Commodity Research Group (CRG) is an independent research consultancy specializing in base and precious metals, as well energy products. The Group provides research and general price analysis for these markets, along with advice to companies seeking to construct hedging strategies.
In this podcast, Andrew Lebow and Jim Colburn discuss the latest economic trends and supply and demand factors affecting oil prices.
About the Experts
Andrew Lebow has been involved in the energy derivative area since 1980. He began his career with Shearson Lehman Brothers where he worked in the initial formulation and marketing of the NYMEX WTI crude contract in 1983 as well as the NYMEX gasoline contract in 1985.
Mr. Lebow has appeared before the State Government of Alaska as well as the State Department of Defense to discuss hedging techniques. Mr. Lebow is also well known as a market analyst and is quoted frequently in the financial press. He has appeared on television on CNBC, NBC, CNN, CBS, and PBS. Mr. Lebow holds a BA from Lafayette College and an MBA from the Kellogg School of Management at Northwestern University.
Jim Colburn is a futures and options professional with 30 years of wide ranging experience in commodity markets. For much of his career, at Man Financial (1989-2011) and Jefferies LLC (2012-2013), Mr. Colburn worked with major integrated oil companies, hedge funds, pension funds and other entities to develop market hedging and trading strategies.
He has conducted trading, hedging and risk management workshops in energy markets worldwide.
Mr. Colburn is a published author on options trading, hedging, market making and risk management. In 1986, while at the New York Mercantile Exchange, Mr. Colburn helped develop new markets in energy option contracts by educating the oil industry, banks, floor traders and brokers, worldwide.
Speaker 1: (00:03)
This is Jim Colburn of commodity research group. I’m here with Andy Lebow also of commodity research group and we’re here to talk about energy markets along with Ed Meir. Andy and I co founded commodity research group, which consults on various aspects of commodity markets. Check out our website, commodity research group.com where we post our monthly commodity reports, our metals reports, our blog and our podcasts. We’d also like to thank our good friend Doug Stetzer of EKT interactive oil and gas training for hosting this podcast. You can check out his daily newsletter, podcast and learning firstname.lastname@example.org. This podcast should be construed as market commentary, merely observing economic, political, and market conditions, and is not intended to refer to any particular trading system. You’re not responsible the trading decisions taken by anyone, not intended to listen. Information is not guaranteed to be accurate. This is not an offer to buy or sell. Today is July 6th. Good morning, Andy. Good morning chip. I thought today with such a spectacular, a weekly Eia report, we would, that’s where we would start. Um, it looks very bullish to me. And why don’t you take us through, uh, what you saw and what you think is important out of this week’s report.
Speaker 2: (01:48)
Okay. You were right. This is a very bullish report, very constructive for the, uh, for the market. And, uh, really just what a, I think the market was looking for. Uh, let’s start with crude, which true by 6.3 million relative to expects of, uh, down like two to three, so that, that’s double what the, uh, what the x specs were. Total motor gasoline stocks true by 3.7, uh, relative to the expects of May, maybe one, one and a half to two. Uh, this slips drew by a 1.9. And, uh, the, the real, the important number, um, is the total stocks drawing by a 13.4 million barrels. That’s a really bullish number. It’s just what the market needed, I think to, uh, to find some stability. That’s a great number.
Speaker 1: (02:46)
Yeah. I think the, uh, the narrative up to now has been, um, the inability of the OPEC agreement to be translated into a stock draw. And you think this is the beginning of, um, you know, more of these reports going forward?
Speaker 2: (03:01)
It could be, uh, we’re looking for a or yeah, we’re looking for, for total stocks that draw further, uh, as we head into July, uh, we think July could be a transformative month. Uh, in terms of, uh, of stock draws is this is the, by this, this should be the most foolish month, uh, of the year for, uh, for demand and a stock draws. So at least we’re starting, uh, we’re starting with a 14 million draw and a 13.4 million draw and uh, and toll stocks.
Speaker 1: (03:38)
Sometimes these are weekly numbers. We have to remember that there’s a lot of noise in here, but, um, I want to just take a quick look at the demand numbers or as the way to the doe or the EIA reports some of his product supply. Um, there was an increase of 2.57, 9 million in, in, uh, effective demand and talk about that.
Speaker 2: (04:05)
Well, that’s just the week to week. There’s a lot of variability on the, uh, on the demand numbers. Um, there, there are calculated their, their products applied or apparent disappearance. Uh, and they’re calculated off inventory numbers. So you can’t, you can’t go by any one week. Um, but this last week at 22.2 is that that’s, uh, probably one of the highest ever. I don’t have the numbers right in front of me, but uh, you know, that’s a, that’s a good one week. Um, key there is, is on gasoline. Uh, we frankly thought it would be a little bit higher. I thought it would be like nine, eight, nine, nine this week. Uh, it was 9.7. Um, so July 4th at least was, um, yeah, not nine, seven. It’s pretty good for a July 4th, we may start seeing, uh, some, some better. The next week two should be, should be pretty strong and other oils, which has been somewhat disappointing this year. Uh, had a huge week at 4.53 out of the what that’s all about Jim. But, uh, that’s a good number.
Speaker 1: (05:10)
Right? And that contributes to the decline in total stocks. Um, couple of things that we saw from last week’s numbers, that domestic production was down around a hundred thousand thousand and, and got a lot of people talking about, you know, is this the end of fracking really? We, we did see a storm come through, but um, this week’s numbers has a domestic production of the lower 48 up 105,000. Um, elaborate, they talk about that please.
Speaker 2: (05:45)
Well, I think the storm was a factor. There were some, if not the primary factor, there were some, uh, rigs taken down, uh, in, in the Gulf coast. So I’m sure that was, that was part of, of the decline. Alaska is going through some maintenances right now, so that, that, that accounts for, uh, Alaskan maintenances and in terms of a fracking and a US production, obviously that’s a, a, a key factor for the market for the market going forward. Um, you know, the second half production, second half us production, uh, should at least lower 48 production. Uh, according to the, um, EIA numbers are set to increase something like, uh, from, from this number. Uh, something like s I think it’s five to 600, five to 600 a day. Um, so I mean, clearly that’s, that’s the other, besides total stocks, a domestic production is, is, uh, you know, the other who were watching really carefully as is the whole market. I don’t mean to bounce around here, but going back to
Speaker 1: (07:00)
stock levels, we’ve been releasing str barrels into the market place. So, um, it looks like they, they drew a, was that 400,000 barrels, uh, last week. Um, can you talk about what’s been going on and the SPR and, um, how it reflects on the commercial stock levels?
Speaker 2: (07:25)
Well, that’s a good question because the, uh, spr release has certainly been a headwind. Uh, we’ve released the, as he said it, around 13 million barrels, of, of which only three has been, uh, have been exported. So the SPR is going into a domestic stocks and it’s, it’s one of the key factors that have prevented crude stocks from destroying quicker than that they should have given where crude runs are. Uh, and we, we spoke about crude runs in the last couple of, uh, of podcasts, but crude runs are running way more much higher than forecast. Uh, this last week it was 17 one, so we’re running, you know, running a good three, four, 500 a day higher than, than what many, you know, many of us had forecast there earlier in the year. Um, but getting back to the SPR, so we probably have another 3 million barrels to go. Uh, and those spr releases will, um, I think they’re set to go through August and after August, you know, at least at least that won’t be, that won’t be a factor. But concurrently, the, um, runs will also be declining, but nevertheless, you know, that that spr at has been, uh, has been an important factor for crude not drawing so quickly
Speaker 1: (08:48)
run levels and 17 report would, if I told you that we see runs at these levels early in the season, would you have expected a crack values to be where they are, are a lot lower or what would you say about it?
Speaker 2: (09:06)
I probably would expect them to have been lower. Uh, cracks really got hammered in, uh, in early June. The diesel crack got destroyed in early June as the guest saline as that the guest Celine crack, uh, diesel probably because of the high production numbers. Um, so yeah, uh, but cracks, but they, they have recovered since the first, since reaching their lows the second or third week in June, the, the August gasoline and diesel cracks have, uh, have both recovered and, um, you know, the, the, the key there is a, without a doubt has been, uh, amazing export demand.
Speaker 1: (09:51)
The export demand is strong in products. Gasoline, diesel,
Speaker 2: (09:58)
correct. Yeah, a export demand crude as well. But Let, let’s talk about product exports. Uh, gasoline, uh, not only, uh, have a diesel spin, unbelievably strong, um, diesel demand, uh, these, these aleks fourth demand, uh, it’s running quite a bit above last year’s levels, but key there is a South American demand has been very strong for both diesel and gasoline. UH, South American demand for diesel of course, picks up seasonally. It is their winter. So, um, exports to South American diesel. Uh, we’ll, we’ll, um, you know, and not only will they continue strong, but they’re going to increase because there was a fire at a, one of Mexico’s largest refinery is just a couple of weeks ago, uh, which has taken out another 330,000 barrels a day of Mexican refinery capacity. So Mexico Mexico’s refineries are running probably less than 40% right now. And, uh, we are going to be, uh, the main supplier. So diesel demand’s going to be strong and gasoline expert demand.
Speaker 2: (11:12)
It’s going to be awfully strong hair over the next couple of weeks. And it’s not only Mexico that, uh, is having a refinery issues, but Venezuela as well. Uh, Venezuela’s, um, power Guana complex has, is been just hampered by a poor maintenances, lack of spare parts, one operational problem after another. Um, so Mexico is, is uh, pardon me, Venezuela, uh, is uh, has increased demand for, for refined products. In fact, just a couple of weeks ago, they put out a huge tender for, uh, for refined products. And again, um, you know, US refiners are art. We’ll, we’ll supply Mexico South America to a certain extent as well. And um, you know, that, that’s gonna that is going to keep a export demand strong. It’s going to keep cracks probably stronger than they owe, then they probably would have been. And uh, you know, margins are finer margin. So hanging in there,
Speaker 1: (12:15)
um, do we have the capacity to increase product exports? Are we reaching bottlenecks in that area as well?
Speaker 2: (12:23)
Uh, that’s, that is a good question because, uh, you know, you talked to a trade sources and they say the docs are, are, uh, you know, they’re running at close to capacity, they’re really fall. So, um, I think that, uh, the capacity export capacity could be, you know, could, could be an issue.
Speaker 1: (12:49)
I noticed in the press sometimes they talk about the oil that’s in vessels on the water and you know, when you have demand increasing like this or exports increasing, um, it’s not necessarily a bearish, uh, notion that there’s a lot of oil around, so to speak. It’s got places to go.
Speaker 2: (13:09)
Yeah. Yeah. And US refined products definitely have places to go. There are certainly some, uh, there has been some, um, oil on water crude for instance, uh, oil on water has increased in the North Sea, some and the, and there is unsold Nigerian, which is a, I’m sure a factor that we’re about to get to. Um, there is sold unsold Nigeria and crude and the, those are not, um, I think today there was a press report that there was something like 40 on salt, uh, August cargoes, uh, of Nigerian crude and that, you know, that that will ultimately clear. But uh, certainly that’s been a main, another main bearish factor on the market.
Speaker 1: (13:58)
Excellent. I, I want to talk briefly about this short. We called it a short covering rally. The market ran up and you know, there were a lot of things that people are pointing to. One was a weaker dollar and other was the minus a hundred thousand barrels of production rig count I think was down last week. But, um, could you, could you talk about the, a speculative, um, positioning that was going on in that stretch where we went, we went from about what, 42 and change up the $47 Wti
Speaker 2: (14:35)
from the rally or the or the on the decline? No, no cause cause the market went when, um, you know, we came off really hard during June, right? Because of uh, basically the, the gross short position for Wti went from 101,000 on May 30th to 108 80,000 on June 27. So you had a lot of, you had a lot of shorts coming into the, into the market and they think that lasts week rally and in June probably squeezed out some of those, uh, some of the shorts that, that it just, um, you know, they’ve just been laid into the late, into the market. Um, you know, it’s interesting, Jim, is that, is that the, um, you look at this June 27th report and the long too short, uh, for crude was, was down to 1.7 to one for Wti and Brent was two to one earlier in the year. Those have been like 12 to one long to short.
Speaker 2: (15:44)
And the brand had been, you know, I think it was 14 to one is the uh, you know, it was the high of the year long longs to short earlier in the year when the market was sentiment was uh, you know, just so you know, sat through it with soul Polish. I think the adding on the shorts, you know, again, it’s part of the, you know, it’s part of the theme that I’ll, you know, stocks aren’t drawing there never will. And uh, you know, the, that I think you get specs, I’m saying, all right, let’s, you know, I think it’s time to sell it.
Speaker 1: (16:21)
They never get, never get credit from the politicians for pushing prices down.
Speaker 2: (16:25)
No, never, never do. And you know, and of course they sell it at the bottom. You know, this gross short position, Slade late in shortly before the market had a big bounce
Speaker 1: (16:38)
yes. Bias to the, I mean, you think about something that the u s oil ETF, you know, people put a will buy that and just just hang on either part of their portfolio and, and just let it go. So there’s always this bias to having along the speculative length in the market at all times. But to see it flip like that was just a amazing, and then we, like you said, we had this, uh, this rally, we probably shook a few of them out. And you know, the question is going to be where we go from here, but before we get into, uh, uh, projecting prices, let’s talk about OCAC because I’m up to now, the narrative has been even with this, uh, OPEC agreement, um, we can’t draw it, the inventory. So what’s, what’s the state of OPAC and the deal? Um, uh, right now
Speaker 2: (17:35)
the deal has been on their mind really by Nigeria and Libya. A Nigerian production has increased Nigerian and Olivia and production or opposite. Just, it’s April by like 600,000 barrels a day. The OPEC, but of course Nigeria and Libya don’t have, they’re not really part of the deal. They have no production targets. Uh, the, the ones that the countries that signed the deal with targets, they, they’d been by and large complying. Um, the problem has been, uh, Libya, Nigeria production rising a rising that quickly and uh, it’s, it’s put OPEC production, uh, at I think it’s 32.5 32.6 Reuters had it as high as 32.7, uh, relative to uh, call on OPEC crude for the third quarter of about 33, four 33, five. So there’s still a deficit but less so because of these, these higher on Nigerian and, and um, Libyan production numbers. But of course, you know, both Nigeria, Olivia had been unreliable suppliers. So what, we don’t know, you know, what’s going to be over the next three months, Nigerian production is set to go high or Libyan production is set to go higher, but, um, it’s really hard to forecast that they are going to remain at that, at these levels. Given past history.
Speaker 1: (19:16)
Yeah. That increases can quickly disappear. We’ve, we’ve seen that in the past and um, again, you global demand three is up 1.5 and um, that that would be, it would, if that comes to fruition, um, it’s going to be hard to see this market kind of collapse into, it’s a new low territory. And you know, what do you think about that idea?
Speaker 2: (19:45)
I don’t see that. I, it’s, it really is hard to, um, to forecast that we’ve got refined, we’ve got new refinery capacity coming on, which should be bullish for a, which should be bullish for crude a u s runs of courses as we mentioned, um, are strong, are running at a much higher than what we thought. Uh, and global demand. I think that, uh, the macro, at least in the short term looks, it looks okay. Um, emerging markets have been strong. A relatively strong, India seems to be coming out of its, it’s monetization, um, you know, the, their demonetization issues. So I think demand is going to improve their, uh, China’s a is, is, is a bit of a question mark, but, um, I think the trend will still be, uh, we’ll still be good for China and, uh, you know, seeing some growth in demand that out of south, um, out of Brazil and Europe Spin Europe first, first quarter wasn’t as good as it has been.
Speaker 2: (20:55)
But, um, you know, I think this third quarter should come in, you know, if it’s dot one five, it’s going to be close. Um, so yeah, I think inventories are going to, are going to draw here and uh, you know, I think that’s going to keep, I think that’s going to keep the market steady. Um, you know, in terms of geopolitical issues, you know, we’ll have to see what, what happens with, uh, you know, with Korea, with the Korean Peninsula that that could change the fundamentals obviously. Um, so I don’t really see things as bleak as, as, uh, you know, what the market was indicating, um, earlier in, uh, you know, certainly, certainly in the first three weeks of June, you know, everything was, everything was fair.
Speaker 1: (21:45)
That was unbelievable how that sentiment get put into the market very quickly. And, um, so I think we were working with a like a 45, 50, 55 range earlier in the year. We, we, we, uh, ducked below that for a little while. Now we’re right at the lower end, 40 around $46 say. Right. Um, going forward, you still okay working with that range? I’m talking about Wti here, 45, 55 range. Do you think we can get up to 50?
Speaker 2: (22:15)
I don’t know about getting, you know, earlier in the year we said, well we could get to 60, so maybe I think you have to lower a bit because uh, because inventories didn’t draw as much as what we thought in fact, and second quarter they’d probably, they probably didn’t draw it all globally. So we’re starting from a pretty high level. We are going to draw, but you know, you still have this inventory headwinds, so it’s hard to really see 60, you know, unless there’s a big change in the fundamentals because of a geopolitical situation, um, or a, um, some kind of infrastructure situation, it’s, it’s hard to see 60 and even 55 maybe it may be on a run. Maybe if we get, uh, a yeah, maybe we get a series of these, of these big draws. Um, you know, the market can sustain a little a upside. We may get some more fits and starts on these draws, but I think we’re heading in the right direction. Um, so, you know, I think we’re looking at 52 is 55 possible? Yeah, I guess so. Yeah.
Speaker 1: (23:26)
After watching these markets for as long as we have, anything’s possible. I’m just talking about what’s, what’s probable and you’re thinking maybe lower that 55 down to 52 or something like that going forward.
Speaker 2: (23:40)
Yeah, I think that’s right. And again, let’s look at the positioning there. Rome, there’s certainly room for the shorts, the cover and there’s this room for some Spec at some more speculative length to come into the market once it gets some confidence. So you know, as you just said, Jim, we can mark watching markets for uh, you know, the 30 years and we know once, you know, once that momentum gets going, anything, anything could be possible.
Speaker 1: (24:06)
Yeah. I would have said that about the recent move to the downside because it of it always tends to swing further than you’d been. You expect them and set the down move was overdone, but all the barriers you was with was coming up at the same time. It’s stuff that keep buying into that I guess. Um, okay. So going forward we’ve got roughly a 45, 52, uh, range. What about the, the structure of crude, uh, had to say the CSO is the calendar spread options have a, haven’t been trading that much lately. And I, and I guess that’s due to the fact that the structure hasn’t been moving in huge ways. What do you attribute that?
Speaker 2: (24:53)
Yeah, I think that’s right. We haven’t seen, you know, we saw the, um, the back of the market like these, these shred thesis that Steve [inaudible] 17 to [inaudible] 18, uh, really take some serious hits down to minus $2 in both Brent and Wti. And uh, again, I think that that’s all, uh, that’s in part and parcel of the of the inventory is not drawing, you know, if the numbers were lower, um, those spreads would have reacted a lot better cause everybody, including US earlier in the year was bullish on structure. How could you not be, how you looked at these numbers? You Go, Oh man, you know, the one trait we really think is going to work, uh, you know, the market’s got to go backward dated.
Speaker 1: (25:38)
It was, you know, what the green was the question.
Speaker 2: (25:45)
Yes. Or just start talking about what degree you though you’re in trouble. How is the contrarian play? Yeah.
Speaker 1: (25:54)
Was that crisis would get weak and this, the contrarian play was that we wouldn’t go backwards.
Speaker 2: (26:02)
So, maybe if we start seeing these draws, the structure will, it will tighten up some, um, you know, obviously the, the, the, the market is worried, uh, about the exit of the OPEC deal and what happens in March. Um, and so that, that’s I think lending some pressure to the, these, these Fred Dcis. Uh, cause there’s a lot of uncertainties. That is how they, you know, how, how they’re going to exit the, uh, how they’re going to exit the deal. And, uh, of course, you know, we’re non OPEC production goes, you know, one thing, the IEA in the, in the it slash report predicted that non OPEC production would be up 1.5 million barrels a day next year. Um, I’m going to tell you the gym, I’d be stunned if it comes up 1.5 million barrels a day. I think that’s way too high. You know, the IEA always tends to over, um, over estimate on, uh, on non OPEC production. So, you know, I just don’t, I think that’s way too high. But you know, if, if it does come in at like that, um, you know, that that’s going to, that’s problematic for OPEC because that takes out all the demand growth.
Speaker 1: (27:20)
Yeah. I wonder if they have a little bit of a leakage as time goes on. Uh, how, how well can they maintain their, uh, their numbers and, um, you know, it seems like the longer we go on a, the harder will be for OPEC to, to remain within their quotas.
Speaker 2: (27:41)
Yeah. I think that that’s, that’s a possibility. I mean, a lot of these countries are rubbing up against, rubbing up against their capacities. Uh, in Saudi, of course it’s going to go, is going to decrease our production as we head into the summer for the, or decrease exports for the, for the summer burn. And they may, they may decrease, they may decrease. Um, both production and exports. We’ll, we’ll, we’ll see how that, uh, you know, we’ll see how that plays out. Um,
Speaker 1: (28:16)
let’s, um, let’s talk about cracks. What do you think about, if you talking about diesel demands, export demand really strong. Um, what about, what do you think the cracks?
Speaker 2: (28:28)
Yeah. Well, I think if we’re talking about, uh, the cracks on the screen, um, yeah, which is the pad one against, against Cushing, at least for diesel. Uh, he had one in New York is still too high in terms of, uh, of inventory and, uh, you know, I think we’re going to draw a little bit, um, but probably not as much as what Cushing is going to draw. Um, but nevertheless, a export demand should help the cracks. The colonial pipeline was not a capacity for the first time and, uh, it’s six weeks. So I, I see diesel going either the diesel cracks going either way, either direction. I don’t think this is going to be a big move, a big move. Either way. Uh, I guess I’d be more bullish and bearish on the, on those cracks. Uh, gasoline and the also interesting, um, I think gas stocks in pad one should, uh, you know, should draw a, we’re not really getting, uh, you’re the marginal barrel is not coming into pad won either from the Gulf coast or from a, or from Europe. Uh, so I, and you’ve got seasonal factors on that. Gasoline is also a spate of a refinery issues popping up. Um, you know, that, that’s the other thing. Um, you know, we’re running these, these plants awfully hard, you know, we’ll see what happens, you know, if they’re able to, uh, if they’re able to sustain, um, these kinds of numbers. Um, because Jim, as you know, you know these, these refineries, no spring chickens, right? Because all you got some old equipment subject to break downs and we’re seeing that. So,
Speaker 1: (30:23)
and we’ve, we’ve talked to people who are making those high tech coatings, right? Maybe they can run longer than that.
Speaker 2: (30:29)
Yeah. Maybe, you know, there, there’s certainly put, you know, there’s certainly invested a lot into, into upgrading, but still,
Speaker 1: (30:37)
well, I always, I always talk to you about when you’re trading things like oil or commodities, it’s different if you want to take delivery of a, if you trading currencies or bonds or something like that, it’s a book entry. When you’re, when you’re trading oil, you’re moving it through pipelines, refiners, stuff breaks, stuff, leaks, stuff happens. And, and, uh, yeah, there’s, there’s a state of a refinery outages and these things go and like you said, we’re running hard, so maybe that probability has bumped up, uh, that that kind of thing could happen. So.
Speaker 2: (31:15)
Yeah, exactly. Yeah. And um, you know, in another six weeks or so we’ll be six to eight weeks, we’ll be squarely into hurricane season. So that’s another thing to, to watch out for,
Speaker 1: (31:29)
right. Which is a, it could take with binary’s down as much as it takes oil down. So it’s more, more of these days of a play on the crack than it is on outright, uh, oil. Is that, is that a good,
Speaker 2: (31:43)
yeah, I think that’s right. And you know, the more we’re talking about some of these old refinery, some of the refineries, um, the more I’m thinking you probably don’t want to be too short on these, uh, on these cracks actually.
Speaker 1: (31:56)
Right, right. So, yeah.
Speaker 2: (31:58)
Yeah. Play it a little bit more with a bullish bias.
Speaker 1: (32:02)
Um, okay, that’s, that’s great. A couple more things. I just want to, I want you to a desert island indicators, like going forward, what are the numbers? What do you want to look at? What, what do you want to see when you’re not? Obviously we were, we were looking at this week, we want, we want to see stock levels go down. One of these, see some gas demand. We were interested in US production number because it was down 100,000. So going forward, what do you, what do you think are the drivers of the market?
Speaker 2: (32:32)
I think we’re going to, again, structure, you know, we want to see structure improving in on the, uh, on crude curve. Um, we, we saw forties, which is a physical grade, go, go backward dated. So I think that’s a, that’s a good indicator. A demand. This one week was huge. We’ll see. We’ll see how that goes. Um, I think the other, uh, indicator in terms of, well again on the demand side, I really think July gasoline demand will be the highest ever, um, at the highest one month ever. And I think, you know, August two ships should be, uh, should be pretty good. So I’d be watching that carefully. And of course, you know, US production, um, we’ll see the, there’s the break evens have gotten, um, a little bit higher now as costs go up. And I, and I think that there could be some back pedaling on, uh, on, uh, what the, uh, US lower 48 production is going to be. Um, and then we’ll be watching, uh, ethane demand. I think we’ll talk more about that in our next podcast, but, uh, I think that’s going to be a, that’s going to be a key indicator.
Speaker 1: (33:51)
Excellent. Okay, let’s wrap it up. We’ll post this on our website and other places.
Speaker 3: (34:02)
Okay. Thanks Jeff.