Friday The Thirteenth, February, 2015; New Light Sweet Crude Oil Trading Market Developing In Houston; Canadian Tar Sands Feeling Pinch

WMB increases its dividend by a penny. See disclaimer. In early 2010, this company paid 10 cents/share; with the penny increase, the dividend is up to 58 cents/share. They raised it even during one of the worst slumps in oil prices ever.

Biggest economic news story yesterday: hardly a word said on the surge in first time unemployment claims; up 25,000; far more than forecast. And nary a word.

Apple leads in the metrics that count. This one is absolutely stunning. Of all the money made on cellphones -- i.e., PROFIT -- Apple captured 93% of worldwide profit on cell phones. Samsung was second, capturing 9%. The numbers (93 +9) add up to more than 100% because nearly all of the other companies reported losses. I find this absolutely stunning. Think about that: 93% of worldwide profits on cell phones was streaming to Apple. If 93% of worldwide gasoline profits were streaming to Exxon -- would  that get anyone's attention. Oh, yeah.

A trifecta?

• US intelligence admits it was surprised by Yemen's fall
• ISIS is "JV" -- we could take them out any time we wanted -- President Obama
• Beghazi? What does it matter -- President-hopeful Hillary

Market?

• futures up
• oil up
• Tesla down 

Pinocchios?

• Brian Williams
• Hillary Clinton
• Elon Musk 

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RBN Energy: new light sweet crude oil trading market developing in Houston.

A new light sweet crude oil trading market is developing in Houston at the Magellan Midstream Partners East Houston terminal – delivery point for that company’s Longhorn and BridgeTex (50/50 owned with Plains All American) pipelines delivering crude from the Permian Basin. Light sweet crude from the Permian is also known as West Texas Intermediate (WTI) the domestic U.S. benchmark crude - widely traded at Cushing, OK where it underpins the CME NYMEX futures contract.  Today we review the developing market and the price relationships that underpin it.

We have previously discussed the possibility of a new crude benchmark in Houston as well as the challenges that Houston faces as a destination for as many as 2 MMBbl of new crude streams flooding into the region from U.S. domestic shale and increased Canadian production over the past four years. There has been talk in the past two years of the CME NYMEX developing a new crude futures contract based on delivery in Houston – with the Enterprise ECHO terminal often discussed as a potential delivery point  but so far that has not panned out. There is little disagreement in the market that Houston could use a definitive benchmark crude to set prices at the Texas Gulf Coast – it’s just that no clear favorite crude grade or location has emerged to take that role.

That may be changing now as more active trading takes place at the Magellan East Houston terminal since increased crude supplies started showing up on the 300 Mb/d BridgeTex pipeline from Colorado City in the Permian in mid-December 2014. Recall that the BridgeTex pipeline actually came online earlier in 2014 but was not able to deliver significant quantities of crude out of the Permian until the Plains All American Sunrise pipeline opened up capacity from Midland, TX to Colorado City. Up until that point pipeline takeaway capacity from the Permian had been constrained by limited outflows on the 275 Mb/d Magellan Longhorn pipeline from Crane to Houston and the older traditional route to the Midwest Cushing, OK trading hub on the 450 Mb/d Basin pipeline. Rapidly increasing Permian crude production trying to find a route to market caused congestion in Midland and prices there were heavily discounted versus Cushing as producers bid each other down to get space on the pipeline. The opening up of the BridgeTex and Sunrise pipelines in December has reduced the congestion and brought Midland and Cushing prices more into line as well as bringing significant new supplies of Permian crude into Houston.

The full story at the link.

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Active rigs:

	2/13/2015	02/13/2014	02/13/2013	02/13/2012	02/13/2011
Active Rigs	137	188	183	205	165

Wasn't Apache one of the darlings on Wall Street this past year? Rigzone is reporting: Apache slashes 2015 rig count: 

Apache Corp, one of the top U.S. shale oil producers, said on Thursday it would slash capital expenditures and its rig count in 2015, in response to the collapse of crude oil prices.

The company, which reported a multibillion-dollar net loss but adjusted earnings that beat Wall Street's estimates, also said it would not divest its overseas businesses, with one possible exception: Australia.

Crude oil prices, down about 50 percent since June, prompted Apache to cut its 2015 capital expenditures by 60 percent and slash its fleet of drilling rigs by 70 percent.

The company is setting aide plans to sell or spin off its Egyptian and North Sea businesses, as they generate much-needed cash.

Cenovus Energy will cut 15% jobs, freeze salary hikes. Rigzone is reporting:

Cenovus Energy Inc, Canada's second-largest independent oil producer, reported a quarterly loss that ballooned eight times and said it would cut 15 percent jobs, freeze salary hikes and cut discretionary spending as it adjusts to the slump in global crude prices.

Cenovus has already slashed its 2015 capital budget twice, which is expected to delay development of some of its tar sands properties, and on Thursday said further cuts were possible if oil prices continue to fall or remain low for an extended period.

The company joins a host of Canadian and U.S. oil and gas producers in scaling back spending plans as crude oil prices have more than halved since peaking in June last year. Analysts have also cut their forecasts for average oil prices in 2015 and 2016, citing global growth concerns, a strengthening dollar and ample supply.