies would have contracted through the winter drilling season until spring break up which will be happening soon. Rig count will fall off the map at that point.

Remember the business was looking up until the double whammy of the Saudi-Russian feud AND the COVID-19 crisis.

Added: No numbers available without a subscription, but the daily mood is characterized here https://www.dailyoilbulletin.com/category/rig-counts/

And if you want to know what rig is drilling for whom and where....... https://riggertalk.com/drilling_rigs_list.php?pageno=1&mapsearch=List+view
 

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I've postulated in the past (pre-pandemic) that oil demand would never exceed 105-110 million barrels per day before rolling over due to EVs taking on more momentum. I now believe it will barely exceed its previous record high of 100 million barrels per day before rolling over due to ICE efficiencies and EVs. There is almost no oil used for electrical generation now (isolated grids using coal or diesel excepted) so oil is not a factor in electrical generation anyway. Coal will be replaced by renewables and nat gas, mostly in the form of LNG. Many of the largest development projects in the world today are gas related along with XOM's Guyana oil developments.
 

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FWIW, some of you may have missed the news yesterday that the owners of Syncrude have decided to change operatorship to Suncor by the end of 2021. That will make a significant difference (reduction) in operating costs since Suncor can get more economies of scale. Syncrude will essentially become a 'normal' JV, likely a 'unit' in O&G parlance. That will cause all Syncrude employees to become employees of Suncor and redundant operations can be eliminated/reduced... as in maintenance, office A&G, etc. The goal, apparently, is to get operating costs of the joint complex down to $30/Bbl or perhaps even lower with new technology fully applied, e.g. driverless trucks.
 

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As an integrated, it is not going to see the same trend as pure upstream producers do with crude price changes .Its refining and marketing business margins will be squeezed with crude price increases. Additionally, condensate blending and nat gas fuel costs go up as well. The reason folks own SU versus other producers is for the more 'balanced' nature of its operations.
 

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Someday when I have absolutely nothing to do I will thumb through ~10 years of posts.

It is interesting that today's price is about where it was a few times back in 2011. A buy and hold investor would have gotten dividends. I do think this will move as soon as investors are confident these higher crude prices are here to stay...notwithstanding I see the downstream refining business likely to be in a long term funk (lower demand and lower refinery utilization factors perhaps forever).
 

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Because it is not a sure thing. Commodities are notorious for not behaving as one would suspect (both up and down), and especially oil which is highly politicized/weaponized. WADR to Doctrine and I understand where s/he is coming from given a good portion of my career in O&G, but s/he sounds a lot like Eric Nuttal and Josef Schachter talking about a bull market in oil for some years now. They (and Doctrine) will be right but the question is when and how long is one willing to wait. Given the mult-year saga for oil not materializing, that is why the market lags potential results at this time.

I doubt very much that demand will go back to pre-pandemic levels, and if it does, it is a few years out and then will turn over within 5 years thereafter. Carbon taxes and the momentum towards renewables are here to stay.
 

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I think oil usage in the US is about to erupt in the next few months...not sure if this is already baked into $60/barrel but this place should be back to pre Covid environment by July.
I suspect that could be true for the USA come the summer, provided there is not a 4th wave from the variants in the making (which it increasingly appears to be the case). I doubt the rest of the world is as impulsive as the USA is though. I don't disagree though that SU could be a $40 stock by late summer. Does not matter for me since I haven't directly owned a commodity stock for some years. Regardless, that really will not change the AB landscape much in terms of contractor activity and jobs. The prudent players in the industry will retire damaged balance sheets first.
 

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There is still almost 10 million barrels per day being held off the market via OPEC+, so even if demand jumps from today's level back to pre-pandemic 100 million barrels per day, the supply is there....today.

I do agree, however, that major investment is needed now to be able to sustain that supply going forward. Oil prices will be good for a number of years...so a bull market in oil in the near term but not a super commodity cycle or a decade or so. I even expect some price peaks/surges on a temporary basis while this sorts itself out.

The USA is expecting spot gasoline shortages this summer....not because of crude supply or refining capacity, but a shortage of tank truck drivers after many of them left the industry in 2020. Could be a similar problem here. It is hard to get people back once they have left en masse for other pastures. It is the same kind of problem in any supply chain.
 

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OPEC+ still controls (or at least has the primary influence on) price. Regardless of how much oil the USA pumps, OPEC is the decision maker whether they want to flood the market to push price down to penalize western producers or to let prices rise which then will temper demand growth and for a time, shore up their own Treasuries. The problem, as has been stated many times, is that petro-countries like SA, Russia, Iraq et al fundamentally count on oil revenues to fund national budgets. They can only ride out reduced revenues for so long before cheating becomes the norm. It is going to be that way for decades I think with western producers having a smaller share of global supply (demand) as the years roll by. Which is why it is most important that western producers work on improving margins on existing production rather than trying to increase production. It won't end well if they continue to pursue increased volume.
 

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Don't let the cap gains tax tail wag the dog. Be prudent on when to exit XEG and in what increments. XEG might have room to run to $15 but the rocket ship is losing its stages and the next $5 will be quite slow getting there. I'd split the bill 50/50 2021 and 2022, exiting the position in 2022 as the runway ends into the overall market.
 

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Why? If Doctrine is right, you have a potential 2 bagger on both at current prices.

P.S. My nickel would be on some more softness from current prices through approximately the end of this year, including tax loss selling season and concerns about the Delta variant. Then a turnaround after that.
 

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I have lots of oil exposure but I am thinking of adding more. I usually move too early, so my normal rule now is to wait until at least they are above the 10 day moving average, and maybe 20 day too.
So which do you act on? Your view of the fundamentals or technical analysis? Or is it really just gut?
 

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Nice link. Written from a slightly different perspective than most but overly optimistic in my view of oil's longevity. I did not read it super carefully but the key point missing on oil specifically was the will and ability of sovereign oil to outlast any publicly traded companies. They will eventually be pushed out of countries with mature O&G industries that they are currently in like Angola, Azerbaijan, Nigeria and Malaysia by state oil companies. They may have more staying power in newer basins like Brazil and Guyana but even then state oil companies like Petrobras will push out the majors in Brazil.

Here is a chart of "current" oil production by country. Oil Production by Country The chart is not up to date though because the new production out of Guyana (>120kpd) is not on the chart.
 

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I might add to Doctrine's post that while it is one of the most widely known seasonal trends, traders cannot bet the farm on this trend because there is always an off-chance that OPEC+ (namely SA) could upset the apple cart to wipe traders out or at least neuter them making 'all out' bets. It's a business risk no one can fully take.

Biden's unabashed about face is a classic case of livelihood trumping ideology.
 

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Getting back to Suncor specifically, I see they are making a commitment to re-starting Terra Nova offshore NF and looking to increase their interest in White Rose (I think). I highly question their rationale for doing so given how marginal these fields are economically without heavy NF and Federal subsidization/support. This is obviously now a social project to keep some GDP generation going in NF. It is not a very comfortable place for a publicly traded corporation to be wrapped up in for years, perhaps a decade or more, to come.

OTOH, for Suncor and partners, they have to be banking on strong oil prices for some years to come and the risk/reward is worth it. I understand ExxonMobil has exited their interests in those fields, focusing instead on much better prospects in Guyana.

Added: For full disclosure, I said I would never own commodities again after having tinkered in a few holdings (POT, TCK.B, COS, CNQ) somewhat in the 2005-2015 period. I will admit to now having Suncor on my Alert list at around $20 CAD which I would actually buy on the NYSE with loose USD I have on hand if the loonie also continues to fall more from current levels as well. I would be looking for a 'trade', e.g. buy at $15-16 USD, journal it over and sell on TSX in 2022 at about $30 CAD. I wonder what the odds of that happening might be in the next year or so?
 

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I doubt an O'Tole win would realistically result in a major sustained improvement in Suncor's price. It ultimately comes down to oil prices, and investor sentiment on cash flow and earnings growth. No more pipelines are going to be built and investor pressure for ESG metrics will keep financing under pressure. The only relief that could come from a change in gov't might be carbon taxes in some form. SU needs to improve its net margin through cost reduction, i.e. margin improvement will be the key success factor separating the men from the boys.
 
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