WEBVTT - Carley Garner on Oil (Audio)

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<v Speaker 1>All right, well, let's get over to our next guests.

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<v Speaker 1>And joining us now is a Kylie Ghana, senior community

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<v Speaker 1>strategist and broke Decarlie Trading. She's had to discuss the

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<v Speaker 1>oil market ahead of that Wednesday decision from OPEQ plus. Kylie,

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<v Speaker 1>welcome to the program. And we've been reporting that well

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<v Speaker 1>yesterday that we were looking at a million dollars uh, sorry,

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<v Speaker 1>million barrels a day about put being cut. Today we're

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<v Speaker 1>talking perhaps as much as two million barrels a day, Karlie.

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<v Speaker 1>That I mean, you know, you do cut that much,

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<v Speaker 1>but it doesn't really change the supply picture as much

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<v Speaker 1>as one would think. Correct, correct, because OPEC is currently

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<v Speaker 1>missing their quotas anyway. So this is in my opinion,

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<v Speaker 1>OPEC is basically taking a page out of the Federal

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<v Speaker 1>Reserve playbook and that they're talking their book. Yeah, they're

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<v Speaker 1>not having as much success as the fedhead with interest rates,

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<v Speaker 1>but I think they're you know, they're going to continue

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<v Speaker 1>to try to do that. And I don't think we're

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<v Speaker 1>going to see a really big production cut tomorrow. I

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<v Speaker 1>could be wrong. OPECK is sometimes very difficult to predict,

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<v Speaker 1>but for political reasons and and just the purpose of

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<v Speaker 1>a cartel is to keep prices high, but to do

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<v Speaker 1>it in a way that doesn't ruffle anyone's feathers and

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<v Speaker 1>encourage others to either increase production like shale producers, or

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<v Speaker 1>um other consumers to come up with alternatives. So I

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<v Speaker 1>don't think they're going to make any really big drastic moves,

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<v Speaker 1>but I think it'll be a psychological move. Maybe half

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<v Speaker 1>a million, maybe a million. But either way, as you said,

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<v Speaker 1>it's probably not going to take that many barrels off

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<v Speaker 1>the market, if it does any at all. I saw

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<v Speaker 1>a couple of other interesting lines. One was that I'm

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<v Speaker 1>in Nassa. The CEO of Aramco in our story said

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<v Speaker 1>that spare capacity is is very low and there won't

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<v Speaker 1>be any left at all. One's China ends COVID zero.

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<v Speaker 1>Now we know that's not right around the corner, but

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<v Speaker 1>it's something that eventually will happen. And the other line

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<v Speaker 1>that was interesting was the energy tracker VORTEXA said that

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<v Speaker 1>China had already shipped in a record volume of fuel

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<v Speaker 1>oil from Russia last month because importers are out there,

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<v Speaker 1>you know, snatching up these these discounted um supply levels. Uh.

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<v Speaker 1>The way that I see it is. China will obviously

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<v Speaker 1>eventually come online. But luckily, UM, they're giving us a

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<v Speaker 1>chance to flatten the curve. We are seeing shale oil

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<v Speaker 1>producers very very very slowly coming up up to the plate.

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<v Speaker 1>The rig count in the US is coming up a little,

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<v Speaker 1>probably more from independent producers than the big companies. But

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<v Speaker 1>the reality of commodities is high prices always cure high prices,

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<v Speaker 1>and that's exactly what we've seen here in the last

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<v Speaker 1>couple of months. If you look at a really big

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<v Speaker 1>picture chart of the s I'm sorry of crude oil.

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<v Speaker 1>We had we not had the COVID meltdown and then

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<v Speaker 1>again the Russian Ukraine Ukraine situation this year. Uh. Those

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<v Speaker 1>two events pushed prices well beyond what probably would have

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<v Speaker 1>been a normal band of of price discovery. Uh. But

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<v Speaker 1>since then, now that things have calmed down a little bit,

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<v Speaker 1>we're right in the middle of a trading range that

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<v Speaker 1>probably should have existed had those two events not occurred.

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<v Speaker 1>In my view from a charting standpoint, I think we've

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<v Speaker 1>got an upside of about limit. And then on the downside,

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<v Speaker 1>I think, believe it or not, I think we will

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<v Speaker 1>see sixty five even if China comes back online. I

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<v Speaker 1>think between demand destruction and other things going on, possibly

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<v Speaker 1>if the dollars stays lofty, that will eventually continue to

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<v Speaker 1>work against Doyle. The big relly we've seen in the

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<v Speaker 1>last couple of days is largely a dollar story, not

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<v Speaker 1>necessarily an OPEC story, Carli. When you look at the

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<v Speaker 1>the oil market as it is at the moment, you know,

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<v Speaker 1>and as it was, let's say, about five years ago,

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<v Speaker 1>it seemed almost as a shale was the sort of

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<v Speaker 1>swing producer. What's happened to change that? Because it doesn't

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<v Speaker 1>seem to be as influential as they were before. No,

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<v Speaker 1>You're absolutely right, they've they've taken a step back. I

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<v Speaker 1>think they got burned a few too many times, and

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<v Speaker 1>and now they're a little bit cautious. They're listening to shareholders.

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<v Speaker 1>I think there are some the pendulum swings wildly in

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<v Speaker 1>both directions, and I think it uh probably between you know,

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<v Speaker 1>the energy revolution, pressure from shareholders and politicians and things

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<v Speaker 1>like that obviously went to one side of the equation,

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<v Speaker 1>and now I think we're swinging back to the other.

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<v Speaker 1>It'll just take some time. Unfortunately, UM, it's not something

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<v Speaker 1>you can snap your fingers and it happens. But I don't.

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<v Speaker 1>I think all of us could agree it's the US

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<v Speaker 1>isn't a better spot if we produce our own energy.

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<v Speaker 1>So I think that's eventually going to happen. Again, just

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<v Speaker 1>looking at the charts, and you touched on this a

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<v Speaker 1>little bit already, looking at the charts over the past

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<v Speaker 1>six to nine months, you got up there around one

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<v Speaker 1>twenty and down to about seventy five or so, and

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<v Speaker 1>it seems like there's it feels like around ninety is

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<v Speaker 1>this sort of median level there is? That? Is that

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<v Speaker 1>something if you really wanted to look out over the

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<v Speaker 1>next six months, that is kind of where prices might hover. Absolutely,

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<v Speaker 1>I think night somewhere around let's just say the low nineties,

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<v Speaker 1>because this is a messy market and picking in exact

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<v Speaker 1>numbers impossible, but somewhere in the low nineties is a

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<v Speaker 1>significant pivot area. If prices stay below that, as I

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<v Speaker 1>suspect they will, I think that we continue to see

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<v Speaker 1>the overall down trend. If prices poke above let's say

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<v Speaker 1>or so, that might prove me wrong and maybe we

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<v Speaker 1>go much higher. I don't think that's going to happen.

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<v Speaker 1>I think that um Like I said, with all the

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<v Speaker 1>things going into China and some of the other things,

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<v Speaker 1>I think we're flattening the curve and giving ourselves a

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<v Speaker 1>chance to catch up on some of the stuff. Hopefully

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<v Speaker 1>that's the case very quickly. Uh what do you how

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<v Speaker 1>do you see a large cup playing out with regards

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<v Speaker 1>to the global energy crunch? Well, I mean, the one

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<v Speaker 1>thing that I'm paying attention to primarily here because supply

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<v Speaker 1>demand fundamentals are really uh, they're They're tough to figure

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<v Speaker 1>out in real time. So what I'm looking at is correlations.

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<v Speaker 1>I've noticed that the correlation between the SMP five hundred,

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<v Speaker 1>the Treasury notes, gold, and crude oil are all about

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<v Speaker 1>negative to the US dollar, meaning the dollars really driving

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<v Speaker 1>the ship here. So what we really need to see

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<v Speaker 1>is the dollar stabilize and then we can start seeing

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<v Speaker 1>price discovering commodities. Okay, thanks so much, Carlie. Carlie Garner,

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<v Speaker 1>a senior commodity strategist and broker at Decarli Trading.