AT Kearney's Heinroth: Supply Reserves Will Curtail OPEC(Audio)

above fifty bucks for just a few weeks. Will uh kind of bottlenet caused by oil field services help boost that oil price again? While our guests coming up on the show now, Sean Heinrath from a t Kearney in Houston says, don't count out. He's got a very fascinating explanation. And we're gonna take a look at the breaking news in the last half hour. Apple facing a potential tax bill running into billions of euros as the EU poises to release of finding into its dealings with Ireland as

soon as tomorrow. Well, we don't have to wait tomorrow for this Charlie Pelletts in the news room, and he's got a Bloomberg business flash, and I think of Kathleen Hayes. Let's begin with Apple shares now trading unchanged one oh six ninety six on shares of Apple. You were mentioning crude oil West Texas Intermediate down one and a half percent, falling seventy cents of barrel on w t I forty ninety three. Right now, Brent crew down one point one percent,

down fifty six cents thirty seven. Natural gas heading the other direction, off now by three tenths of one percent to eighty eight per million bt us on natural gas. Oil is declining them with doubts that producers will agree on a deal to stabilize the market when global suppliers meet next month for informal talks. Jason Schenker is chief economists at Prestige Economics. He was interviewed this morning on Bloomberg Television. A town of this is very different than

anything we've seen in a while from OPEC. Uh. You know, they've had side meetings before, but they haven't been formally announced. Uh of the press release directly from the OPEC secretariat, and you've got different members saying they might do this, they might do this. Uh, you know, and I don't think personally that they're going to change their production levels, but the fact that that could be on the table if prices fall further is something that has stemmed prices.

Here man, we will have more on oil coming up right here on taking stock. Herbal Life shares trading higher after billionaire Carly Com bought more than two point three million shares in the embattled nutrition company that has the high profile that that is the high profile target of fellow billionaire activist investor Bill Ackman. Herbal Life up now by three point nine two thirty two on Wall Street. Now, let's take a look at other news from around the world.

Thank you, Charlie from the Bloomberg Newsroom. I'm Matt Miller. One of Hillary Clinton's closest aids, Huma abbot In, said she's separating from her scandal plagued husband. Former Congressman Anthony Weiner ween to resigned from Congress in two thousand eleven after he was caught texting intimate pictures of himself to women.

There's now a report that he again exchanged sexually charged messages with another woman the White House says the United States today is meeting President Obama's goal of admitting ten thousand Syrian refugees during the current fiscal year. After a slow start, the administration was able to hit the goal a month ahead of schedule. Brazil's suspended president has made an emotional appeal to keep her job. Joe Marussa urged

senators today to vote against her impeachment. She said it would amount to her death sentence and would put Brazil's democracy at risk. Julia l Chi, Bloomberg's Salpoulo bureau chief, spoke with Bloomberg Television. She mentioned that a few times people people kept asking her, will your resign? Will you resign?

And she says, it's just not in me. I don't give up, I don't fight, And she kept saying she's not fighting for her terms, she's fighting for democracy and justice and just reiterated that she is innocent of the crime he's being accused of. Businesses on North Carolina's outer banks are watching tropical weather systems that could rain out one of the last busy weeks of the summer tourist season. One tropical depression is about three hundred miles southeast of

the Cape Hatteras Beaches and is moving northeast. In the Gulf of Mexico. Another tropical depression is churning west of Key West Global News twenty four hours a day, powered by over twenty hundred journalists and analysts and more than one twenty countries. I'm Matt Miller. This is Bloomberg, and we thank you what again recapping The stocks are rallying with the SMP five hundred index up twelve, a gain of six tenths of one percent of ten year up seconds,

the yield one point five six. I'm Charlie Platon. That's a Bloomberg business flash. You're listening to taking stock with bim box at Kathleen Hayes on Bloomberg Radio. Taking stock of the energy market. We step back. Two big forces at work of You say a global supply glut uh that has not been sufficient and reduced. Others say, well, global demand that keeps rising. Sooner or later that all price will not on lea surpass fifty bucks of barrowbable

head to sixties seventy even higher. Our next guest is looking at oil field services. This may be key this part of the industry to how prices performed. Next, Sean Heinroth is a principal oil and gas at the consulting from A. T. Kearney and he's joining us from Houston, Texas, the heart of US oil country. Shaun, welcome, Hey, thank

you very much. Kathleen, happy to be here. So, UH, tell us broadly how the oil field services fits into the industry right now and why it's so important to your outlook for how quickly oil prices can rise and how long they can stay at higher levels A couple of things, Kathleen, I think that the oil field service industry as a whole is a very complementary piece to what determines ultimately what we're able to supply UH in

the energy side of the equation. So they work with operators and provide a lot of the technology and and frankly just the labor that goes into UH providing the oil and gas that UH is ultimately consumed in the petrochemical and refining industries. And so UH they are one half of that equation in a sense. Okay, And so what is the state of the oil field services, What's what's the struggle? Why is this going to be so important to the outlook for oil I think a couple

of things that have gone on here. As we entered into late two thousand and fourteen, we had a very typical oversupply in the industry that we see periodically on the order of every five to ten years. A couple of things that were different that happened back in two thousand and fourteen and continue today. One is UH with the oversupply, it came at a time when there were a couple of sluggish economies both throughout Asia and Europe, so we did and get that normal response to lower

fuel prices that come with an oversupply situation. The second that's more interesting and more specific to oil field services is this promise of unconventionals here in North America, and we're beginning to see evidence of another regions of the

world has begun to take full effect. And with that, the oil field service companies have been at the forefront really of defining UH that promise through the technology and through the capital investments that they've made on their half UH that are really complementary to a lot of the funds that the operators were pushing into the industry. UH. And I'll say, for instance, if we look just at the permium base in here out in West Texas and

New Mexico. Uh, compared to two years ago, well, activity is determined by oil field services companies is down almost seventy yet production is almost flat. It's it's roughly percent down. And a lot of that, uh efficiency or productivity growth has really been enabled through advancements at the oil field service companies have been able to create through R and D programs and through efficiency programs that really the operators

are standing to benefit from. So, in other words, people have been kind of worried about the energy market being you know, somebody layoffs under maintain ascids, that the oil field services be this big bottleneck as demand for crude begins to pick up and that could cause prices to your rise. You're kind of letting us know maybe not, maybe probably not. Uh. What about Also though the OPEC meeting, you know, next month, informal talks for all these big

global suppliers are going to be taking place. How's that going to enter into what's the key question to the price of oil? Ahead of that? I think when I think about what OPEC is able to do, certainly the decisions that come out of those meetings have the potential to create an uptick in the market. Uh maybe through just the shifting of uh kind of the depression that's

taken place in the market. I think a lot of people have, you know, thought a year ago this market would already have begun its recovery, and here we are a year later, effectively below or or at where we were this time last summer. Um. But frankly, any decision that's made by OPEC and in some of the other large producing companies, I have a feeling will be more temporary in nature and really delay the inevitable. Uh. When

I look at the numbers and and the reserve potentials. Uh, you know, the the unconventional base that's here in North America and other regions around the world has the potential to really disrupt OPEC and other large producing nations ability to really regulate and control the market. Maybe they can do it in the next couple of years, but I think they're reaching the end of their rope in terms of overall demand and what percentage they control of that.

Where's the price of oil going next? Are you suggesting maybe it's going down because there's not going to be this bottleneck or where do you see what we're all

going from here? I think there'll be some short term volatility of it, depending on what happens in next month's meetings, But when I look at the fundamentals, it supports a more moderate growth position UH in terms of pricing over the next several years, and so we will get back to those seventy and eighty dollar pricing levels, but that will come partly through inflation and partly through increase demand

over an extended period of time. Sean Heyra, thank you so very much for joining us principle for oil and gas at a consulting company A T. Kearney in Houston, Texas. So up next, we are going to be taking a look at a couple of very big stories. In particular Apple, it may be facing billions of euros in tax arreers according to an EV decision pending that we don't know for sure yet. This is Bloomberg Caesar's entertainment. Can it remove one more log jam ahead of the road to

getting out of bankruptcy? Another big story today coming up on taking stock Bloomberg Radio