Oil market prices show just how much supply is out there, says Sankey Research's Paul Sankey

? (Anchor) 00:00.190

so what does the situation in venezuela mean for the energy market let's ask top oil analyst paul sankey president of sankey research paul it's good to see you and how are you thinking about the events in venezuela cuba as it relates to the oil price

Paul Sankey (President & Lead Analyst) 00:15.300

yeah i think the market perceives it to be potentially bearish obviously if you were to change regime and then open up but of course it's it's going to be a knee jerk reaction the reality of the barrels coming back to the market will will likely take much longer but certainly

Paul Sankey (President & Lead Analyst) 00:29.780

the immediate reaction would be would be negative as regarding the potential for more supply from venezuela you

Brian Sullivan (Anchor) 00:35.380

know it is interesting paul that we're talking about possible regime change in venezuela we're boarding oil tankers we're rerouting the oil to texas and the price of oil up yeah a couple percent but it still at fifty eight bucks in the united states that alone is probably the

Brian Sullivan (Anchor) 00:51.390

biggest message i think about oil inventories and the state of psychology around oil right now

Paul Sankey (President & Lead Analyst) 00:57.950

yeah and as you know brian we've we've thrown everything at this oil price we really have i mean you've even got in the background here more talk of israel iran you know just to add to everything that's going on and of course as you well know there's there's there seems to be a

Paul Sankey (President & Lead Analyst) 01:11.230

significant issue with with russia ukraine so it it is disappointing and it just tells you how much supply is out there

Brian Sullivan (Anchor) 01:17.990

you know what is i think maybe the most surprising thing in the markets obviously the venezuela news aside paul is that when i look at my screens i'm looking at ABP just got a new CEO stocks up what eighteen percent this year shell is up about the same this year total energies

Brian Sullivan (Anchor) 01:36.070

the european majors which people wrote off as dead because they were making all the wrong moves they have made investors a lot of money this year comment on that and then also what you see or what you think might happen in twenty twenty six

Paul Sankey (President & Lead Analyst) 01:50.750

well as you know brian there's been a significant rally in european stocks as well i mean if you had been long rheinmetall for example the the german defense company you would have outperformed palantir this year so yeah they've gone up i don't think investors are terribly

Paul Sankey (President & Lead Analyst) 02:05.590

enthusiastic about them but yeah there is there is change there and i think generally the market has begun to think about the next phase of the oil market post oversupply and actually started buying into the oils you can see it in a very levered name like transocean rig going up

Paul Sankey (President & Lead Analyst) 02:20.750

per in the fourth quarter quite a bit as people are doing a very contrarian trade basically quite frankly yeah

? (Anchor) 02:26.310

paul i do find it a bit odd when i stand back and look at all these trades you have all of the metals flying which are in various parts of a we're going back to internal combustion engine a la you know platinum that's jeff currys pick the economy is not in recession there's

? (Anchor) 02:39.510

demand for everything we're ending the energy transition to some extent where it's not as aggressive as it was a few years ago so where's the bid for oil you know it's it seems like that's the last logical part of this story i hope it's not as a consumer i'm happy to pay lower

? (Anchor) 02:54.430

gasoline prices but i understand those who say it's going up next year why is the market perceived to be in a glut of oil and how much longer can that glut last i think

Paul Sankey (President & Lead Analyst) 03:03.550

it's the supply side you know i think that these these metals that you're talking about have supply issues clearly and as you say there's there's a lot of demand massive demand for them and that's you know that's the balance whereas in oil if you think oil is cheap at sixty try

Paul Sankey (President & Lead Analyst) 03:16.550

natural gas at at four you know that's that's twenty dollars a barrel of oil equivalent so the supply side is is abundant here and i think additionally people don't tend to think too hard about technology which obviously relates to the supply side and the ability of these

Paul Sankey (President & Lead Analyst) 03:30.750

companies to continue delivering as you know US up still with a much much lower rig count is telling you that productivity is is strong in the in the supply side

? (Anchor) 03:40.190

and it can remain so because that's kind of an argument against owning some of these stocks

Paul Sankey (President & Lead Analyst) 03:44.950

six billion dollar question is when will we see the rollover particularly in US supply absolutely because as we've said there's a lot of issues around the world with you know russia is formerly the biggest producer in the world one of the top three biggest producers having major

Paul Sankey (President & Lead Analyst) 03:57.990

issues the other thing we haven't mentioned by the way to think about with venezuela is refining refining was a huge industry venezuela actually has the world 's biggest single refinery doesn't run but you

Brian Sullivan (Anchor) 04:08.030

know it doesn't run

Paul Sankey (President & Lead Analyst) 04:09.950

no i'm first shouldn't laugh it's over a million barrels a day of capacity so yeah it's it's another angle and then i think the other one that confuses me is just the whole cuba angle and and where the administration is going with this it's it's been a bit of a surprise that you

Paul Sankey (President & Lead Analyst) 04:24.430

know that that there has been this issue going after venezuela to the extent they have quite frankly when it seems that there's a cuba angle here as well that you've referenced yeah well

Brian Sullivan (Anchor) 04:34.070

yeah one wonders if if cuba will help us resolve the maduro issue

Paul Sankey (President & Lead Analyst) 04:40.480

just to be clear by the way brian i should say that a source in the state department told me that this is about lowering the press i mean you know this was obviously off the record but that's what i was told the venezuela thing so yeah it is pretty bearish