Thursday, March 26, 2015

War Across The Mideast -- Saudi Arabia, Allies Attack Yemen -- March 26, 2015

My daily routine changes little. Occasionally I don't start the day at Starbucks but it is rare. The location of the Starbucks varies. There are three in my immediate area and a fourth that is 5.5 miles away -- a nice bicycle ride. For various reasons, I usually go to the Target Starbucks in the immediate area -- it is never busy. More accurately, it "was" never busy. However, now it is extremely busy. They normally have one barista; today three. The line is 7 deep compared to the usual "no line." It turns out that the new owners of the grocery store up the street did not keep the contract with the in-store Starbucks, so now many of those customers are coming down here.

Left over from yesterday's Rigzone. I don't think I will link any of the stories; most are old by now; for the archives only.
  • Hess pulls out of Kurdistan
  • Wood Mackenzie: "demise of unconventional oil exaggerated"
  • North Dakota oil rig count drops below 100 (to 98 to be exact)
  • as oil prices slide, North Dakota sees manufacturing future (okay, maybe that one I will post later)
  • in an attempt to further hobble US oil industry, US Senate Democrats push White House on oil train safety

Active rigs:

Active Rigs99198186206170

RBN Energy: part 7 of the series on natural gas in the Marcellus / Utica
The U.S. Midwest region is slated to get an infusion of cheaper Northeast natural gas supply later this year as the first of five new westbound pipeline expansions is expected to begin service in November. Already a couple of projects are moving gas to the Midwest from the Northeast.  The Northeast-to-Midwest capacity will have a huge impact on the Midwest supply stack and consequently on prices. The Chicago Citygates forward curve shows prices flipping from premiums to discounts later this year. Today’s blog continues our look at how new pipeline capacity will re-shuffle the Midwest’s supply stack and change regional pricing.

This is Part 7 in our natural gas forward curve series. Part 1 provided a definition of forward curves and how they work. Part 2 and Part 3 dove into two Northeast gas markets – Transco Zone 6 in New York and Dominion South in Appalachia. The region is poised to transform from a net demand region to a net supplier of natural gas to the U.S. but is sorely constrained by takeaway capacity in the near- to mid-term, resulting in distressed pricing. In Part 4, we laid out the fundamental drivers influencing Northeast forward curves for the next several years, the biggest factor being the slew of pipeline expansions proposed to relieve supply congestion in the region. In Part 5 we concluded that based on expected supply/demand fundamentals and our variable cost assumption, the current forward curve correctly suggests extreme price weakness through 2016, but that the back of the curve (2018-19) may be too pessimistic and holds some upside potential based on timing of capacity expansions – assuming all of those expansions happen.

ISIS/Syria/Iran/Yemen now have Saudi Arabia surrounded (with one trivial exception: Oman). Iraq is pretty much neutralized / occupied as far as Iran is concerned. Iran's rear flank is secure. Once John Kerry and Barack Obama remove the sanctions on Iran, Iran becomes a much bigger threat to its neighbors in the Mideast. Most importantly: they have the money they need to pursue their regional goals. Remember: it's called the Persian Gulf, not the Saudi Arabian Gulf. The relationship between the US and Saudi Arabia was once a solid relationship (and, of course, that was true with regard to the Shah of Iran, also). Saudi Arabia could not have missed the fact that the Obama administration has thrown the Israelis under the bus AND will soon conclude an "agreement" with Iran allowing the latter unfettered development of their nuclear "energy for peaceful uses" program. Saudi Arabia does not have a warrior culture; without US support it cannot defend itself. As important as Saudi Arabia is to the stability of the western world, the fact that the US has thrown Israel under the bus certainly suggests to princes that with regard to the present regime in Washington (DC), nothing is off the table.

It doesn't matter that any of this is hyperbole or even remotely likely or possible, the market does not like uncertainty. And we're going to see that today.

Disclaimer: this is not an investment site. Do not make any investment, financial, or relationship decisions based on anything you read here or think you may have read here.


This week's issue of The New Yorker has a great article on snooker. The author writes:
People who grew up in Britain in the nineteen-eighties, as I did, found themselves steeped in snooker whether they liked it not.
That is so incredibly accurate. As a family we lived in England for three years in the late 1980's. As much as one might have wanted to "remain an American" it was almost impossible. British television (BBC 1, BBC 2, ITV, and a fourth station, and that was it); British radio (BBC 1 and BBC 2); fish, chips, and mashed peas (not for the faint-hearted); consistent weather (overcast, cool, rain); pubs; pub food (best food in England); queues; darts; and, snooker.

Of all those mentioned, there was only one exception for me: I didn't get interested in snooker. So now, the article in The New Yorker on snooker. Highly recommended. Very, very interesting. Usually I find New Yorker articles are too long; this one is not long enough at seven full pages and only one small drawing.


Re-posted from late last night: Apple will release three new iPhone models in the second half of 2015, according to a new report from DigiTimes. The site claims that a 4-inch iPhone model will join the 4.7-inch iPhone 6s and 5.5-inch iPhone 6s Plus.

I don't have a smart phone and have no plans to get one. However, a clamshell phone about 3 inches x 1.5 inches when closed and very, very thin would be the cat's meow. Now that, I would consider.

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