Friday, May 19, 2017

The Energy And Market Page, T+119 -- May 19, 2017

Boom. Market up triple digits. 

Oil. WTI hits $50/bbl.

Boom: Deere profit jumps 62%. Sales rose for the first time in 13 quarters. Coincides pretty closely with oil patch. Just saying.

Futures: up slightly.

Of course: Saudi will extend cuts -- they have no choice with Saudi Aramco IP looming. The surprise? Russia is going along with the cuts, not expected to be extended into March, 2018.

Not news. But the headline catches one's attention, from Bloomberg -- "US shale roars back at OPEC." Some data points (again, nothing new):
  • areas in the "enormous" Permian and Eagle Ford shale where breakeven price is $34/bbl
  • analysts now say US shale production will grow even faster than expected
  • production will increase 1.4 million bopd through December, 2017, according to one analyst
  • JPMorgan doubled its forecast to an increase of 800,000 bbls a day for the same period
  • US shale producers output increase is about half of the OPEC cuts
  • US shale producers output increase is twice that of Russia's cuts
  • situation for Saudi Arabia will not improve in 2018
  • JPMorgan forecasts US shale to grow by 1.05 million bopd in 2018; BofA says 950,000 bopd
  • even if price of oil "collapses" a lot of DUCs could still be completed -- profitably even at $30
  • US crude oil inventories: 520.8 million bbls, still well above the 350 million bbls that was the "norm" before US shale revolution. See this post.
Reminder: Another memo to Jane Nielson, I guess. 

And analysts usually pooh-pooh stock re-purchase programs: Warren Buffett's stake in AMEX jumps from 17% to 25% simply because of AMEX buying outstanding shares. 

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