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00:00Our spotlight is on oil. Now Iran says it sees a foreign ship that was smuggling fuel in the Persian Gulf which could heightened tensions in the Strait of Hormuz. Bloomberg recently spoke to Iran's foreign minister about it. We certainly have the ability to do it but we certainly do want to do it because the Strait of Hormuz in the Persian Gulf or lifeline it has to be secured. We play a major role in security in securing it . But it has to be secured forever. But actually how high is the threat level right now. You know I think the threat of a misunderstanding is certainly very high. But what's shocking is that prices don't seem to care. I mean even with this tanker situation going on for the past couple of days and all that confusion additional armed forces the earlier seizure of an Iranian ship the prices haven't reacted. And so it actually brings a little bit of optimism in terms of I don't think there's going to be a sudden flare up just because those prices are kind of taking all this in stride. So how do you understand that. Because even earlier this morning we only had prices up like five tenths of one percent and then we have the news that potentially a Transnet. So one of the pipelines in Russia is able to finally transmit more crude that was contaminated and boom prices lose like 2 percent. What do you make of that . Yeah. And prices are also losing power today because we had a really big refined product stock build in the air a hub in Europe following yesterday's refined products stock build in the US. So you know there's a lot of that concern around the economy and is consumer demand keeping up. And I think there's oil elsewhere. You know we already have OPEC plus bringing down production a million point two or so and this tension in the Gulf even if it leads to a disruption maybe that'll help sop up some of this oversupply. We still have volumes out of Africa Nigeria Libya have been very resilient. Venezuela falling from technical issues but still on the board. Mexico Brazil and of course the US all producing all able to get volumes on the water into Asia where they need to go. So if you take a look at the curve and what we're pricing in and we still see backwardation but we've seen the curve really hold steady in the back end. Is that justified. This is the Brent curve right here. Is this curve justified. Yeah I think it is. You know I think we we definitely have demand is the bigger risk right now is money of supply to meet what we need. And I don't think there's a high risk of this oversupply. So we really should be cautiously constructive but these tensions are going to persist through the summer and we're also headed into oil earnings season. The big big oil starts next week. Then you get the Eon piece here in the US trickling out as well. What are we going to learn about production the forecast for 2018 2019 from the US. Hopefully we're going to learn that the forecast hasn't changed much. You know big oil I think is going to give kind of the standard expectations in terms of what they're doing it's really these and Ps that we're looking at and we're expecting pretty range bound Permian activity most of their spending being put towards higher service costs more though more so than expanding activity and we're expecting that momentum for production is going to slow down in 2020 as well. They really are still striving to spend within cash flow and we want to see that reiterated. So we're looking for. Comments about how they're still continuing to hold these costs down. We're also looking at where are they focusing this production. Are you in the eastern or the western part of the Permian. What are you doing in the scoop and the stack in terms of exploration right now kind of you know learning more about some of the more complicated Mekong geology that's fine. But as long as you're not just producing for producing sake then prices should actually get a little support from that as well. Everyone's going to say they're going to spend within cash flow but if we see CapEx come in 50 percent plus their whole budget for the year what's the market going to do to that. You know it's going to punish it. It's not going to take it well. Everyone is going to say they're spending within cash flow. This is why a little more so I'm actually going to be looking to see what the service companies are saying what's the level of activity they've been dealing with and what pushback are they getting in terms of rising costs and new orders new contracts. I want to see what the the boots on the ground are dealing with not just what the employees are saying that they're signing up for .

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Oil Shrugs Off Persian Gulf Tensions, Maintains Slide

Ashley Petersen, senior oil market analyst at Stratas Advisors, talks with Bloomberg's Alix Steel about how the oil market is affected by the recent headlines in the Persian Gulf. Tensions between Washington and Tehran remain high over a spate of attacks on cargo ships, the downing of drones and the British seizure of a tanker carrying Iranian oil. Earlier in the day, the U.S. condemned Iranian naval activity and demanded that the Islamic Republic release a small tanker and its crew that its forces seized this week. (Source: Bloomberg_TV)

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