RE:RE:RE:RE:RE:RE:RE:Perspectivemasfortuna wrote: HeavyBanana wrote: To preface things on "demand destruction" and prices going too low (presumably meaning below $75) equating to a much longer time frame for debt reduction and share buyback sounds logical but it has a built in assumption that demand destruction caused by a tipping point high price per barrel would create a price shock to the downside that goes significantly below $75 before the company has lowered debt significantly.
To the extent that a runaway price per barrel to the upside would bring on demand destruction, it does not form a steep and direct line to sub $75 per barrel par se.
In todays oil fundamentals, demand destruction would likely normalize price per barrel back to the range between $75-90.
So let's reap in the massive cashflow if and when oil prices run away to that demand destruction tipping point and enjoy everything in between just as well within the $75-90 range that is all but a given for the foreseeable future.
I think Baytex gets bought out well within the next two years and it will likely manifest itself in the period between now and any perceived tipping point to demand destruction one can conjure up.
Last July oil was at $120. This July oil was at $63. It might not go down in a straight line but it was pretty darn close.
Masfortuna, you didn't answer the question if it was demand destruction that caused oil to go from $120 to $63
Interestingly, the SPR held 588,317,000 barrels in January 2022 and at July of this year held 347,454,000 barrels. I think the FED was active raising rates to (causing panic),no?
Don't think the SPR draw down supports demand destruction at $120 being the driver for oil to $63.
Seems like there were factors in addition to SPR releases compunding the down pressure on oil during the period too but demand destruction care of $120 oil price wasn't one of them.
Not being argumetative here. I just don't play into the demand destruction narrative that is thrown out there with a seemingly logical basis but not really ground in fact. Nada demand destruction so far this year and it wasn't a factor at $120 last year either.
Maybe if the SPR releases and other factors didn't come into play during the period then demand destruction might have began to manifest itself but only at steps well above $120 or if $120 held for a very extended amount of time, then maybe a slow burn could have played under the demand destruction banner but certainly not a sharp decline liken to SPR and other factors weighing heavy on oil price.
The sweet spot is $105 WTI, imo and you won't see any sign of demand destruction at that level.
Not saying the FED or other factors couldn't impact demand if things were ratcheted up in lock step to oil rising over $100 but SPR releases now being a non-issue makes a balancing point between $75-90 oil the downside case regardless of FED moves going forward, again imo.