Tuesday, August 15, 2017

Making America Great Again, T+207 -- August 15, 2017

US retail sales soar! Link here. Data points:
  • 7-month high (wow, coincides with President Trump's 7th month in office)
  • strong retail sales aided by strong demand for new autos and Amazon's Prime Day specials
  • forecast: a 0.4% increase; actual: 0.6% increase
  • sales rose 1.2% at auto dealers
  • even retail sales increased 1%
How did futures react? 
  • Dow 30 before the retail sales number: +40 - +42
  • Dow 30 after the retail sales number: +47 
EIA regional production data. Note how EIA has changed definition of regions --
  • new: Appalachia (combines Marcellus and Utica
  • new: adds Anadarko (western Oklahoma)
  • graphic below: number of active rigs
  • amazing: Bakken producing more than 1 million bopd with so few rigs (800 DUCs; and 1,500 shut-in wells)

Bloomberg talks more about shale production and "re-mapping" by the EIA.
Oil output from major U.S. shale plays is poised to reach a fresh record next month, further complicating OPEC’s efforts to support prices.
The Energy Information Administration expanded its monthly forecasts to include the Anadarko shale region spanning 24 Oklahoma and five Texas counties. The region, a well-established oil and gas producing area, has seen an uptick in improved drilling and completion technology. 
The U.S. shale production gain is being led by the oil-rich Permian basin of New Mexico and Texas, where production has risen steadily over the past two years. The agency projects Permian output to rise by 64,000 barrels in September, reaching a record of 2.6 million barrels a day. [Memo to self: update wiki's Hubbert Peak Theory entry, see below.]
The forecast comes just as Saudi Arabia and Iraq, the two biggest producers of the Organization of Petroleum Exporting Countries promised to strengthen their commitment to cutting production.
Crude output in the U.S. meanwhile has climbed in nine of the last 10 months. Prices declined to a three-week low Monday amid global glut concerns. Non-OPEC supply is set to expand over the next five years, while growth in total oil demand will slow.
The EIA report also made another change to reflect shifts in oil and gas production: The agency consolidated data from the Marcellus and Utica areas, known for their natural gas production, and classified it as a single Appalachia region.
Why? Why did the EIA add the Anadarko. The agency could no longer ignore the huge amount of  natural gas coming out of this oily play. From Bloomberg,
America’s shale gas production is about to surge 12 percent. Sort of.
The Energy Department issued a report Monday estimating that the nation’s prolific shale formations will yield 59.4 billion cubic feet a day in September, a massive jump from the roughly 53 billion projected for August.
The difference: The agency began including the more than 6 billion cubic feet a day of gas flowing out of the Anadarko basin of Oklahoma and Texas.
The addition of the Anadarko is testament to the flood of gas flowing out of shale formations known better for their oil riches. Almost half of the country’s shale gas is now being produced in crude plays, pulled out of oil wells as a byproduct.
These supplies, known as associated gas, threaten to quash any meaningful recovery in an already-glutted market.

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