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Here comes OPEC PR Offensive

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JC

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OPEC Sec Gen hitting the PR circuit hard at the CERAWEEK OIL. conference this week.  Now they are the US friend.  Never forget how they blocked oil to US '73 '74 after we supported Is real against Egypt/Syria, tried to kill US oil production both '85 - '86. , '98 - '99, and recently 2014 - 15.  Last one didn work because non-OPEC oil has grown.  They want US oil companies to join the cartels effort.  

The sherade that oil investment will dry up is a false argument.  For instance Hess just reported that new wells 2018 forward get 55% return at $50 a barrel !  Imag one what their return will be at $70 bbl.

Short term prices could rise based on Sandi's cutting "EXPORTS"  in April.  Be careful to distinguish between production cuts and exports cuts.  The producers can play games with this nuanced announcements.

But more important the thing to watch is if Trump continues the Iranian waivers allowing continued shipping of oil (to India, China, etc).

Sandi's said they will do whatever it takes to support oil prices.  I believe them. BUT FORTUNETLEY THEY HAVE NO CONTROL OVER THE OIL SUPPLY TSUNAMI THAT WILL HIT THE WORLD  MARKET FROM PERMIAN.  Starting Q4 into 2020 (1) new PERMIAN pipelines (2)  4 new or upgraded oil export terminals (3) by the close to 10,000 DUCs (Drilled but Uncompleted wells) will support the supply.

Oil economics have changed.  Technology is transforming another industry and it's only just started.  

What will the valuation of E&P, Refiners, etc be if oil "stabilizes" or "balances" at $45 bbl.

NOPEC should pass Congress. There are no Cartels in , Natural Gas, Iron Ore, Soybeans, Lithium, Cobalt, Gold, Silver, etc, etc, etc. 

Oil industry needs to face reality.  Sandi's can't charge $85 bbl for oil that cost them $4.00bbl to lift.

Hess better watch it.  Don't collude to prop up prices.  Could return to bite you.

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