Re: Oil-JP Morgan Call Highlights.

JPM had a conference call today covering both macro and micro themes in the energy space. I will just summarize salient macro points.

JPM thinks COVID is about to peter out based upon the 1918-19 analog of 4 waves lasting 20 months. Mobility trends are corroborating this.

Oil is still cheap relative to other energy commodities. Coal prices are implying $150-$200/bbl for oil.

JPM's demand forecast is very similar to what I see from Cap One and GS.

JPM's minimum incremental capex requirement to meet demand is $600B. GS' number today was $500B. Too bad ESG initiatives are likely to stymie this in a major way.

Where spare capacity will be is the Trillion Dollar Question. Cap One has played devil's advocate and posits that GCC countries might have more spare than many think.

JPM is clearly in the "Supercycle" camp and thinks the world will see structural deficits leading to $100+/bbl prices by 2023 and beyond.

While I can see the backwardation really disproportionately benefiting OPEC/GCC and by inference allowing them to invest in spare capacity, a valid counterpoint is that they're just now approaching fiscal breakeven and not necessarily that flush.

Thought this was an interesting "bullish tell" from the Saudis with respect to their projected spare.

As I opined earlier today, I think the only near-term risk to the bullish thesis is stupid governmental policy which could cause a near-term hiccup but compound the global oil deficit longer-term.

Re: Oil Export Ban-Could the Admin be THAT stupid?

Best quote from the call: “ESG investors are short inflation.”