Q: At what sustained oil price do things really start to burden TVE?
Seasonal strength in oil is approaching or is it?
Thank you for any insights you can provide.
Seasonal strength in oil is approaching or is it?
Thank you for any insights you can provide.
5i Research Answer:
We do not necessarily have a specific price in mind that will burden TVE, as its recent struggles have been driven more by operational performance. In the winter, crude inventories typically decrease as demand for heating oil spikes. Oil demand is expected to grow as we enter 2024 but supply is also estimated to go into a surplus. Due to the current geopolitical risks, there will be even more volatility in the industry which makes it harder to predict the degree of seasonal strength that we can expect. Oil price improving will definitely help TVE, but it needs to first focus on fixing operational issues. Its costs, including hedging losses, are in the $30/b range, so it does have a cushion on prices up to a point.