Saudi Says Economy In Trouble For Medium To Long Term; ND Rig Count At 17; Where's The Beef -- May 11, 2020

Focus on Fracking: weekly edition has been posted. Section on plastics particularly long.

Say what? Fauci says folks should not be wearing masks. I can't make this stuff up.

CLR: 1Q20 reports.

NOG: 1Q20 reports. 

Trump's farm support: government will start purchasing $3 billion worth of farm goods, next week; link here;

Where's The Beef: Omaha Steaks "temporarily" out of many of its beef offerings; link here; years of ordering from Omaha Steaks, I've never seen this before; never, never would have expected it:

Headlines out of Saudi:

• official message:
• low oil demand, prices, coronavirus impact as well as unplanned expenditure on health sector pressured state finances to a level that will be hard to deal with without affecting the economy on medium to long term 
• Saudi reported a record $27 billion monthly drop in its net foreign assets
• seeking to contain a deficit that could approach levels last seen after the previous oil crash (definition of insanity, previously posted)
•  announces a one-million-bbl cut in production for month of June
• some suggest this means Saudi will pump 7.492 million bbls in June (note the false precision)
• austere measures
• will triple VAT on its citizens from 5% to 15%
• will cut cost-of-living allowances for government workers 
• looking to shore up revenue and rationalize spending with initiatives totaling $26.6 billion; link here;
• total savings announced represent about 10% of expenditure initially planned in this year's budget 
• projects delayed
• will also look at re-structuring "special" government employee salaries; these "special" government employees, such as Vision 2030 employees, often paid more than typical state employees
• article mentions Wuhan flu oil demand debacle but does not mention that Saudi is responsible for the oil glut; interestingly, the article also fails to mention the huge loss of tourism dollars during month of Ramadan 
• Saudi Aramco cuts domestic gasoline prices in half; link here; from 1.31 riyals/liter to 0.67 riyals per liter; a riyal, I believe is "worth" about 25 US cents; and, here;

ICYMI: Saudi Arabia running out of money. Link here.  The last time Saudi tried to break US shale, they kept at it for two full years, 2014 - 2016. This time, they barely lasted a month. The definition of insanity.

Iraq: like to try to take advantage of this situation; Iraq has its own problems; government seems to be in disarray

UAE: experiencing jump in Wuhan flu cases;

CLR: will curtail 70% of its crude oil production in May, 2020

Fake news: fake news has gotten so bad that The Bismarck Tribune now points out which of its postings on twitter link to "true" stories

Death: comedy veteran Jerry Stiller, "Seinfeld" star; dies at age 92; no mention of Wuhan flu;

China car sales: up 4.4% year-over-year vs -43.3% in previous month

• Jan - Apr vehicle sales -31.1% y/y vs -11.3% a year earlier (note)

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Back to the Bakken

OPEC basket: $22.91

Active rigs:

24.62	5/11/2020	05/11/2019	05/11/2018	05/11/2017	05/11/2016
Active Rigs	17	66	60	51	27

Wells coming off the confidential list today --

Monday, May 11, 2020: 32 for the month; 82 for the quarter, 309 for the year:

• 36579, drl, Tong 34X-9A, Midway,
• 36577, drl, XTO, Tong 34X-9C, Midway,
• 35879, SI/NC, Zavanna Usher 28-20 5HXW, Patent Gate, t--; cum 40K over 26 days; pretty nice;
• 33807, drl, BR, CCU Gopher 6-2-15MBH, Corral Creek,

Sunday, May 10, 2020: 28 for the month; 78 for the quarter, 305 for the year:

• None.

Saturday, May 9, 2020: 28 for the month; 78 for the quarter, 305 for the year:

• 36637, drl, WPX, Nighthawk 6-34HY, Heart Butte,
• 36575, drl, XTO, Tong 34X-9D, Midway,
• 33808, drl, BR, CCU Gopher 5-2-15TFH, Corral Creek,   

RBN Energy: the baffling impact of oil futures on physical contract prices -- CMA roll adjust and P-Plus.

On April 20, that fateful day in crude oil markets when the CME May contract for WTI at Cushing collapsed to negative $37.63/bbl, the number of contracts involved in the chaos was relatively small. So you might think that most producers sat on the sidelines, watching Wall Street paper traders writhe in stunning financial pain. But not so. Almost all producers saw their crude prices that day crashing in exactly the same magnitude. That’s because the daily price of the CME WTI contract is part of the formula pricing used in a very large portion of crude oil contracts in U.S. markets, both directly and indirectly. There are two formula mechanisms that are commonly used in crude oil sale/purchase contracts that are responsible for that linkage: the CMA and WTI P-Plus. These arcane pricing mechanisms are complicated, but in order to understand U.S. crude markets, it is critically important to appreciate how they work. Today, we continue our deep dive into crude oil contract pricing mechanisms.

The CME NYMEX WTI crude oil futures contract is the underlying benchmark in nearly all U.S. domestic crude price contracts. Differences between futures and physical trading arrangements make pricing physical WTI barrels complex. Two formula mechanisms are commonly used in physical transactions that link directly to the NYMEX settlement prices — the CMA and WTI P-Plus — and so both contract types felt the impact of last month’s price collapse.

The CME NYMEX WTI futures contract is the most liquid — or most widely and actively traded — commodity futures contract in the world, and is so ubiquitous that it also underpins domestic U.S. crude contract markets. It’s a strange symbiotic relationship, in that not only do cash crude prices heavily influence futures prices, but the cash contract price for most U.S. crude is indexed to the futures price. Differences between futures and physical trading, as well as the delivery mechanism that links the two markets, make pricing physical WTI complicated.