Saudi Deficit & US Oil Cuts: What’s Next for Prices?

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Video Transcription edited for grammar. We disavow any errors unless they make us look better or smarter.

Stuart Turley: [00:00:00] Saudi Arabia’s budget requirement, which we just talked about, about the $90 oil. And I think that there are some publications that it should be around the $80 oil. And I’ve been saying this for a very long time, coming down and trying to say, I think that it is going to be in a, an $80 world is where it’s going to kind of level out. Now, when is going to be according to the tariffs? And as Josh Young has said, the longer it stays down low, the higher it’s going to go and then it’ll drop back down. [00:00:34][34.2]

Stuart Turley: [00:00:42] Hello everybody, welcome to the Energy Newsbeat Podcast. This is the daily standup for Wednesday, May 7th. Buckle up, we’ve got some stories here. Saudi Arabia’s budget deficit surged before the oil price crash. Pretty interesting. US cuts oil forecast just before the crude’s latest plunge. I spent a little time working with a crayon on this story. It’s a pretty good outlook. We want to hear from you where you think oil is going. Here’s another great one. Peak Shale may be here as says Diamondback CEO. Well, I’ve got an interview scheduled live today with Doonberg to cover this very issue. 18 US states suing Trump over shutdown of wind projects. You can’t buy this kind of entertainment. Marathon Oil Petroleum Q1 down on earnings due weak refining margins and then lastly just to get a little brief update on the oil prices from oilprice.com. [00:01:45][62.8]

Stuart Turley: [00:01:46] Let’s get started here with Saudi Arabia’s budget deficit surged right before the oil price crash. Now understand also that President Trump is about to get on an airplane in a few weeks, so I think that they were really wanting to do the oil moves before he got there. Goldman Sachs projects a deficit of 67 to 75 billion approximately 251 to 281 billion rials or 6.7 percent of GDP if Brent averages 62 per barrel. I’ve always had a crayon that I thought that the Saudi Arabia government really wanted the oil above 80 to 85 but the International Monetary Fund notes that Saudi Arabia’s fiscal breakeven price is over ninety dollars in a barrel. This story will come into play in a little bit when I talk about what I think the US forecast is, but during the first quarter of the year, the budget deficit of 15.6 billion or the 58.7 billion from the Saudi minister showed. It’s pretty interesting. With $60 a barrel, Saudi Arabia may have to accelerate borrowings and deferred… Planned investments and mega initiatives such as the futuristic city of No. So you sit back and take a look at this. Is the Saudi government really going to do this and why did they agree to really put out the additional production cuts? Because they wanted to really try to rein in their their folks like Kazakhstan and Russia from overproducing. They have a really tough battle going on, and I applaud them for trying. [00:03:36][110.3]

Stuart Turley: [00:03:37] Let’s go to the next story here, the US cut forecast oil output just before crude’s latest plunge. In this story, I took a look at US oil and gas storage, where we are on our total US crude stocks, where I took look at also our storage, our demand, and as well as everything else. So if we take a look at. U.S. Oil stocks were 457 million barrels, a decrease of 12.7 million from the previous week. In Cushing, in the Key Storage Hub, 682,000 barrels, approximately 34 million barrels compared to a decrease 86,000 the previous weeks. The SPR is still down But as we take a look at this, I calculated out the differences of demand versus production, whether or not production is going to fall and keep falling. And in the last part of this, I came in with this final conclusion here, and there’s a lot of data in here. So we would appreciate you going in and taking a look, saying, hey, that’s good data, or it’s not. But the bottom line the EIA has revised some of its prediction on oil and gas prices and we’re seeing reports that vary from 50 to 60 dollars if OPEC follows through with this production increase to the prediction of the US declines could roll to 90 dollars so there’s a huge mix of what’s going to happen if the U.S. Is at peak. Oil production and it starts rolling back, we’re going to see oil going in, going higher. Today we had some articles discussing Saudi Arabia’s budget requirement, which we just talked about, about the $90 oil, and I think that there’s some publications that it should be around the $80 oil. I’ve been saying this for a very long time coming down and trying to say I think that it is going to be in an $80 world is where it’s going to kind of level out. Now when is going to be according to the tariffs and as Josh Young has said the longer it stays down low the higher it’s gonna go and then it’ll drop back down. So I think we are often running at the races here. [00:06:09][152.4]

Stuart Turley: [00:06:10] Peak shale may be here says Diamondback CEO. There’s three bullet points here and this is from Zero Edge. Good folks over there. Before oil prices started plunging last month, most banks and research firms had forecast of US shale production would grow this year and next year before plateauing later in the decade. Diamondback Energy trimmed its own full year production. Forecast Monday and said that it expects onshore oil rigs across the entire US industry to drop by almost 10% by the end of the second quarter and fall further in the months later on. Bloomberg notes that US shalefields have been the entire engine behind the surge in US crude. I’m going to go on record and I believe that I think I can say that for this for a lot of folks one oil and gas. Field or basin does not determine the output of a country it can impact hugely the the impact but there is so much oil all over the united states that i don’t think that we can say that we’ve reached peak oil in my opinion but i’m willing to listen to folks and if you’re a I’d love to visit with you and say hey wait a minute This is why I think we are again. I think that there is so much more left in Alaska and if we take a look at Kern County and in California there’s a lot still left there as well. It’s just you got to get Gavin Newsom out of office and then some realistic policies going on there. We’re not at peak oil yet in my opinion. [00:07:55][104.6]

Stuart Turley: [00:07:55] I’d like to give a shout out to Steve Reese and the Reese Consulting team. If you go to Energy Newsbeat, go to Resources tab on the top, go down to Trading Desk. And if you need some information from them, just let us know. Or you can go to energyreeseconsulting.com. They are wonderful. If you’ve got molecules in the Hanesville and you want them to go to Germany on LNG. They can do it if they you want a data center and you want to know where to put it how much gas how to get the gas there how are you going to have a backup power supply reese energy consulting is your team in order to do this but let’s go to the next story here you can’t buy this kind of entertainment. [00:08:37][42.0]

Stuart Turley: [00:08:38] 18 us states suing trump over shutdown of wind projects this is absolutely hysterical. Let’s see where the story came from. I went ahead and added This is from America Offshore Renewables, and I added where all of the electrical per state, what they were paying and how much these wind farms have added into their electrical mix. And if you wanna take a look at these 18 states, they have higher energy costs because of wind and solar. And if are like New York, you’ve got an average cost of 22.96 kilowatt per hour due to high dense urban demand taxes and offshore wind investment. Arizona is 12 cents per kilowatt hour. Because it only has some wind and some solar but it’s got nuclear sitting there and then you take a look at California 25.70 cents per kilowatt hour due to renewable mandate grid updates and urban demand and they import 70 percent of their oil unbelievable bad management but when you take Look at the America’s offshore the the States were New York, Massachusetts, Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Illinois, Maine, Maryland, Michigan, Minnesota, New Jersey, New Mexico, Oregon, Rhode Island, and Washington State. If you sit back and take a look at it, those are the Democrat run states that are poorly run and you pig pile on a lawsuit So that you can do more wind energy and have a higher energy cost You really can’t buy this kind of entertainment. If you live in those states, you may want to look at moving. Your energy bills are just going to go up. [00:10:39][121.6]

Stuart Turley: [00:10:40] Let’s go to the next story here. Marathon Petroleum Q1. This is in the financial side of the house, and Michael normally covers these kinds of things, but Q1 down on earnings due to weak refining margins. Marathon Petroleum released its Q1 earnings on May 6th. But it had an MPC of 74 million or 24 cents per diluted share compared to a net income of 937 million or $2.58 diluted shares in Q1 and Q24. Below is a detailed analysis of the earnings report. We’ve got that listed for you on energynewsbeat.co. The renewable diesel I’ve got some folks that I’m going to be talking to about renewable diesel and renewable natural gas on the podcast, so looking forward to those kinds of things. Established as a separate segment in Q4 of 2024, renewable diesel included activities are previously reported under refining and marketing. So anyway, excellent article. [00:11:41][61.6]

Stuart Turley: [00:11:42] And when you sit back and take a look, oil prices bounce back from the OPEC bombshell. At the time we are recording this, let me check the stock charts, WTI is at 59.09 which was up a buck 96 today and then Brent crude is at 62.03 a buck 80 up today and this article by oilprice.com was very good and it went through just basically going through that and it gave the rig count by basins if you take a look at that the net change or gain it looked like there was down five six down down five totally and they were in the Permian drop two Utica drop three Haynesville picked one up for natural gas and the Eagle Ford lost one. So anyway, as we get back and sit back and take a look around the world, we’ve got some great things going on today. I’m doing a live interview with Doomburg and David Blackman. And we’re going to be talking about peak oil and whether or not we’re going to ask Doomburd opinion on if president Trump thinks low oil prices will bring Putin to the table. [00:12:53][71.3]

Stuart Turley: [00:12:54] If you listen to the podcast, you know, the answer to that one. Thanks and have a great day. Subscribe, like, share, read this to your pet, read this to kids. It’ll absolutely bore them to death unless they’re actually wanting to learn how to be a podcast host and that way they’ll know what not to do. Have an absolutely wonderful day. We’ll talk to you all soon. [00:12:54][0.0][760.8]

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