“These [oil] cycles, and we can get into it, they move up in three waves. They go doubt, pullback, optimism, a pullback, and then parabolic euphoria.”

“The well count is starting to bottom out, and even as of the latest Texas Railroad Commission data that was just updating for this call, it looks like that's bottoming out too.”

“So I think the best ones that is now front and center is obviously the refiners, and I still think that there's a lot left in the tank.”

"If you go back and look at the mega tech capex... there is not one single metric around meeting a capital budget."

Robert Connors, the author of Crude Chronicles and advisor to funds that manage over $1 trillion such as T. Rowe Price walks us through his bullish oil cycle call in great detail with all the supporting charts.

The logic is simple: well productivity is declining and the marginal cost of production is increasing. Therefore, oil prices are on the rise.

Drawing on more than a century of industry data gathered by hand at the Library of Congress, Robert explains how oil cycles are driven not just by supply and demand, but by long-term productivity trends, capital allocation, and marginal production costs.

Stocks mentioned: PSX, MPC, VLO, CVX, XOM, BP, TTW, RIG, NE, DO, VAL

______________________________________________________________________

[00:00:00] Highlights

[00:00:26] Introduction to Robert Connors and his long-cycle approach to energy research.

[00:02:10] How the Iran conflict fits into Robert's three-wave commodity cycle framework.

[00:04:28] Why well productivity—not traditional supply and demand forecasts—drives long-term oil cycles.

[00:09:13] Evidence that U.S. shale productivity growth is slowing and what that means for future oil prices.

[00:11:38] Comparing productivity trends across Bakken, Permian E&Ps, and integrated oil companies.

[00:14:21] Where future global oil supply growth could come from beyond the Permian.

[00:18:15] Understanding marginal production costs and why they establish the long-term floor for oil prices.

[00:20:44] Robert's framework for estimating a sustainable oil price range despite geopolitical volatility.

[00:24:35] Why refining margins are driven by secondary processing capacity rather than simple utilization rates.

[00:29:50] Global refining capacity outlook and why Robert remains bullish on refiners.

[00:32:54] Similarities between today's AI infrastructure spending and previous shale investment cycles.

[00:36:41] Productivity cycles, technology investment, and the relationship between energy and growth stocks.

[00:39:54] Robert's preferred investment opportunities, including refiners, integrated majors, and offshore drillers.

[00:44:47] Why offshore drilling may be entering a favorable cycle with limited new rig supply.

[00:51:24] How executive incentive structures influence capital allocation and shareholder returns in the offshore sector.

[00:52:53] Where listeners can follow Robert Connors and Crude Chronicles.

______________________________________________________________________

💡 This episode is powered by:

AlphaSense: Request a Demo

Pitch The PM Links:

📩 Subscribe to our Substack for research updates and new high-conviction episodes from top PMs, and our Job Board: ⁠https://pitchthepm.substack.com/⁠Doug Garber on LinkedIn: https://www.linkedin.com/in/doug-garber-42aa508

Crude Chronicles Links:

Robert Connors on LinkedIn: https://www.linkedin.com/in/robert-connors-cfa-cpa-oilinvestor/

The Crude Chronicles: https://thecrudechronicles.substack.com/

EP.40: The Next Phase of the Oil Cycle: Why Refiners Win

Pitch The PM

EP.40: The Next Phase of the Oil Cycle: Why Refiners Win