Active rigs:
| 11/27/2015 | 11/27/2014 | 11/27/2013 | 11/27/2012 | 11/27/2011 |
|---|
| Active Rigs | 65 | 183 | 191 | 185 | 202 |
RBN Energy:
New York State of Contango – The Out of Season Heating Oil Storage Play
The New York market for residential and commercial heating oil is
traditionally tight in the winter months when demand exceeds local
production and supplies are supplemented from storage and
inflows/imports from outside the region.
Coming into winter this year
inventory levels were above normal for the time of year and market
prices are in contango (a condition where future prices are higher than
today) – encouraging further storage. Today we explain how the result is
an extension of traditional seasonal storage trade opportunities and a
shortage of available inventory capacity.
Traders have long taken advantage of seasonal demand patterns for
energy by buying when consumption and prices are low in the off-season
then storing until supplies become tighter during the high demand season
and selling at a profit. Northeast natural gas traders routinely used
to take advantage of higher winter prices for gas that they buy cheap in
the summer months and inject into storage – selling at a premium when
winter weather pushes prices higher. That strategy is getting harder
these days because abundant production in the northeast from the
Marcellus and the Utica is keeping winter prices lower (as we pointed
out earlier this week in “I Walk The Line”).
Another popular trade based on the same principal involves purchasing
heating oil during the summer in the northeast - placing it in storage
and selling when winter demand pushes prices higher. In both cases
(natural gas and heating oil) the success of the trade relies on
seasonal demand outpacing local production during the winter and pushing
up prices enough to cover the trader’s storage costs and a margin to
boot.
The seasonal heating oil trade is popular in the New York region
because the CME/NYMEX heating oil futures contract requires delivery in
New York harbor – meaning that participants have a pretty efficient
hedging tool to lock in the seasonal spreads to profit from the trade.
This year however high crude oil and refined product inventory levels in
a generally oversupplied market are weighing on prompt prices versus
those for future deliveries - a market condition known as contango that
we have discussed several times this year.
In New York the current heating oil market contango is providing an
additional opportunity for traders to profit from storage outside the
traditional summer/winter seasonal play.
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There's Still Lots Of Life In Canadian Oil
There were a lot of energy-related stories throughout
The Wall Street Journal today but none of them were worth linking -- the stories have already been covered in the blog
ad nauseum or they are mostly fluff pieces it seems. There was one exception:
Canadian Oil Sands attracts attention, page B8, very last page of that section and easy to miss. Searching for it on the web, I see that it it is an old story, posted two days ago. In fact, now I vaguely remember seeing it earlier and may have even posted / linked it. Whatever.
More than two dozen potential suitors have expressed interest in making an offer for Canadian Oil Sands Ltd.
, including four “highly credible parties,” according to documents the company filed in an effort to thwart Suncor Energy Inc.
’s hostile bid.
The interest by other parties may slow Suncor’s momentum ahead of a Dec. 4 deadline it has set for a response to its all-stock bid—currently
worth about 4.47 billion Canadian dollars ($3.36 billion)—for Canadian
Oil Sands, the largest owner of the Syncrude oil-sands mining
consortium.
Canadian Oil Sands last month rejected Suncor’s bid
as too low and asked securities authorities in its home province of
Alberta to uphold a “poison pill” provision enacted after Suncor made
its bid that gives shareholders at least 120 days to consider a takeover
offer.
Suncor has cited a lack of competing offers as one reason
why Canadian Oil Sands shareholders should accept its bid, which is
0.25 of a share for each Canadian Oil Sands share. The Alberta
Securities Commission has scheduled two days of hearings starting
Thursday to consider Canadian Oil Sands’ effort to block that bid by
ruling on its updated shareholder-rights plan.
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A Note for the Granddaughters
As long as I've got the
WSJ in front of me, I might as well finish it. This is pretty cool. Our granddaughters had several Barnes and Noble gift cards that they have "collected" over the past year. On Wednesday, their mom took them to B&N to stop until they dropped. Our older granddaughter was thrilled to get the new illustrated edition of the first
Harry Potter novel, as well as a small field guide called
Fantastic Beasts and Where to Find Them, written by "beast" authority Newt Scamanader, based on J. K. Rowling's book. I mention this because the
WSJ has an interview with Eddie Redmayne (Oscar winner,
Theory of Everything, Stephen Hawking) who will play Newt Scamander in an upcoming movie.
I guess you have to hang around middle school teenagers to keep up with current events. But then again, that's always been true. Had I not taught middle school for a few years, I never would have known who Justin Bieber was/is.
*********************************
Finishing
The same
WSJ has a long article on
The Revenant. I think I've blogged about this before. Don't remember. Don't want to go through it again.
Yes, here it is. The
link to the WSJ story story is here.
