Good morning; here's what the Oilman has for you today:

• Doom and Gloom on Oil Markets Ahead of Fed Meeting

• Shell Grows Some Guts, Signals U-Turn on Transition

• Tweet of the Day

Doom and Gloom on Oil Markets Ahead of Fed Meeting

The Fed is meeting Tuesday and Wednesday to discuss monetary policy.

In plain English, it means central bankers will argue about whether it’s a good idea to hike rates again or maybe pause for a while.

While banks expect a pause, oil traders seem to be a lot more pessimistic. WTI slid below $70 on Monday.

What does it all mean, darling?

High rates push oil prices lower because they push the dollar higher, and oil buyers from all the big markets outside the U.S. don’t like that.

So, higher rates mean lower oil demand.

At least for oil priced in dollars, which is most of the oil traded today.

But Wall Street expects a pause in rate hikes.

So why is oil falling?

Because traders are now watching China and don’t like what they see.

They don’t care about China’s record oil imports.

They’re determined to get depressed, so they’re looking at its GDP and PMI readings.

With PMI pointing to an actual contraction, that’s enough to depress anyone.

The stage is set for a massive rally

Predicting oil prices is a notoriously risky, ungrateful business.

But with things where they are right now, it’s safe to say that prices will begin to rebound before the year’s end.

Because lower prices cause lower supply.

Demand, at the same time, is going nowhere, regardless of how oil traders feel about it.

Of course, there is a but. No rally will take place if we slip into a total recession.

Not a dream scenario, for sure.

The Oilman would take higher oil prices over a recession and a price dive any day.

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Shell Grows Some Guts, Signals U-Turn on Transition

This week, the new chief executive of Shell will be making an investor presentation at the NYSE.

In this presentation, Wael Sawan will reportedly drop a bomb: he will announce that Shell will spend more on oil and gas production.

Shocking.

From transition poster boy to oil and gas company

Okay, maybe Shell isn’t exactly the transition poster boy because BP has been a lot louder and enthusiastic about it.

But Shell, too, has been spending more on wind, solar, EV charging, and hydrogen. And their flip-flop got some of the “LeT’s GrEeN tRaNsItIoN tOdAy” people upset:

👆 The above is from a lecturer in “Political Ecology.”

Totally not a grift or a useless area of “study” — right?

And since climate change is all the rage, Shell has been “reimagining” itself (that’s what all the cool kids say these days).

Just like BP, Shell has been trying hard to convince activists and activist-minded investors it is changing.

That court ruling forcing it to cut oil and gas output sure helped, too.

And now the CEO is going to tell American investors something very different.

He’s going to tell them something that they already know:

The energy transition is not working.

And the reason it’s not working out is that it can’t. Not like this.

You can’t phase out oil and gas when there’s nothing even remotely comparable to replace them.

And it looks like Shell has just realized this.

Good for Shell.

What’s next?

If Shell dared risk getting its activist investors angry, then maybe others will follow.

Actually, some are already confronting the activist camp: TotalEnergies is suing Greenpeace for false accusations.

It’s truth-telling time, and it’s spreading.

The world runs on oil and gas, and the industry is no longer afraid to state it openly.

This is a good thing. Truth is always better than delusion, however pretty the delusion.

Around the Global Patch

🌏 Leading Asian refiner makes major sales of Oman crude oil.
🇦🇷 Chevron invests $500M in Argentina's vaca muerta.
🇷🇺 Russia's warning to the U.S. hands off Saudi Arabia's oil.

Tweet of the Day

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