Kilduff on Oil Markets (Audio)

bit higher. Pim that the market got caught short in the face of some comments by the new Saudi oil minister. Uh and the short covering is is underway with with abandon right now, so I think we still have some more to go before we can head back lower again. All right, what is going to cause the lower prices after this short covering? Well, again, you know that the market got to a record short position. So whenever the book gets floated to one side, I like to say

it has to revert um. But I think as long as put the price rally fails at fifty or fifty two, we'll go back down. The reason we're going to go back down is because for all the talk of a freeze, and all the talk of cooperation among OPEC, Russia and maybe some other countries, there's just keeps seeing more and more oil coming to the market. The Saudis are at a record export level of crudal and refined products. The Chinese are continuing to ramp up their export of refined products,

brush at and all time high. Northern Iraq oil productions came back online for the first time in months chest today. Olibians are starting to get their oil after the market again as well as Nigerians can get their act together. It's just another wave of oil for this market so that it has nowhere to go. But then and John countries such as Venezuela, they're looking to increase or to

export more oil because that's a hard currency earner. Absolutely, Pim and you know, and they in Venezuela that you just mentioned, they certainly are the basket case among the producers right now. With their economy teetering on imploding completely. Their their oil production actually is somewhat challenged, so that is something of a supportive feature. And I know you've probably been talking about this all day, but the weakness and the dollar has had a big effect on on

dollar denominated oil prices. As well as that dollar falls, it props up oil prices, so that too is a factor right now. What role is Iran playing in the oil industry? Well interesting, I was at the last meeting, at the last goal around of this freeze uh nonsense. I was convincent deal would not come together. I thought maybe this time that there was a chance for a deal because the Iranians are pretty much back to their pre sanctioned output levels in terms of crude oil production.

But they have just said that they probably won't attend the meeting in Algeria next month where they're hoping to get this deal cobbled together. And also to their recent allowance of Russia to use an air base within Iran to strike Syria is really a stick on the eye of the facialities once again. So there's no coming together between those two name uh fat players in OPEX, and

without that there will be no deal. John, you mentioned Nigeria production and I wonder if you could tell us a little bit about why it is at a twenty seven year low and what's going to happen next. So where the oil is in Nigeria is in the southern

part of the country. You're on the coastlines called the Nigeria Delta, and from time to time the indigenous folks down there raise up rise up in protests and rebel and bomb and attack the oil infrastructure because they don't get their their fair share of the pie as they

as they see it. The new government that came in their cut payments to the various groups there, and what you think would happened happens, and so there's been attacks on the infrastructure and they've been a pretty dedicated bunch there that has helped not oil output offline, but that the government has reversed course, has begun making payments, their serious negotiations under way so that oil output could rebound

as quickly as it went offline. I like the point now that this is not the Fokohoram and other um sectarian sort of upset that you have in the northern part of the country. This is strictly all about petro dollars john at a price of around forty eight dollars a barrel for West Texas and fifty dollars a barrel for Brent crude, at what point do US producers start pumping more oil? Well, they've done an incredible job. Now

over the past, you're driving their costs down. There are a number of areas now where they're profitable at thirty five dollars a barrel. Uh. You might have noticed today that the rig count Bakers use rick Cant was up again, I think for the fourth straight week. It's fact. I think they added ten right, they added ten riggs, ten more riggs. It's up about almost now off it's low from March, so they've been racing riggs back into service.

And earlier this week it was partly due to an adjustment, but the e i A told us that US production has jumped the most it has since May, undred and fifty thousand barrels a day, which is not insignificant. So they're on the comeback trail really as we speak. Just getting over four dollars of barrel seems to invite it some hopeful analysis among the sector to get back in,

get back in the ground, and get drilling again. To give you some numbers for it, uh, the number of rigs drilling for oil in the United States has climbed for eight consecutive weeks. It rose about four rigs for the for the week for the first time since February. This all according to Baker Hughes Uh. John, explain what happens with refiners because they're switching over from gasoline production

to h heating oil. Correct, that's correct. And they're also switching over from a summer grade gasoline to winter grade gasoline, which is easier to make. And then we had an abundance of that coming out of last winter, which helps get the pump prices really low come February when they had to switch out. So it's gonna happen now, Tammy. You're going to see the refiners cut their runs, their their their util station rate, and of course that's going to cause crude oil be less in demand back up

in the system. And this is why over the course of the next couple of months you could see a real breakdown again, just as we saw last year, as the glut just enlarges and gets bigger and bigger and uh and and really the global market gets swamp again. I want to thank you very much John Kildoff, he is the founding partner of Again Capital, giving us his view on the oil markets with oil posting a third weekly gained. I want to thank you all for listening

to taking Stock. My thanks to our engineer Reggie Basil, our producer Marx and Escalche. I'm pim Fox and this is Bloomberg.