And even if one agrees that oil is near its peak, the ESG movement is limiting both money and where it can be drilled, notes famed investing author John Mauldin. “Economics 101 says that if you reduce the supply of something that has increasing demand, the price will increase,” says Mauldin, who, it should be noted, is affiliated with a Independent oil and gas operator.
And that is what has happened, particularly in the case of offshore oil fields. The VanEck Oil Services OIH ETF has soared 51% over the past 52 weeks, a period in which the S&P 500 has gained 15%. The shares of an oilfield services company, Weatherford International
FMRD
,
has increased by 202% during that time period, a period in which Nvidia
NVDA
Shares have gained 228%. transoceanic
PLATFORM
and tide
TDW
They are pretty close to tripling in value in the last 52 weeks.
Not that anyone seems to care. Look at this photo from a Barclays offshore oil conference, filled with empty chairs.
Rupert Mitchell, author of the blog Blind Squirrel Macro, focuses on owners and operators of oil rigs or drilling vessels, their support vessels and specialist service providers, with a combined market capitalization of $30 billion. valeris
VAL
,
Noble
northeast
and Weatherford have emerged from bankruptcy with limited or no debt, while Transocean is in debt but has the most senior assets, putting it in a position to be the first to take advantage of rising daily rates. Tidewater is a leader in the platform supply vessel market.
Their argument is simple: there are high utilization rates, over 90%, and increasing daily rates, which, as it seems, are just the daily cost of drilling. At the same time, offshore companies are quoting at a discount of up to 80% on their replacement cost value, preventing new equipment from being built. Shipyards, burned by the sector in the past, are instead focusing on hot sectors such as liquefied natural gas vessels.
“Bottom line: no new drillships, floaters, jackups, PSVs, etc. will be built. until daily rates have spent a reasonable amount of time well above current levels (so that the economics of new construction start to look sensible). We are very far from that point. “Oilfield equipment and services players with low average age fleets will increasingly become price makers,” he writes.
The market
US stock futures
ES00
NQ00
were languid after the S&P 500 SPX fell 0.2% last week. Oil futures
CL00
were above $91, and bitcoin futures
BTC.1
They were over $27,000.
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The buzz
The big event is Wednesday, when the Federal Reserve’s decision is announced, but for Monday, the economic calendar includes homebuilder sentiment.
stellantis
STLA
made a weekend offer of a 21% pay increase over the course of a new contract, which was quickly rejected by the United Auto Workers, who are striking at one plant each at Stellantis, Ford Motor
F
and general engines
G.M.
.
Biden’s national security adviser held talks in Malta with China’s foreign minister, possibly ahead of a leaders’ meeting.
Turkish President Recep Tayyip Erdogan asked Elon Musk to build a Tesla
TSLA
factory in Türkiye at a meeting in New York.
The best of the network
How to read offers from car manufacturers.
Adam Smith’s misinterpretation led to deaths of despair.
A real-life succession drama at LVMH
MC
,
where Bernard Arnault, 74, has five children, all of them in the business.
Best tickers
Here were the most active stock symbols on MarketWatch as of 6 a.m. ET.
The graphic
24 stocks are needed to reduce portfolio volatility to 10% of market volatility over the past five years, according to calculations by UBS quantitative strategists. They ran similar tests going back to 2009 and found that 28 was the median number that put the portfolio’s volatility within 10% of the market. It is true that the stocks analyzed by UBS were chosen at random and without taking into account any diversification objectives.
random readings
People watch pirated movies on TikTok, one 90-second clip at a time.
The host of a popular podcast about Rome is asked about the viral trend that explains why men are obsessed with the Roman Empire.
No Fun League was trending again after a New England Patriots lateral to an offensive lineman on a desperate fourth-down play was somehow ruled out of bounds.
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