Wednesday 6 March 2019

Why shale will keep oil company RoEs atrocious, Gold fails to take Goldman's breakout cue, Chinese QT & London's biggest ever sale has started!

This interview is a golden nugget Chevron CEO promising a production double - ie the oil price is the only form of capital discipline and the US will go to a net oil export position soon and will have to take market share from another producer (hint, it's Iran) 

He even says their ownership of land allows them to write its fair value/ lease equivalent value down vs smaller peers that are leasing land and Chevron can therefore still operate at a lower oil price. 

All points to terrible RoEs for all but the genuinely lowest cost producers - and shale is not low cost..

US 4 week average net imports now look like they are only 700 or 800k bpd, down from 12.5 million. There have even been two weeks of net exports.  

Despite Goldman's bullish call at top of the recent range, Gold did not break out this time Maybe in late Q3 after a Q2 USD rally/ risk off phase, $1200-1220 is a decent floor to bounce off Need wages to show Fed loose for real, tight for financial economy


Chinese Quantitative Tightening? Telling local debtors to repay CNY debt quickly, in turn forcing them to sell their offshore assets.

As such London's biggest ever sale has started... Up to 68% off and much further to go... However, unlike sales at the shops, you probably want to be the last to buy (I guess the Europeans threatening to leave over Brexit will just have to stay)