What Warren Buffett Sees -- October 4, 2022

I normally don't pay much attention to API data, rather the EIA data that comes out a day later.

Earlier I posted: 

API: reported a "surprise" draw .... well, check it out for yourself ... there's a huge data point that blows me away ... and I think Warren Buffett sees it, also. We'll see the EIA data tomorrow.

Let's look at that one data point that blows me away:

The American Petroleum Institute (API) reported a surprise draw this week for crude oil of 1.770 million barrels, while analysts predicted a build of 333,000 barrels. U.S. crude inventories have grown by roughly 21 million barrels so far this year, according to API data, while the U.S. Strategic Petroleum Reserves fell by nearly eight times that figure.

The draw comes even as the Department of Energy released 6.2 million barrels from the Strategic Petroleum Reserves in the week ending September 30 that left the SPR with 416.4 million barrels.

In the week prior, the API reported a build in crude oil inventories of 4.150 million barrels after analysts had predicted a small build of 333,000 barrels.

Did you catch it?

U.S. crude inventories have grown by roughly 21 million barrels so far this year, according to API data, while the U.S. Strategic Petroleum Reserves fell by nearly eight times that figure.

From my perspective, in the big scheme of things, "oil" seems fairly well balanced -- oil supply / oil demand -- based on price of gasoline and the number of days of supply for US crude oil, and yet, and yet, and yet, look at all the oil that was released from the SPR this past summer ... and gasoline is still over $3.00 / gallon in most of the US and trending toward $8 / gallon in California.

Imagine what would have happened had the US not released a million bbls of crude oil from the SPR every day this past summer.

Sure, I know a lot of that oil was exported to Europe -- and that's the SecEnergy's argument -- which means she doesn't understand the concept of "commodity." 

Cut exports to Europe, Brent surges in price, and WTI follows. 

And US operators aren't interested in making up any shortfall; US operators are laser-focused on free cash flow. 

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While Traders Were Dumping Oil ...

... Buffett bought another 5.99 million shares of OXY. And more CVX.

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What Else Warren Buffett Sees

Link here.

Arguably nothing is more important than earnings growth, as surging profit levels is what most investors are after. For growth investors, double-digit earnings growth is highly preferable, as it is often perceived as an indication of strong prospects (and stock price gains) for the company under consideration. While the historical EPS growth rate for Chevron is 8.4%, investors should actually focus on the projected growth. The company's EPS is expected to grow 126% this year, crushing the industry average, which calls for EPS growth of 122%.

Is anyone paying attention?

And this analysis / article was written before the announcement that OPEC was going to cut production.

And, of course, if anyone needs a reminder:

• Russian exports will soon plummet;
• US shale cannot make up the shortfall that will be caused by the OPEC cut in production;
• China is about to "open up";
• as the Europeans begin to freeze this winter, they will start burning more oil to make heat.

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What Else Warren Buffett Sees

There's at least one more thing that Warren Buffett sees.

I'll leave this one for later. Let readers think about it. 

Actually I can come up with at least two more reasons why Buffett is betting $25 billion on CVX and OXY.