Tuesday, February 7, 2017

Peak Oil? What Peak Oil? And Coal Is Making A Comeback; The Market And Energy Energy News, T+18 -- February 7, 2017

This Tells Me EVs Are Dead

Ford plans to double SUV output. Link here. The margin on SUV's is incredible. Margin on EVs? LOL. Incentives and government mandates needed to move EVs.

EIA's Short-Term Outlook

Oil Markets
  • Global oil supply and demand is now expected to be largely in balance during 2017 as the gradual increase in world oil inventories that has occurred over the last few years comes to an end.
  • Improved economic growth in both developed and emerging market countries is expected to contribute to higher global oil demand over the next two years.
  • U.S. crude oil production in 2017 is expected to be about 100,000 barrels per day higher than in 2016, with production rising another 550,000 barrels per day in 2018.
  •  U.S. production of natural gas plant liquids is forecast to grow 250,000 barrels per day in 2017 and other 450,000 barrels per day in 2018.
Gasoline/Refined Products:
  • Warmer-than-normal weather during January kept U.S. demand for distillate fuel, which includes heating oil, at the third lowest level for the month since 2001.
Natural Gas:
  • U.S. natural gas production is expected to increase during 2017, due in part to higher natural gas prices, after output declined last year for the first time since 2005.
  • Natural gas-fired electricity generation will continue to account for the biggest share of U.S. electricity supplies over the next two years, with coal-fired generation coming in a close second.
  • Coal use by the U.S. electric power sector is set to increase during 2017 as higher natural gas prices cause some power plant operators to run more coal-fired generation.
  • Higher coal-fired electricity generation in 2017 is expected to contribute to a boost in U.S. coal production this year.
  •  Wind and solar power are expected to account for the most growth in U.S electricity generation by energy source over the next two years.

OPEC in serious doo-doo?
Brent could close below its 50-day moving average for the first time since the November 30, 2016, meeting, when the "organization" agreed to cut production.

NTSB: getting ready to release cause of crude oil derailment that occurred in North Dakota back in 2013. Noted at PennEnergy. The CBR train derailed when the train ahead of it, carrying soybeans, derailed; at the time, said to be due to a broken axle; 40 axles recalled. 

Right to work? Add Missouri (#28) as of yesterday, February 6, 2017; add Kentucky (#27) as of early January. Link here New Hampshire could become #29.

Of note:
  • AAPL is on a tear; up nicely today; looks like it hit a 52-week high
  • BRK-B is flat today, but near an all-time high
  • SRE struggling, but still above $102
  • T holding its own; just slightly over $41
  • National OIlwell Varco "soars" after posting narrower-than-expected loss; shares jump 5% on opening


: fifteen minutes after the opening bell, the Dow and the NASDAQ both hit new highs.

GDP Now:
for those who missed it, 1Q17 GDP is now forecast for a 3.4% growth rate. Quite extraordinary -- first Trump quarter now estimated at a 3.4% growth rate. No wonder the market hit new highs today. Oil is down almost a dollar, approaching $52/bbl. Historical data here.

net profits fall year-over-year, but sets records along the way:

  • net profits fall less than 3% y-o-y
  • net profits at $9.43 billion
  • pre-tax adjusted earnings: $12.9 billion -- a yearly record
  • EPS, $6 for the year -- another record
  • several other records
  • company's revenues grew over 9% vs 2015 
  • comment: it's those big SUVs, and cheap gasoline 
  • GM sets record after record, and this is the Fox Business headline:


another nice day on Wall Street today?

now below $53 again, right in the sweet spot --
  • enough for shale operators to survive
  • not enough for Saudi Arabia to survive; still hemorrhaging cash
  • gasoline priced nicely for US consumers -- all indications are that gasoline should fall in price but my hunch is that the price of gasoline will melt up as we move into the driving season later this spring
BP earnings (numbers rounded)
, Financial Times:
  • $400 million vs $200 million one year earlier -- huge?
  • analysts expected more: analysts expected $600 million 
  • shares fall 3% in early trading
  • earnings held back due partly to BP's stake in Russia's Rosneft
  • better earnings due to better crude oil prices
  • says its break-even point: $60 at end of 2017 (probably Brent)
Amazon: AmazonPay very likely to edge out PayPal before it's all over.


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