Wednesday, July 25, 2018

Reuters Analyst Reads The Blog -- July 25, 2018; US Crude Oil Inventories Drop By A Whopping 6.1 Million Bbls; Nearing The "Magic Number"

Definition: "swing producer." In the past, "swing producer simply referred to production of crude oil. That definition is useful, perhaps, for traders and speculators in crude oil, but the definition is clearly lacking. Oil in its raw form at the well site is not particularly useful. A truck of Bakken oil sitting out on a pad west of Tioga, ND, doesn't mean a whole lot to the consumer in Rome, Italy. What matters, when it comes to "swing producer" and the "real world," is how fast a refined product can be delivered to the consumer. Using that definition, without question, the US is the world's swing producer when it comes to "crude oil." See more at the link in the next item.

Reuters is reading the blog! Last week, this post: The US is the swing producer -- i.e., the shale producers are the world's swing producers. (By the way, Rusty Braziel seems to be suggesting the same; see the RBN Energy link today.) Within days after posting that "fact," this, over at twitter, from the Reuters analyst:

So, are US shale producers now the global swing producer? Machts nichts in this context. The point is that it's great to see Reuters reading the blog. 

Keystone XL: apparently even the Nebraska folks are getting tired of this story. The headline and link: Nebraska Supreme Court agrees to speed up oral arguments in Keystone XL pipeline case.  I've not read the article yet, and probably won't. I find it amazing: the smartest guys in the world -- supreme court judges -- are still not up to speed on the Keystone XL. How long has this been dragging out? That's a rhetorical question; don't reply.

Pending: I believe COP reports earnings tomorrow, and CVX and XOM will report earnings the following day, all before the market opens for the day. Not sure.

Weekly petroleum report, link here:
  • most important data point today, refinery operating capacity: at 93.8%, a bit on the low side
  • gasoline production at 10.3 million bbls (threshold: 10 million bbls)
  • distillate production at 5.2 million bbls (threshold: 5 million bbls)
  • US crude oil inventories: yesterday, the API reported that inventories dropped 3.16 million bbls; the EIA reports that US crude oil inventories decreased by a whopping 6.1 million bbls; now down to 404.9 million bbls. For the longest time, I opined that "350" was the magic number; I now feel comfortable that the new "magic number" is "400." WTI? flat!
  • days of supply, US crude oil: that will be reported later
  • gasoline supplied, four week average: 9.7 million bbls
  • distillate supplies, four week average: 4.1 million bbls
Back to the Bakken

CLR: pretty funny.  UPI headline is click bait -- yes, CLR production came in below guidance but it was due to "wet weather and voluntary restrictions." Once I read the "sub-headline" I read no further. Again, machts nichts. But it certainly unnerved investors: CLR is down almost 5% today. Buying opportunity?

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

Wells coming off confidential list today:
  • 34290, SI/NC, XTO, FBIR Walker 31X-36G, Heart Butte, no production data, 
  • 33956, SI/NC, Crescent Point Energy, CPEUSC David 8-29-32-157N-99W TFH, Lone Tree Lake, no production data, 
  • 33712, 861,  Liberty Resources, Storsul C 158-93-8-5-3MBH, East Tioga, t2/18; cum 62K 5/18;
  • 31954, A, Hess, EN-Vachal-155-93-0532H-7, Alger, t6/18; cum --
Active rigs:

Active Rigs64603273192

RBN Energy: US producers' new, critically important role in global crude oil markets.
U.S. crude oil production has doubled in the past eight years, from 5.5 MMb/d in 2010 to a record 11.0 MMb/d this month — an astonishing 9% compound annual growth rate. But there’s more to the Shale Revolution than higher production. Its most noteworthy characteristic may be a newfound market responsiveness that U.S. production volumes have to price, in which U.S. producers flex their “sweet spots” and an at-the-ready inventory of drilled-but-uncompleted wells (DUCs) that can be ramped up when prices warrant and pulled back when they don’t. This newfound flexibility has profoundly changed the role of the U.S. in global markets. In today’s blog, we take a big-picture look at crude oil production growth, the special ability of U.S. producers to respond to shifts in crude pricing, and the potential for the U.S. to have a stabilizing role in global markets.

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