"We Have To Be Prepared To Be Surprised" Featuring Dr. Dan Yergin, S&P Global

C.O.B. Tuesday

We have been intrigued by some of the news coming out of the World Economic Forum (i.e. Davos) and have been on the lookout for someone who could give us an objective, independent summary and assessment of the gathering. We were elated to connect with our special friend Dr. Dan Yergin for such a discussion. While impossible to succinctly summarize his achievements and contributions to the energy industry, Dan is the Vice Chairman of S&P Global, the Chairman of CERAWeek, and the author of several books, with his most recent being "The New Map." He is a Pulitzer prize-winner and a highly esteemed energy expert. It was our pleasure to discuss Dan’s key takeaways from the event as well as preview this year’s CERAWeek Conference.
We covered a lot of territory in our conversation starting with Dan’s impressions of Davos and the role of major international conferences (Davos, COP, etc.), the unique role of the Founder and Chairman of the World Economic Forum Professor Klaus Schwab (bio linked here), this year’s top theme, and geopolitical concerns including proxy wars, disruptions in the Middle East, and Red Sea disruption affecting oil tankers. Dan shares his perspective on oil market dynamics, OPEC+ cohesion and oil demand projections for 2024, Russian production resilience despite international service companies pulling out of the country, global energy forecasts and the gap between IEA and OPEC projections, Argentine President Javier Milei’s impactful speech (linked here), power/electricity demand growth, copper and mining challenges, and more. We also discuss the CERAWeek Conference taking place from March 18 – 22 in Houston and how the conference’s theme of "Multidimensional Energy Transition: Markets, Climate, Technology and Geopolitics" will translate across sessions such as LNG, geopolitical complexities, and the changing global environment. Dan never disappoints and we had a great time visiting with him (as usual!).
Mike Bradley kicked off the show by highlighting recent bullish equity market sentiment, his current energy commodity thoughts, and key things to focus on as the energy sector ramps up Q4 reporting over the coming weeks. On the equity market front, he remains concerned that equity volatility is very low and equity market sentiment is very bullish. Broader equity markets like the Nasdaq and S&P 500 continue making all-time highs due to continued optimism with AI and large-cap technology stocks, while smaller indices like the Russell 2000 continue to trade well below their all-time highs, therefore a narrow market breadth. Global crude oil prices have caught a bid in recent weeks (WTI at ~$75/bbl). Both Brent and WTI crude oil time spreads have moved back into backwardation, for the first time since November, which typically signals a tighter physical market, and could be related to frigid U.S. temperatures. U.S. natural gas prices plunged by ~$1.00/MMBtu over the last week, which has pushed natural gas price to ~$2.40/MMBtu. On the energy sector front, Q4 energy sector reporting has begun with the Big3 oil service companies reporting and over the next couple of weeks, energy sector reporting will broaden out to a handful of NAM land rig/frac companies, E&Ps, midstream, oil majors and refiners, all of which should provide a clearer picture of the 2024 classic energy landscape. For a more complete list of scheduled earnings in the energy and energy-related world in the next week, click here.
For our COBT history buffs, today marks Dan’s fourth appearance on COBT. His previous episodes include Feb. 15, 2023 (linked here), Feb. 23, 2022 (