CHERYL: OIL IN FOCUS, OIL
PRICES HOVERING AROUND 65 A
DOLLARS A BARREL, FRACTIONALLY
DOWN THIS MORNING.
SO FAR THIS YEAR, THIS CONTRACT
HAS SURGED MORE THAN 35% WITH
THE ECONOMY OPENING UP, WE COULD
SEE A SPIKE IN DEMAND AND HIGHER
PRICES AT THE PUMP.
WE’RE ALREADY SEEING THAT.
I WANT TO BRING IN STEPHEN
SHORCK.
GOOD MORNING MANY TALK TO ME
ABOUT WHAT WE’RE SEEING WITH THE
CONTRACT.
IS THIS BECAUSE THE ECONOMY IS
GOING TO OPEN BACK UP, THE GROW
BALL ECONOMY IS GOING TO --
GLOBAL ECONOMY IS GOING TO BE
STRONGER OR IS IT BECAUSE
TRADERS ARE PUSHING THE CONTRACT
UP.
>> IT’S A COMBINATION OF BOTH.
IN DECEMBER WE HAD THE FORWARD
CURVE OF THE MARKET FLIPPED.
FOR THE BETTER PART OF 2020
PRICES IN THE SPOT MARKETS, THE
CAN’T MARKET WERE BELOW THAT OF
THE PRICES IN THE FORWARD
MARKET.
THIS WAS A CLEAR SIGNAL THAT
THERE WAS A GLUT ON THE MARKET
AND DEMAND WAS NOT THERE TO
CLEAR THAT GLUT.
WE STARTED TO SEE THAT SWITCH
BACK IN DECEMBER WHERE THE SPOT
PRICES STARTED TO MOVE ABOVE THE
FORWARD CURVE SO CLEARLY THIS
WAS A SIGNAL TO TAKE OIL OUT OF
INVENTORY, BECAUSE RISING DEMAND
IN THE STOCK MARKET.
DEMAND IS STRONG.
IT’S EXPECTED TO GET STRONG AND
TRADERS ARE PLACING THEIR BETS
ACCORDINGLY.
JAMES: BRIAN BELSKI JUMP IN
HERE.
BRIAN: WITH RESPECT TO THE
COMPANIES -- I KNOW YOU LOOK AT
THE FORWARD CONTRACT.
OBVIOUSLY OIL PRICES A YEAR AGO
ARE MUCH DIFFERENT THAN THEY ARE
TODAY.
THINK ABOUT WHAT THIS MEANS FOR
CONSOLIDATION IN THE COMPANIES
GOING FORWARD.
ARE WE IN A SECULAR TYPE OF
SHIFT BACK TO DEMAND RELATIVE TO
THE SUPPLY KIND OF DRIVEN FORCES
ON A FUNDAMENTAL BASIS WE’VE
SEEN FOR THE LAST 10 YEARS?
>> YEAH, IT’S A FAIR QUESTION.
WE’RE CLEARLY AT THAT DQ OVER DX
MOMENT GOING BACK TO CALC ONE
HERE WHERE WE’RE AT A INFLECTION
NOINT THE INDUSTRY.
WE -- POINT IN THE INDUSTRY.
WE HAD A RUDE AWAKINGEN IN 2020,
WITH WHAT CAN HAPPEN WITH
DEMAND.
THAT HASTENED THE ARRIVAL OF
GREATER RENEWABLE TECHNOLOGY IN
THE MARKETS, SO THE INDUSTRY HAS
SHIFTED ACCORDINGLY AS FAR AS
THE OIL COMPANIES ARE CONCERNED,
THEY’RE LOOKING AT POTENTIALLY
PEAK DEMAND IF NOT NEXT COUPLE
YEARS, CERTAINLY WITHIN THE NEXT
DECADE.
SO THEY’RE MAKING PLANS IN
ACCORD TO MAKING A SHIFT MORE
AWAY FROM OIL TOWARDS GAS,
TOWARDS PETROCHEMICALS, TOWARD
ELECTRICITY.
SO THIS IS A SITUATION WHERE NOW
SUPPLY HAS BEEN MAINTAINED AND
THEY’VE LEARNED HOW TO PRODUCE
MORE EFFICIENTLY AND NOW IT’S
GOING TO BE DRIVEN TO YOUR
POINT, DEMAND DRIVEN STORY GOING
INTO THE NEXT FEW YEARS.
CHERYL: ALSO, THE OTHER STORY
HERE IS A NEW ADMINISTRATION,
WHAT IMPACT HAS THE BIDEN
ADMINISTRATION HAD ON OIL ON GAS
PRICES?
I MEAN, THINK ABOUT THIS.
THEY CANCELED THE KEYSTONE
PIPELINE, THEY’RE TALKING ABOUT
LIMITING SUPPLY, TALKING ABOUT
GREEN ENERGY JOBS AND CANCELING
OIL JOBS.
WHAT DOES THAT TELL YOU?
>> ABSOLUTELY.
IT’S HAVING A POSITIVE EFFECT ON
PRICE AND NEGATIVE IMPACT ON THE
ECONOMY.
OF COURSE, WITH KEYSTONE XL, WE
ALSO HAVE THE SITUATION OF THE
MORATORIUM NOW ON NEW DRILLING
AND PERMITTING.
WHILE THIS DOES NOT IMPACT
PRICES IN THE NEAR TERM, IT
SENDS A CLEAR MESSAGE TO THE
MARKET THAT CAPITAL IN THIS AREA
WILL NOT BE WELCOMED AND WILL
NOT BE WELL TREATED.
ON THE CLOSER FRONT OF WHAT
WE’VE SEEN THE BIGGEST IMPACT
THAT BIDEN HAS HAD ON PRICES, IS
THE TREATMENT OF SAUDI ARABIA.
THERE WAS SURPRISE TWO WEEKS AGO
WHEN SAUDI ARABIA TOOK A MORE
HAWKISH VIEW AT THE OPEC MEETING
AND OIL PRICES SURGED AFTER THAT
SURPRISE DECISION.
IN REST RETROSPECT IT SHOULD NOT
SURPRISE.
THE BIDEN ADMINISTRATION WILL
NOT TALK TO THE YOUNGER LEADER
OF SAUDI ARABIA, THEY WILL ONLY
TALK TO THE 83-YEAR-OLD FATHER.
THEY’RE THREATENING TO FREEZE
ARM SALES TO THE UAE AND SAWED
SOUGHT.
THEY’VE HAD THE RELEASE OF THE
KHASHOGGI REPORT WHICH PROVED TO
EMBARRASS NBS.
THERE’S FACE SLAPPING THEY’VE
DONE TO THE SAUDIS AND THAT’S
HAD AN IMPACT ON PRICE.
CHERYL: IF YOU LOOK AT THE OIL
PRICES SINCE THE ELECTION, UP
MORE THAN 70%, I THINK THAT’S
YOUR HEADLINE RIGHT THERE.
STEPHEN SHORCK, ALWAYS GREAT TO