Farmer @ Johnsongrass, TX said:

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I got an Alabama-born buddy (North Alabama grad) says Ags 31 & Tide 24. He's nailed the victor of every game since Johnny's debut in Tuscaloosa. We'll see..

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Farmer @ Johnsongrass, TX said:

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BaylorSpineGuy said:

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Farmer,

If all of this is gonna happen now within a month or so, shouldn't the XOM/CVX price be higher already?

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XOM/CVX a higher price? Yes, it should be higher. Brandon made XOM radio-active with the statement "Exxon made more money than God". No one - not individuals, not funds and not institutions wanted to touch the stock. Whether people will believe it or not, once the Woke crowd polarizes something, you stay away from it for self preservation purposes. Individuals and companies just shy away from the person or business that got tagged as "you're it".

Further, WTI and XOM trade pretty much 1:1 in price. There's just not a lot of spread between the two...until about 2 weeks ago. I have been posting that WTI and Brent (more WTI) were being manipulated in the Futures market. The Treasury, Fed, Fink or Soros, maybe all of them was/were holding WTI down. Everyday WTI traders just backed away from it. Open interest plummeted. All the S&D data for months told the market that WTI should be higher in price (XOM price too). However, no one big or brave enough could take on the manipulators in the WTI Futures. That is, until Saudi started talking in the press about the disconnect between Futures and the Cash market. When there is a supply shortage and growing demand, prices don't go down. But, amazingly, the DOE/EIA stepped in and found a way to manipulate the demand numbers downward to match that manipulated WTI price. Now both were in sync. Saudi basically said enough, and they are now exposing the manipulators today. They cut production by not meeting quota for several months, then told Brandon they would increase by 100,000 bpd last month, last, on Oct 5th they said the cut will be 2 million barrels per day relating to November production. Finally, someone (Saudi with brass cajones) gave Brandon the middle finger and WTI started to take off. About 10 days before the OPEC+ Oct 5th meeting, XOM started disassociating itself from WTI. XOM now trades at a premium spread of +7 to +14 WTI (use +$12). This disassociation will continue and XOM will continue to rise. XOM is a cash printing machine and the market will no longer be politically correct and stay away. The jig is up and smart money knows it. All the XOM analysts were projecting XOM at 107 to $127. Right now, the safe projection is $110 for XOM by year end. I think you could push it to $115. The only analyst that continues to be negative on crude and XOM is Citi. Goldman is $150 crude and $135 XOM and have been strong in their support.

Whether you believe explanation above is up to you.

This is how I saw it, see it, and continue to view today. From the above you should be able to discern the connection between suppressed WTI price, it's relation to XOM price and how Saudi is the strength to correct this manipulation. This explanation is awful to type because the entire thing stinks and is rotten to the core. As for CVX, it trades at $60 to $65 over XOM. Use $65 over for trading purposes. That spread should remain fairly steady going forward. I see XOM going to $115 without a doubt based on maybe a WTI move to $100 or $105 all by the end of the year. If WTI goes to $150, holy cow, I don't know how high XOM/CVX could go. XOM break even is $41 crude, they are a cash machine. The forward PE suggest a $120 stock with similar earnings to this year. And, XOM is the largest NatGas producer in the U.S. and #2 in the world (maybe #1 now with Russia out of the picture). It's been a long hard ride with XOM and the numbers finally prevailed....with Saudi's help!

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Moreover, if a massive worldwide recession ensues (certainly looking this way), will the price drop?

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There will be backing & filling, no straight line up, but the BS in manipulation is starting to head out the door. Brandon is going to try and halt refined products from export, but he has no authority. Brandon will stop crude exports if crude goes to $125-$150. Brandon is the major violator today with his SPR Releases and cheap sales to China and other foreign powers. There will be a move to export as much LNG from the US to Europe. Brandon will try and stop this. NatGas prices for Americans this winter are going to be abnormally high. Will O&G stock prices drop with everything else, maybe to some degree, but not nearly as much as the rest of the stock market.

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In other words, is there even a bear case to be made for any of the O&G stocks?

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At some point yes, maybe 2 years out...? I don't know. Structurally, O&G can't build fast enough in 12 to 18 months to even-out the demand. Supply chains and raw materials to make parts, rigs, pipe, etc. can't pump it out fast enough for the capex buildout that needs to be completed. If that Keystone Pipeline got put back on the books to finish, it will take years to complete. Hauling crude by rail is stupid. Cheapest transport is a pipe. However, Warren Buffet likes to keep his trains busy...amazing.

China is now expected to reopen in December. That would only put more demand on crude supply. Russian Price Caps by the G7 allegedly start on Dec 5th for crude and Feb 23rd for refined products. Couple more data points to insert in an already volatile situation.

Hope this helps you in some way.

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BaylorSpineGuy said:

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Thanks as always! Have been wanting to buy some XOM for a while, but the decision just seems too obvious! It's not easy to make money in the market. Professionals take peoples' money everyday. Your analysis seems spot on and I don't dispute any of it. I just can't decide if there's an aspect I'm blind to or not. As I said, the decision to buy XOM seems too obvious. It just makes me anxious.

Appreciate your insight as always and thanks for the congrats earlier!

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Farmer @ Johnsongrass, TX said:

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If you're keeping score at home. An XOM refinery in France shut down yesterday/today....workers went on strike! Heck yeah! And the European hits keep on coming! You ain't seen nothing yet! (you know, that should be a line in a song..) Farmers Almanac states a long & cold winter this year across the globe. What does Farmer know? See what I did there?

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Bob Knights Liver said:

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Does this normalize EPS to account for stock splits? We've had a lot of those recently, so if not accounted for that would tend to pull down EPS. Possibly making the actual EPS even more extended that this graph. It may very well be accounted for, though.

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Farmer @ Johnsongrass, TX said:

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Brandon's Administration will set this country back to the 18th century if they pull off NOPEC. Europe is well on their way back to the 18th century now. Europe will experience de-industrialization and move manufacturing to energy stable countries where those companies have operations (growth in the U.S.). Europe will be unable to manufacture goods with current energy prices and be competitive in a world market. Shifting the manufacturing of European product to the U.S. with a strong U.S. dollar doesn't help the cause to go export. All the extra production will not be absorbed here in the U.S. with Powell looking for 10% unemployment in the U.S. Europe runs out of Euros because companies move manufacturing (tax base), people are unemployed (tax base), no sales of European goods (tax base), no welfare, no subsidies, no natgas, no electricity and the list goes on.

https://finance.yahoo.com/news/desperate-europeans-return-world-oldest-050015923.html

If Putin is overthrown, that's not bearish crude or energy. The lack of structural O&G capex spending to build for a normal 2-3% growth per year was not spent in the last 3 years. It's not going to catch-up in 12 months. Energy is in a Mega-Cycle. It will not matter if a Red Wave happens in November, energy stays strong. As long as Brandon's Administration stays hell bent on the Green Energy Steal, U.S. Big Oil is not coming to Brandon's rescue.

Regarding SPR Releases (sales in Nov of 10 million barrels). The Brandon Administration tried to make this news again in an effort to tone down OPEC+ production cut. (Nov sale was previously reported a week or 2 ago) Reports indicate 155 to 165 million barrels have shipped from the original 180 million barrels total from the SPR. (Add 10 to the 180 commitment) It appears that shipments will drag through Nov. Current SPR inventory is approx 416 mb, say 160 mb have shipped, that means 30 mb left to ship, 416 mb minus the 30 mb puts the SPR at 386 mb inventory. DOE/EIA minimum stockholding is 315 mb. So, 386 mb minus 315 mb means Brandon could Release another 71 mb anytime between now and whenever. Then Brandon HAS to stop. The SPR will need to be refilled. With the information above spelling out the inability to produce enough crude to meet demand, refilling the SPR will have to wait, but it still has to be refilled. Do you think crude will come down in price over the next 2 years? I don't.

Gov Newsome is calling for a California tax on fossil fuel companies. I posted earlier that refineries in CA are doing routine maintenance. Prices are rocketing. No other State uses the CA blend so other refineries don't make it. I say quit refining gas for CA altogether.

IMO, the safest place for your money in this market is XOM, CVX and OXY, if you want to participate. Other basics - smokes, food, telecom and alcohol are secondary segments. This is nothing new from what I've been posting, but the situation is more dire today then it was months ago.

Side note, I have a son in college now so I'm talking to a lot of folks that have kids in college too. What I am hearing from these folks is troubling to me. The parents are not using college funds to pay for school because the market is down(they are still invested in the market in those account(s)). They are using personal savings to pay college bills.....waiting on the market to go back up....then sell investments in the college fund to generate cash to pay for school. Actually, I'm not sure what I would do if I were in a similar situation. It just seems troubling to me.

Still banging my drum.

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