You had a great report out which we'll Get to about the super cycle i just want To get your take on the texas deep Freeze and these numbers that we're Getting and sort of when we can expect Demand and production to kind of level Out here It's going to take a while we've got Most of the production back online Uh and and hence a bit of a A big increase in uh in crude oil uh Inventories and we don't have most of The refining back online it takes longer And it's more complicated to start up a Refinery Than it is to start up with oil Production so we have this massive Drop which was anticipated on the on the Product side That drop is going to increase margins It's going to as it already has It's kind of sustainable for a while for Several months Which will increase demand for crude oil As more refinery comes back online so Yes There will be an adjustment and it does Have global replica Uh repercussions right and something Difficult for producers and then opec Also To deal with just staying in the new ask You for a second when you have Oil at 6065 the emp's are going to
Talk about discipline with the exception Of say eog resources Are they really going to deliver Discipline at these numbers And how do they compete with the private Guys that are putting money in and Pumping more oil Well the private guys are really Interesting uh uh and yes they They seem to be putting more money in And puppy more oil and raising their Recounts thus far They've kind of maintained market share Actually their market share now is about 48 49 50 of total reutilization That's what it was when oil directional Drilling dipped below 170 that's what it was when oil Directional drilling A year ago was in the uh 700 Rig count rate for oil directional Drilling so they've kept the pace And yes they're showing what rational Actors are doing we really believe Strongly That at price levels that we anticipate Including the ones that are there now We're going to see More rigs going into the market as they Have been for The traditional players they're a little Late coming back in because of the Disciplined path that they think the Investor community wants
But at these prices the investor Community is going to change its mind And the best of the community is going To say hey this is short cycle oil Short cycle oil is meant to be pumped When prices are high Because they can respond to it and Increase cash flow so i suspect That the pressure points on the industry Are going to change as we get Into late spring into the summer we're Going to see we think the recount Getting up Above the level not only which doesn't Allow replacement for replacement Of the declines but to the point where We have an increase so Our price deck leads us to believe that We're going to see 400 000 barrels a day of growth at the End of the year from a low point reach To the middle of the year And then about a million barrel a day Growth next year all else equals and You've got to wonder then What that does for opec they're going to Want to get ahead of that um i just want To show you this chart If you can't see it i'll explain it to You it's um us daily output as well as An opec crew production Um the white line there is u.s the blue Line is opec you can see sort of opec Rolling over particularly
Saudis had that uh voluntary cut and Then you have the white line A little bit of tick-up within Production in the u.s How does opec plus respond to this over The next 48 hours Well they're going to respond to other Things over the next 48 hours They're going to respond to the pressure Within the group to Raise production come what may because The price levels are what they are Uh and they're going to pit that against Those particularly the kingdom Which is looking for caution i have told Our clients that i would not invest In any way on this opec meeting i think There are too many wild cards at stake And we don't know the direction that Things will take but the directions that Whatever they take in terms of whether There's a rollover As uh reuters is reporting or whether uh There's an increase as the consensus Is the consensus is for an increase of Uh 500 000 barrels a day from the opec plus Group come April 1 and an increase of up to a Million barrels a day by the kingdom I actually think that anything less than That in april Will be a very bullish move and the Reason for that is because as we
Just are seeing in the u.s inventory the Oil world is a world Of production and refining and In that business there are crude oil Stocks that Go down and when opec cuts and there are Product stocks that go down When the refineries have not come back We're at a very interesting juncture in Uh In the month of february there are many Commentators who point out That seabourn saudi exports were not Down by a million barrels a day They might have only been down by by say 900 000 barrels by uh by 100 000 barrels a Day Now why is that that's because their Their refining system is in maintenance So they may have cut production but they Have also cut demand at home And this is a period of time when demand Around the world by refiners who are the Only buyers of crude Has gone down come april we expect saudi Domestic refining to go up By more than 600 000 barrels a day that Doesn't include Uh testing out of a new refinery with a 400 000 Barrel a day capacity uh and we expect Global refining to come back online Not just in the u.s but in east asia and
Around the world And refining demand to go up so if There's no Big increase there's likely to be a Reduction Of some middle eastern oil in the market At a time when refinery demand is going Up So it could be a fairly strong bullish Statement and if that's the case the Traditional Buyers of crude uh in east asia south Asia Are likely to see them grumbling about The price Um and i just note that at the ief Meeting that took place the International energy forum where the Saudi loyalists Spoke about disciplined discipline Discipline the indian oil minister came Up Two speakers after him and said Discipline means High prices for consumers consumers Don't like that and you better not do it So we'll see what happens it's good Morning it's guy In london uh just getting some comments From opec plus actually the jm7 Mc ending without recommendations According to delegates actually i don't Want to talk about Uh oil i want to in my last question
Just people are little to gold Ed yields are going up we've got a 148 On a 10 year In the united states we've been Significantly higher than that over the Last few days Money is absolutely pouring out of etfs What is your outlook how bad does it get How much more downside could there be For gold Well there could be a couple hundred Dollars worth of downside probably not More than that there are Other things going on besides the Interest rate play Uh and the rise of 10-year yields In the last 24 hours there's more than That at stake Because gold certainly does respond As a as a reservoir of value When interest rates are low uh but it it Serves other purposes As well we note that emerging market Central banks are again Buying gold they've done that for the 10 Years before Uh before the pandemic we think they'll Do that again That's in part because of increasing Concerns about where the dollar goes And about stability in terms of of of The dollar As a store of value and as a mechanism For
For settlement of international trade so We have central bank buying going up and We have jewelry buying going up After a kind of a year and a half pause On the jewelry buy so we think Gold will hit a bottom from its Traditional buyers As the etf retail and institutional Investment move Comes out of it because of the change in The macro environment and you had a Really good note out yesterday that Talked about how Some metals may be in a super cycle but Oil is not you did make the case for Bullish short-term oil prices so i just Wanted to get your thesis on kind of Why we're not in this super cycle world Where we do have some kind of reflation We do have a reset in terms of carbon Intensity and greening Yes well all in all that's because oil Doesn't disappear all that quickly so As you know from that report we mapped Out three Areas of projected demand growth we took A historical curve oil demand Rising very much the case now as it is So we're bullish oil Over the next year maybe a little longer Than that maybe not Depending on other things and that's Because with the recovery around the World at five and a half percent
Recovery We're gonna see oil demand rising by About five and a half percent or five And a half million barrels a day A year on year and with numbers a little Bit on the upside or the downside from That that's kind of a consensus view in The market And that's because with the recovery you Get a surge in demand Where it's about one percent per uh Every gdp growth number of one percent You get one percent Increase in demand for petroleum Products that's not normal the normal 20-year trend before the pandemic Was about half of that a little more Than A half a percent increase in oil demand For a one percent Increase in um in gdp so Yes demand is going to be very strong on The growth side uh Given you the the low numbers from last Year Against the higher numbers from this Year and this may extend into 2022 Especially If we have an increase in trade Accompanying this and trade tends to be When it's growing Pretty damn diesel intensive given the Demand for diesel by trucks Uh but after that it slows down and then
We have new New policies that are already in place That came with the pandemic These are seen particularly in europe With the move by cities and Governments to ban non-electric vehicles And the movement by Auto manufacturers to stop making ice Vehicles so We we have yes a slow down and we think It'll go down to point four to one Rather than point five to one but if we Have more progressive policies in place It can be even lower than that You combine that with the low cost Of oil finding and developing oil and Producing it And that that spells in our judgment Over supply
