Friday, May 15, 2015

A Great Example Of Meaningless Statistics -- May 15, 2015

Market Watch is reporting:
Prices for the U.S. crude-oil benchmark settled lower on Friday, but still tallied a gain for a ninth week in a row—said to be the longest weekly streak of gains in at least 30 years.
Concerns over a supply glut in the market pressured prices, but weakness in the U.S. dollar and a 23rd straight weekly decline in the number of active U.S. oil rigs helped cut losses.
On the New York Mercantile Exchange, June West Texas Intermediate crude CLM5, +0.13% lost 19 cents, or 0.3%, to settle at $59.69 a barrel.
Based on the most-active contracts, WTI crude has now climbed for nine weeks in a row—marking the longest winning streak in at least 30 years, according to Price Futures Group’s Phil Flynn. Similarly, news reports said the weekly streak of gains was the longest since 1983.
Longest weekly streak of gains in at least 30 years. Wow.

I already see this in President Obama's weekly Saturday address, which by the way has also set a record: the longest weekly streak of losing audience share, having set that record last week with the 157th week in a row of losing audience share of those tuning into the weekly Presidential radio address.

A Little Light Reading Following Breakfast

Something To Watch Going Forward -- May 15, 2015

Don noticed this, the narrowing between the price of diesel and the price of gasoline. In all my years of blogging, it seems the price of diesel was significantly higher than least expensive grade of gasoline.

In the graphic below, it appears that the spread between the price of gasoline and the price of diesel is narrowing.

It may simply mean nothing more than supply and demand as we move into the summer driving season.

However, when one looks at
  • GDPNow forecast for 2Q15, forecast for 0.7% growth, and shrinking
  • 1Q15 GDP of 0.1 to 0.2% and possibly will be revised downward
  • industrial output declines (in today's report) for the second consecutive month
  • the marked decline in activity in the US oil and gas industry
One might see something other than the upcoming summer driving season to explain what's going on.

Is it possible the price of diesel is reflecting lower rail activity and lower trucking activity? Someone else noted the problem with the rail industry also.

Perhaps this snapshot in time is nothing more than an anomaly that will go away next week, but if nothing else, something that might be interesting to watch.

China Is Really, Really Big -- EIA

Wow, talk about a slow day.

I'm leaving early to be on my bike to meet my wife and 10-month-old granddaughter at the local library. Every Friday, the baby goes to the library to listen to the librarian read to babies and for the babies to interact with each other. It's one of her many, many outings every week.

Then the three of us go to a restaurant that the 10-month-old likes -- which, it appears -- is any restaurant that offers croissants or French Fries.

For all the folks coming here to read about the Bakken, I apologize for the last few days. Not much being reported.

EIA's "energy cookie" for the day:
China’s robust economic growth and thirst for energy resources in the past decade has driven it to become the top global energy consumer.
China has the largest oil and gas production in the Asia-Pacific region and the largest coal production in the world, but the country’s escalating energy demand, albeit at slower growth levels in the past few years, increases its reliance on imports and need to secure more energy supplies.
China is also in the midst of balancing its need for energy security with environmental concerns and is implementing economic and energy sector reforms to provide more sustainable and long-term growth. --- EIA

TGIF -- May 15, 2015; Industrial Output -- Projected To Be Flat -- Declined For The Second Consecutive Month; Reces.....

It will be interesting to see whether this affects GDPNow's forecast. Bloomberg Business is reporting:
Factory production stalled in April, as American manufacturers were dealt blows by a strong dollar and cheap oil.
The unchanged reading in manufacturing followed a 0.3 percent March gain that was larger than previously estimated, a Federal Reserve report showed Friday in Washington. The median forecast in a Bloomberg survey of 21 economists called for a 0.2 percent increase. Total industrial production declined for a fifth consecutive month amid mining and utilities cutbacks.
This is the big concern, buried deep in the article:
Total industrial production declined 0.3 percent for a second month. It was projected to be unchanged. Estimates ranged from a drop of 0.7 percent to a 0.8 percent gain. Output in March was revised from a previously reported 0.6 percent drop.
The article does not mention that President Obama killed Keystone XL; that Putin has sandbagged the Sandpiper; and, ObamaCare doesn't do much for the US manufacturing sector (whereas the other two would).

Nice story also on Bloomberg Business on two Texas oil towns just 38 miles apart; one booming; one not.

Active rigs:

Active Rigs84191194210173

RBN Energy: update on US gas exports to Mexico.
At a time when market prices have been weakened by a surplus of new natural gas production waiting for demand to develop, Mexico has been stepping up to the plate by increasing imports.  Gas demand for Mexican power generation, industrial use, and commercial and residential space heating continues to increase at a torrid pace south of the Rio Grande, much to the relief of gas producers in the Eagle Ford, the Permian Basin and other U.S. plays within reach of the international border.
Today we provide an update on Mexico’s growing dependence on U.S.-sourced gas, and the implications for producers and midstream companies.
There’s said to be more than 500 Tcf of technically recoverable shale gas in Mexico, much of it in the Burgos and Sabinas basins just south and west of the Eagle Ford. But the shale plays south of the border are said to be geologically complex, and cracking their gas-extraction code is akin to cracking a very sophisticated safe.
Besides, Mexico’s gassiest areas lack the road and water infrastructure that development would require, and (yet another negative) they are rife with drug-cartel gangs and violence.
For now, Mexico, (whose 2014 gas demand averaged 7.2 Bcf/d) is focused on maintaining its sagging domestic gas production (4.4 Bcf/d last year), and on developing the gas pipelines it needs to import increasing volumes of U.S.-sourced gas and move it south to population and industrial centers, where Mexico’s state-owned ComisiĆ³n Federal de Electricidad (CFE) and independent power companies are developing thousands of megawatts (MW) of gas-fired generating capacity to support a growing economy. 
It’s been quite a ride for U.S. gas exports to Mexico that have more than doubled from 2010 to 2014 (900 MMcf/d to 2 Bcf/d) and averaged 2.5 Bcf/d in the first two months of 2015 (up more than 40% from the previous January/February); by 2016, gas deliveries from the U.S. to Mexico are expected to average more than 2.7 Bcf/d (or 1 Tcf/year, according to the U.S. Department of Energy’s Quadrennial Energy Review released in April 2015), and by 2030 DOE sees U.S. gas exports to Mexico doubling again, to 2 Tcf/year or nearly 5.5 Bcf/d.

I saw this yesterday; probably linked it earlier, but I don't remember. Business Insider headline: The Saudis just went nuclear on their Obama snub. The link is here. I'm reading the Jane Hawking biography -- the Stephen-Hawking-of-black-hole-fame-Jane. She devotes a fair amount of the book to the two of them growing up under the specter of the Cold War and being completely frightened by the real risk of a nuclear war between two superpowers. Both she and he became peace activists trying to dial back the nuclear build-up. It would be interesting to see how these 60's peace activists feel about the nuclear arms race in the Mideast that President Obama has given us which the Hawking grandchildren and great-grandchildren will get to face. Nobel Peace Prize for this president. Truly amazing. In the 60's we had two relatively sane superpowers with a MAD strategy; Obama has given two relatively MAD mideast countries a reason to go nuclear.

This is not an investment site. Do not make any investment or financial decisions based on anything you read here or think you may have read here.

So, what's the market doing? DOW down 30 points; oil down 2% but I doubt the WTI average price for May will drop below the "tax-break threshold." 

Was Krugman the only person to ever win a Nobel Prize in economics? To the best of my knowledge, the Prize must have been given only once, and that one time to Krugman. Or maybe CNBC simply can't find any other Nobel Prize-winning economists.

Not much news today. We will see the White House news dump after the news cycle ends promptly at 5:00 p.m. eastern time tonight.

Note for the Granddaughters

I have been on the fence for twenty years, its seems, whether to buy/watch Wes Anderson's Rushmore. Yesterday, I finally broke down and bought a copy at the local Barnes and Noble. I started watching it about 11:45 p.m. last evening; I enjoyed it so much, I stopped watching after 15 minutes so I could enjoy the movie when I was really ready to watch a movie. My wife had been napping or doing something when she came out to check her e-mail. I asked her if she wanted to see Rushmore? She cannot stand Bill Murray but reluctantly agreed.

We watched the same 15 minutes I had already seen, and then I stopped, suggesting we should watch it over the weekend, and not so late at night. She loved it and wanted to see the whole thing. So we were up till 2:00 a.m. or so watching the movie.

Very, very quirky, the movie. One of the "extras" on the DVD is a very, very good Charlie Rose interview with Bill Murray after this film came out.

Coincidentally, I also picked up a copy of F. Scott Fitzgerald's This Side of Paradise while I was at B&N. It turns out there is a "connection" of sorts between Rushmore and This Side of Paradise but it is so obscure, I am sure a) no one else has seen the connection; and, b) when I point it out, they will think I'm nuts.

It's not worth going into that connection now.

I'm a sucker for softcover classics printed on really nice paper in a really nice font with a new foreword or introduction or critical analysis. This particular copy of TSOP had it all, and interestingly enough was a Barnes and Noble imprint, as they say. All for $8.95 and then a 10% members discount.

I can't say I would recommend any of the three (Rushmore,  a new copy of This Side of Paradise, or a B&N membership) to anyone; but, for me they are perfect. Sort of like Omaha Steaks.

Speaking of which. Regular readers know my fascination with Omaha Steaks. I understand the price points quite well. About two weeks ago, there was an Omaha Steak advertisement in the Sunday Parade magazine. They were offering a selection at a price so low I was truly shocked. Even my wife was amazed and she doesn't follow Omaha Steak pricing at all. So, I phoned Omaha Steaks and ordered this particular choice to be sent to my brother-in-law.

End of story.

Last night, I was still tempted by that low-cost selection. There was a limit of two and since I had ordered just one I was "entitled" to one more. I went on-line; to my surprise the selection is not available on-line. It is such a great deal Omaha Steaks was apparently using it as an introductory offer for readers of Parade magazine.

When I spoke to them the first time (when I bought for my brother-in-law), I asked if the offer was "real" and if it was available to regular customers and what the "catch" was. No "catch." I said they must be losing a lot of money on this item; she replied she did not know about that but it had been extremely well received.

Just be forewarned: if you have never ordered from Omaha Steaks be prepared for an endless barrage of additional offers from the individual taking your order.  I think a lot of folks will be turned off by the continued "selling" but I find it somewhat humorous. The Omaha folks have a nice way of bantering with you as they gradually increase your $49 order to $999.

I sometimes wonder if the "oracle of Omaha" hasn't taught them all he knows about marketing.

Poor Excuse -- May 14, 2015; Blogging Will Be Delayed

I was gone most of the afternoon, bike riding, and just got back in. I see too-many-to-count-e-mails from readers regarding the Bakken, mostly from Peter, Paul, Mary, Steven, and Don -- I will get to them within the next 24 hours. I apologize for the delay. I picked up a promising movie (DVD) and an even-more-promising classic to read, and the movie and the book become a poor excuse for delaying entries on the Bakken. Sorry.

I didn't carry my laptop with me like I usually do when I bike. Instead, I stopped by the Apple store in Southlake Town Centre to check on news on the Bakken. I  see that there was only one new permit on today's daily activity report.

I guess I better post the wells coming off the confidential list tomorrow before I forget: wow, this is unusual. It appears there are no wells coming off the confidential list tomorrow (May 15) or May 16. What was going on six months ago? November 15, November 16? Nothing on November 15th that would affect permitting. November 15th was a Saturday. I guess that explains it.

One bit of irony. It appears the Mideast is going nuclear. It looks like a nuclear arms race between Iran and Saudi Arabia. It's a bit ironic, I suppose, that Iraq will be the only major country in the Mideast not to have weapons of mass destruction. LOL. Iraq was the only country that paid a huge price for people thinking it had weapons of mass destruction. Now, our president is encouraging the region to go nuclear.

Fox Network -- May 15, 2015

This really is incredible.

I knew it was "bad" but I never knew it was this bad. Don't just scroll through these numbers quickly; stop and compare the numbers and compare the numbers especially for the 25 y/o-to-54 y/o age group -- these are absolutely astounding.

Viewers in the all-important 25 - 54 age category, primetime:
  • Fox News: 337
  • MSNBC: 76 (not even in the same ballpark as Fox News)
8:00 p.m.
  • Fox News: O'Reilly: 396
  • MSNBC, Chris Hayes: 56
I understand Chris Hayes won't be around much longer.