Minimal Blogging Today; Oil Continues To Surge -- Libya Is The Reason

I will be at "Soak City" all day with the granddaughters and two of their California cousins. No rain, but overcast (good), and fairly warm.

EOG is trading at a new high. Disclaimer: this is not an investment site; do not make any investment decisions based on anything you read here or think you have read here. 

This may be why oil continues to surge, as reported by Platts:

Crude oil output from the Organization of the Petroleum Exporting Countries (OPEC) fell to 30.45 million barrels per day (b/d) in June from 30.57 million b/d in May, as lower volumes from Libya and Iraq more than offset an increase from top producer Saudi Arabia, a Platts survey of OPEC and oil industry officials and analysts showed Tuesday.

“What’s notable about this month’s figures is not the Libyan decline, because that was known since the start of June, but the way the Saudis stepped right in to fill that gap,” said John Kingston, Platts global director of news. “The Saudi role as swing producer becomes more significant every month, as the kingdom puts oil into the market when it’s needed, and takes it out when it’s not. It has been particularly aggressive in this role in recent months.”

Libyan production, which had recovered to around 1.4 b/d in May, plunged by 200,000 b/d in June amid continuing political unrest that has included protests at key oil fields across the country.

We talked about his on July 7, 2013, when we said "Libya is getting out of the oil business."

Reuters is reporting the OPEC will lose market share to North American shale oil in 2014. Somehow that doesn't seem to be a news story. I haven't watch television in quite some time; I certainly have not seen any CNBC so I don't know what the talking heads are saying, but I am quite surprised how few stories (as in "none") there are about the fact that oil futures are pegging oil at $105, moving toward $106. When I last tuned into CNBC some weeks (months?) ago, every talking head seemed to be saying that oil was headed toward the $70's again. Whatever.

There was a huge, huge North Dakota storm in the past 24 hours; severe enough it should affect July production numbers. If interested, the regional papers, The Dickinson Press and The Bismarck Tribune will report the stories. We won't see July production numbers until September; the next North Dakota production numbers, probably released on/about July 15, will be for May, 2013. May was also a challenging month for operators: muddy roads and road restrictions kept operators out of the oil patch much of that month. We'll get an idea how much pipeline has been put in based on production numbers.

For all the grief The Drudge Report gets, it certainly aggregates news nicely. What I get a kick out of is this: Drudge reports no news. He simply links the stories that folks are reading in various areas of the country which are not being seen by those who don't get those newspapers. Perhaps the most interesting and most timely article he links today is the vote on a "living wage" vote in the District of Columbus set for "today." (Drudge refreshes his stories at glacial speed so one never news what "today" is on Drudge.) Wal-Mart planned to open a store (or stores) in DC but has told the district it won't open any Wal-Marts in the district if the district council votes to mandate a "living wage." It will be interesting to see how this goes. My hunch: some compromise will be reached. Much more is at stake than Wal-Mart. I don't know if folks have been to DC, but the city shuts down on weekends and the summer. Sure, there are a lot of tourists there during the summer, but these tourists are not buying hardware, books, Starbucks, etc. The locals, the few that can afford cars, will shop outside the district if retail prices surge due to "living wage" costs and O'Bama Care.

The Daily Beast has a nice story on our US ambassador to Egypt: Anne Patterson. That must have kept the Islamists off-balance, having to deal with a ....a....a... woman.

But while her American defenders credit Patterson with taking a realistic approach to a volatile situation, many in the Egyptian opposition regard her as the person responsible for America’s close embrace of Islamists in Egypt. During the protests that led to the fall of Morsi’s government, her face, crossed out with a red X, became the symbol for many Egyptians of what they saw as U.S. discouragement of their efforts.

 “Some say that street action will produce better results than elections,” Patterson said in a June 18 speech. “To be honest, my government [the US, I presume] and I are deeply skeptical.”

To many in Egypt and some in Washington, Patterson’s comments were only the latest example of her failure to recognize the Morsi government’s bad behavior and her reluctance to use her office to publicly press it to address the grievances of the Egyptian people.

“Rather than understand and remedy the perception that the U.S. is supporting the Muslim Brotherhood, Ambassador Patterson is continuing the age-old U.S. practice in Egypt of being the last man standing to support an authoritarian regime. In so doing, the U.S. is once again putting itself in an increasingly lonely camp, contributing to ongoing instability, and hurting its own image and credibility with the Egyptian people,” Egyptian activist and lawyer Dina Guirgui wrote at the time.

Reuters is reporting that a federal judge has ruled that Apple conspired to raise e-book prices and damages will be assessed. Bad news for Apple. Worse news for the Nook. Oh, I forgot. The Nook is dead. So, I assume e-book prices will now fall, resulting in even less royalties for authors. Oh, well.

From the Platts report linked above:

OPEC kingpin Saudi Arabia boosted output by 250,000 b/d to 9.65 million b/d, the highest volume since November 2012 when output was estimated at 9.82 million b/d, the survey showed. Saudi output typically climbs in summer to meet increased demand from domestic power stations for direct-burning crude. Saudi production was estimated at an average 10 million b/d during May, June, July and August last year.

The latest survey indicates OPEC is overproducing its official 30-million-barrels-per-day ceiling, which has been in place since January 2012, by 450,000 b/d. Adherence to the ceiling, however, is informal as OPEC has not set individual country quotas. This effectively leaves the management of the market to Saudi Arabia, the only country with the ability to make significant adjustments to output.