Thursday, July 13, 2017

The Energy And Market Page, T+174, Part III -- July 13, 2017

Camelot II is in Paris. Press conference pending.

Not riding Nvidia's coattails. XLNX is down slightly at the opening.

Saudi sends less oil to the US: according to Kemp. We'll see. If accurate, this will be quite interesting, on many levels. The big question: how much oil does Saudi's refinery in the US refine on a daily basis? If Saudi drops below the one-million-bbl threshold, that should be a headline. From Reuters
U.S. crude imports from Saudi Arabia averaged less than 900,000 barrels per day (bpd) in the four weeks ending on July 7, according to the U.S. Energy Information Administration.
U.S. imports from Saudi Arabia are running at the slowest rate since 2015, and the slowest for the time of year for over five years.
Imports from Saudi Arabia will fall even further to less than 800,000 bpd in August, according to a Saudi industry source familiar with the kingdom's oil policy. 
The most recent data available at the EIA site is all the way back to April.

Prediction. Plan B. I bet Warren Buffett has a back-up plan if Elliot Management thwarts BRK's bid to buy Oncor.

Whopping (their words, not mine). Old news. OPEC's production cuts (wink, wink). From 24/7 Wall Street:
In its monthly Oil Market Report for July released Thursday morning, the International Energy Agency (IEA) said that global crude supplies rose by a whopping 720,000 barrels per day in June, due to increases from both OPEC and non-OPEC producers. Total output was 97.46 million barrels a day, up by 770,000 barrels a day.

Commercial inventories in May in OECD countries totaled 3.047 billion barrels, up by 6 million barrels from the April total. OECD stockpiles are now 266 million barrels above the five-year average, down by 34 million barrels from the prior month's total. The IEA said that preliminary indications show a "moderate reduction" in June stockpiles.
Much, much more at the link.
Much, much more at the link. As I've said before, the tea leaves suggest that the fundamentals suggest that the price of oil should be much lower than it is. It almost appears "every Arab for himself" with Saudi Arabia taking the brunt of the cuts (wink, wink).

Oil pricing, from EIA:
EIA now forecasts Brent crude oil spot prices to average $51 per barrel (b) in 2017 and $52/b in 2018. West Texas Intermediate (WTI) crude oil prices are expected to be $2/b lower than Brent prices in 2017 and 2018. Daily and monthly average prices could vary significantly from this forecast because global economic developments and geopolitical events in the coming months have the potential to push oil prices higher or lower than the current Short-Term Energy Outlook (STEO) price forecast. --- EIA  
Sempra news: wins $115 million deal to build liquid fuel terminal. Details:
  • Sempra's unit: IEnova
  • 20-year contract
  • awarded by Mexico's Veracruz Port Adminisration
  • construction, maintenance, and operations
  • capacity: will supply 1.4 million bbls of gasoline, diesel, and jet fuel to central Mexico
  • will begin 2H18
  • 500 direct and 2,000 indirect workers will be needed
Texas hyperdive. Enterprise Products Partners, London co. plan new ethylene export terminal on Houston Ship Channel. Also at Zacks.
The proposed terminal would be built at Enterprise’s Morgan’s Point complex, where the company already has the world’s largest ethane marine export terminal.
The Houston company would manage the construction, operations and commercial activities of the new terminal, while Navigator Gas would utilize its fleet of 14 ethylene-capable vessels to deliver ethylene to customers.
The new terminal would connect to Enterprise’s ethylene salt dome storage and ethylene pipeline system, both of which currently are under construction.
The storage facility will have approximately 600 million pounds of capacity, and the pipeline system will connect to ethylene producers and consumers along the Gulf Coast. 
EEP. Spike in price of EEP coming? Or pump and dump?

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  1. Hi, Bruce!

    Any thoughts on this article regarding the increasing use of computerized algorithms in oil trading?

    No rush, and thanks as usual for all of the incredible, elucidating work!


    1. I saw the headline when the story first came out; I never read the article ... until now.

      Outside of currency trading (which really doesn't count), oil is the #1 traded commodity. I think I even had a graphic of that some time ago.

      Algorithms are simply another tool.

      But it is somewhat ironic: now we have money managers trying to figure out the impact "machines" have on oil prices. My hunch is that humans are watching what the algorithms produce and are reacting (emotionally and rationally, depending -- ).

      But I did not read much into the article. The article included this line which sort of encapsulates my thoughts:

      "It's like the boogeyman," said Mr. Pomada. "People tend to blame things that they don't know much about."

  2. It really is ironic. I appreciate your perspective.


    1. I forgot to add that when the oil market takes off, none of those bullish on oil will be complaining about the "machines." They will be too busy taking their profits to the bank.