1 00:00:00,680 --> 00:00:04,240 Speaker 1: You're listening to taking stock with pim Box at Kathleen 2 00:00:04,280 --> 00:00:09,719 Speaker 1: Hayes on Bloomberg Radio. Oil prices posting a third weekly 3 00:00:10,000 --> 00:00:13,200 Speaker 1: gain as the potential for a production freeze deal among 4 00:00:13,360 --> 00:00:18,079 Speaker 1: major producers outweighing concerns about ample inventor is here to 5 00:00:18,120 --> 00:00:22,239 Speaker 1: tell us more? John Kilda, founding partner of Again Capital. 6 00:00:22,680 --> 00:00:25,000 Speaker 1: All right, John, great to have you with us. Are 7 00:00:25,000 --> 00:00:28,080 Speaker 1: we going to see oil prices continue to move higher? 8 00:00:29,480 --> 00:00:30,960 Speaker 1: I think in the short run we will go a 9 00:00:30,960 --> 00:00:34,800 Speaker 1: bit higher. Pim that the market got caught short in 10 00:00:34,880 --> 00:00:38,280 Speaker 1: the face of some comments by the new Saudi oil minister. 11 00:00:38,800 --> 00:00:42,120 Speaker 1: Uh and the short covering is is underway with with 12 00:00:42,200 --> 00:00:44,120 Speaker 1: abandon right now, so I think we still have some 13 00:00:44,159 --> 00:00:46,120 Speaker 1: more to go before we can head back lower again. 14 00:00:46,560 --> 00:00:50,440 Speaker 1: All right, what is going to cause the lower prices 15 00:00:50,479 --> 00:00:54,680 Speaker 1: after this short covering? Well, again, you know that the 16 00:00:54,720 --> 00:00:57,680 Speaker 1: market got to a record short position. So whenever the 17 00:00:57,720 --> 00:01:00,000 Speaker 1: book gets floated to one side, I like to say 18 00:01:00,000 --> 00:01:02,279 Speaker 1: it has to revert um. But I think as long 19 00:01:02,320 --> 00:01:05,040 Speaker 1: as put the price rally fails at fifty or fifty two, 20 00:01:05,160 --> 00:01:06,880 Speaker 1: we'll go back down. The reason we're going to go 21 00:01:06,920 --> 00:01:09,840 Speaker 1: back down is because for all the talk of a freeze, 22 00:01:09,840 --> 00:01:12,319 Speaker 1: and all the talk of cooperation among OPEC, Russia and 23 00:01:12,319 --> 00:01:15,120 Speaker 1: maybe some other countries, there's just keeps seeing more and 24 00:01:15,160 --> 00:01:17,600 Speaker 1: more oil coming to the market. The Saudis are at 25 00:01:17,600 --> 00:01:21,200 Speaker 1: a record export level of crudal and refined products. The 26 00:01:21,319 --> 00:01:25,400 Speaker 1: Chinese are continuing to ramp up their export of refined products, 27 00:01:25,720 --> 00:01:29,640 Speaker 1: brush at and all time high. Northern Iraq oil productions 28 00:01:29,680 --> 00:01:32,280 Speaker 1: came back online for the first time in months chest today. 29 00:01:32,520 --> 00:01:34,720 Speaker 1: Olibians are starting to get their oil after the market 30 00:01:34,720 --> 00:01:37,479 Speaker 1: again as well as Nigerians can get their act together. 31 00:01:37,720 --> 00:01:39,959 Speaker 1: It's just another wave of oil for this market so 32 00:01:39,959 --> 00:01:42,440 Speaker 1: that it has nowhere to go. But then and John 33 00:01:42,680 --> 00:01:46,640 Speaker 1: countries such as Venezuela, they're looking to increase or to 34 00:01:47,000 --> 00:01:52,600 Speaker 1: export more oil because that's a hard currency earner. Absolutely, 35 00:01:52,640 --> 00:01:54,520 Speaker 1: Pim and you know, and they in Venezuela that you 36 00:01:54,560 --> 00:01:57,800 Speaker 1: just mentioned, they certainly are the basket case among the 37 00:01:57,840 --> 00:02:01,240 Speaker 1: producers right now. With their economy teetering on imploding completely. 38 00:02:01,640 --> 00:02:04,560 Speaker 1: Their their oil production actually is somewhat challenged, so that 39 00:02:04,680 --> 00:02:06,680 Speaker 1: is something of a supportive feature. And I know you've 40 00:02:06,720 --> 00:02:09,480 Speaker 1: probably been talking about this all day, but the weakness 41 00:02:09,480 --> 00:02:12,080 Speaker 1: and the dollar has had a big effect on on 42 00:02:12,120 --> 00:02:15,639 Speaker 1: dollar denominated oil prices. As well as that dollar falls, 43 00:02:15,639 --> 00:02:18,240 Speaker 1: it props up oil prices, so that too is a 44 00:02:18,240 --> 00:02:21,360 Speaker 1: factor right now. What role is Iran playing in the 45 00:02:21,400 --> 00:02:27,680 Speaker 1: oil industry? Well interesting, I was at the last meeting, 46 00:02:27,680 --> 00:02:30,880 Speaker 1: at the last goal around of this freeze uh nonsense. 47 00:02:31,200 --> 00:02:34,800 Speaker 1: I was convincent deal would not come together. I thought 48 00:02:34,800 --> 00:02:36,720 Speaker 1: maybe this time that there was a chance for a 49 00:02:36,760 --> 00:02:39,560 Speaker 1: deal because the Iranians are pretty much back to their 50 00:02:39,960 --> 00:02:42,840 Speaker 1: pre sanctioned output levels in terms of crude oil production. 51 00:02:43,560 --> 00:02:46,520 Speaker 1: But they have just said that they probably won't attend 52 00:02:46,680 --> 00:02:49,120 Speaker 1: the meeting in Algeria next month where they're hoping to 53 00:02:49,160 --> 00:02:52,120 Speaker 1: get this deal cobbled together. And also to their recent 54 00:02:52,160 --> 00:02:55,600 Speaker 1: allowance of Russia to use an air base within Iran 55 00:02:55,680 --> 00:02:58,160 Speaker 1: to strike Syria is really a stick on the eye 56 00:02:58,160 --> 00:03:01,680 Speaker 1: of the facialities once again. So there's no coming together 57 00:03:01,760 --> 00:03:05,080 Speaker 1: between those two name uh fat players in OPEX, and 58 00:03:05,160 --> 00:03:08,000 Speaker 1: without that there will be no deal. John, you mentioned 59 00:03:08,120 --> 00:03:10,480 Speaker 1: Nigeria production and I wonder if you could tell us 60 00:03:10,520 --> 00:03:12,680 Speaker 1: a little bit about why it is at a twenty 61 00:03:12,760 --> 00:03:17,080 Speaker 1: seven year low and what's going to happen next. So 62 00:03:17,480 --> 00:03:19,560 Speaker 1: where the oil is in Nigeria is in the southern 63 00:03:19,600 --> 00:03:21,639 Speaker 1: part of the country. You're on the coastlines called the 64 00:03:21,720 --> 00:03:25,360 Speaker 1: Nigeria Delta, and from time to time the indigenous folks 65 00:03:25,360 --> 00:03:29,240 Speaker 1: down there raise up rise up in protests and rebel 66 00:03:29,320 --> 00:03:32,239 Speaker 1: and bomb and attack the oil infrastructure because they don't 67 00:03:32,240 --> 00:03:34,760 Speaker 1: get their their fair share of the pie as they 68 00:03:34,800 --> 00:03:37,040 Speaker 1: as they see it. The new government that came in 69 00:03:37,120 --> 00:03:41,000 Speaker 1: their cut payments to the various groups there, and what 70 00:03:41,160 --> 00:03:43,480 Speaker 1: you think would happened happens, and so there's been attacks 71 00:03:43,560 --> 00:03:46,520 Speaker 1: on the infrastructure and they've been a pretty dedicated bunch 72 00:03:46,560 --> 00:03:49,640 Speaker 1: there that has helped not oil output offline, but that 73 00:03:49,720 --> 00:03:52,960 Speaker 1: the government has reversed course, has begun making payments, their 74 00:03:53,000 --> 00:03:56,880 Speaker 1: serious negotiations under way so that oil output could rebound 75 00:03:57,120 --> 00:04:00,000 Speaker 1: as quickly as it went offline. I like the point 76 00:04:00,040 --> 00:04:03,520 Speaker 1: now that this is not the Fokohoram and other um 77 00:04:03,760 --> 00:04:06,320 Speaker 1: sectarian sort of upset that you have in the northern 78 00:04:06,320 --> 00:04:09,360 Speaker 1: part of the country. This is strictly all about petro 79 00:04:09,480 --> 00:04:13,040 Speaker 1: dollars john at a price of around forty eight dollars 80 00:04:13,040 --> 00:04:15,920 Speaker 1: a barrel for West Texas and fifty dollars a barrel 81 00:04:16,120 --> 00:04:20,240 Speaker 1: for Brent crude, at what point do US producers start 82 00:04:20,279 --> 00:04:24,360 Speaker 1: pumping more oil? Well, they've done an incredible job. Now 83 00:04:24,400 --> 00:04:27,000 Speaker 1: over the past, you're driving their costs down. There are 84 00:04:27,040 --> 00:04:29,520 Speaker 1: a number of areas now where they're profitable at thirty 85 00:04:29,560 --> 00:04:32,640 Speaker 1: five dollars a barrel. Uh. You might have noticed today 86 00:04:32,680 --> 00:04:35,200 Speaker 1: that the rig count Bakers use rick Cant was up again, 87 00:04:35,360 --> 00:04:37,080 Speaker 1: I think for the fourth straight week. It's fact. I 88 00:04:37,080 --> 00:04:40,080 Speaker 1: think they added ten right, they added ten riggs, ten 89 00:04:40,120 --> 00:04:43,360 Speaker 1: more riggs. It's up about almost now off it's low 90 00:04:43,440 --> 00:04:46,600 Speaker 1: from March, so they've been racing riggs back into service. 91 00:04:46,920 --> 00:04:49,800 Speaker 1: And earlier this week it was partly due to an adjustment, 92 00:04:49,839 --> 00:04:53,320 Speaker 1: but the e i A told us that US production 93 00:04:53,360 --> 00:04:57,120 Speaker 1: has jumped the most it has since May, undred and 94 00:04:57,160 --> 00:05:00,559 Speaker 1: fifty thousand barrels a day, which is not insignificant. So 95 00:05:00,960 --> 00:05:03,839 Speaker 1: they're on the comeback trail really as we speak. Just 96 00:05:03,880 --> 00:05:06,320 Speaker 1: getting over four dollars of barrel seems to invite it 97 00:05:06,440 --> 00:05:09,400 Speaker 1: some hopeful analysis among the sector to get back in, 98 00:05:09,760 --> 00:05:11,880 Speaker 1: get back in the ground, and get drilling again. To 99 00:05:11,960 --> 00:05:14,560 Speaker 1: give you some numbers for it, uh, the number of 100 00:05:14,720 --> 00:05:18,560 Speaker 1: rigs drilling for oil in the United States has climbed 101 00:05:18,600 --> 00:05:22,120 Speaker 1: for eight consecutive weeks. It rose about four rigs for 102 00:05:22,160 --> 00:05:26,000 Speaker 1: the for the week for the first time since February. 103 00:05:26,000 --> 00:05:29,839 Speaker 1: This all according to Baker Hughes Uh. John, explain what 104 00:05:29,920 --> 00:05:35,479 Speaker 1: happens with refiners because they're switching over from gasoline production 105 00:05:36,040 --> 00:05:41,200 Speaker 1: to h heating oil. Correct, that's correct. And they're also 106 00:05:41,240 --> 00:05:45,240 Speaker 1: switching over from a summer grade gasoline to winter grade gasoline, 107 00:05:45,520 --> 00:05:47,800 Speaker 1: which is easier to make. And then we had an 108 00:05:47,800 --> 00:05:50,599 Speaker 1: abundance of that coming out of last winter, which helps 109 00:05:50,600 --> 00:05:53,719 Speaker 1: get the pump prices really low come February when they 110 00:05:53,760 --> 00:05:56,719 Speaker 1: had to switch out. So it's gonna happen now, Tammy. 111 00:05:56,839 --> 00:05:59,120 Speaker 1: You're going to see the refiners cut their runs, their 112 00:05:59,200 --> 00:06:02,320 Speaker 1: their their util station rate, and of course that's going 113 00:06:02,360 --> 00:06:05,720 Speaker 1: to cause crude oil be less in demand back up 114 00:06:05,760 --> 00:06:07,600 Speaker 1: in the system. And this is why over the course 115 00:06:07,600 --> 00:06:08,880 Speaker 1: of the next couple of months you could see a 116 00:06:08,920 --> 00:06:11,920 Speaker 1: real breakdown again, just as we saw last year, as 117 00:06:11,960 --> 00:06:15,560 Speaker 1: the glut just enlarges and gets bigger and bigger and 118 00:06:15,720 --> 00:06:18,040 Speaker 1: uh and and really the global market gets swamp again. 119 00:06:18,320 --> 00:06:20,839 Speaker 1: I want to thank you very much John Kildoff, he 120 00:06:21,080 --> 00:06:25,320 Speaker 1: is the founding partner of Again Capital, giving us his 121 00:06:25,440 --> 00:06:29,640 Speaker 1: view on the oil markets with oil posting a third 122 00:06:29,839 --> 00:06:33,120 Speaker 1: weekly gained. I want to thank you all for listening 123 00:06:33,120 --> 00:06:36,080 Speaker 1: to taking Stock. My thanks to our engineer Reggie Basil, 124 00:06:36,320 --> 00:06:40,240 Speaker 1: our producer Marx and Escalche. I'm pim Fox and this 125 00:06:40,680 --> 00:06:41,320 Speaker 1: is Bloomberg.