Wednesday, October 11, 2017

EIA's Monthly Short-Term Energy Outlook And Winter Fuels Outlook -- October 11, 2017; WTI Below $60 Through All Of 2018 -- Industry; Won't Hit $70 Until At Least 2020

WTI to remain below $60 through all of 2018 -- US industry experts. From Reuters via Rigzone:
Nearly two-thirds of U.S. oil executives see crude oil prices remaining below $60 per barrel through 2018 and not hitting $70 until at least the next decade.
The survey, based on a poll of 250 executives at companies that produce, transport and refine oil and natural gas, reflects a shift from last year when many respondents forecast commodity prices would rise and capital spending budgets grow.
U.S. oil prices fell slightly on Wednesday to $50.79 per barrel.
Schlumberger also opined today that it would be "lower for longer." No links; read it but did not think it worthwhile to post it ... until now.

EIA Short-Term Energy Outlook
Winter Outlook

Winter Fuels Outlook:
After last year’s relatively warm winter, our forecast assumes this winter heating season will be more normal and see increased spending on heating oil, propane, and natural gas because of higher fuel consumption and prices. Expenditures are expected to be relatively in-line with an average winter.

We forecast that homes that depend on natural gas for heating will experience a 12% increase in their heating costs compared to last winter.
Gasoline/Refined Products:
Despite the late summer’s hurricane disruptions, petroleum markets have largely returned to normal operations. Gulf Coast refineries reached 86% utilization by the last week in September, which was only 5 percentage points below average utilization for this time of year.

Consumers should expect to see retail gasoline prices continue to decrease from the two-year high of $2.69 per gallon, following Hurricane Harvey. We are forecasting average prices at the pump will fall to $2.33 per gallon by December.

Crude oil production in the Gulf recovered following Harvey, with production increasing by about 70,000 barrels per day in September, putting that month’s average production at 1.7 million barrels per day.

Based on our observations of current drilling and our price expectations, the forecast continues to project that U.S. crude oil production in 2018 will top the 1970 annual production record of 9.6 million barrels per day, with the current output forecast at 9.9 million barrels per day next year.
Natural Gas:
We expect that natural gas inventories will reach 3.8 trillion cubic feet by the beginning of the heating season at the end of this month, in-line with average levels from the past five years.

U.S. natural gas exports are expected to grow this winter and mark the first winter the United States will be a net exporter of natural gas.
U.S. homes that depend on electricity for heating are forecast to see their bills increase by 8% this winter compared with last winter.
Coal exports were up 62% from January to July 2017 compared to the same period in 2016, based on strong global demand.
For 2017, electricity generation from utility-scale solar power is expected to increase by 40% and small-scale solar is estimated to climb by 28%.

Atmospheric CO2 Surges From 401 PPM To 403 PPM -- October 11, 2017

From CO2 Now:

Down from 405.07 last month (August, 2017).

September, 2016: 401.01 ppm.

403.38 - 401.01 = an increase of 2.37 parts per million. Is that even statistically significant? Is that even "reproducible -- in other words, if an independent group of researchers measured atmospherica CO2 from the same location at the same time, would they get the same number?
US Debt: About $20 Trillion?
Top Six Wealth Management Companies: managing $19 trillion. 

ObamaCare Premiums To Rise 25% In California

From The Los Angeles Times:
California’s health insurance exchange said Wednesday it has ordered insurers to add a surcharge to certain policies next year because the Trump administration has yet to commit to paying a key set of consumer subsidies under the Affordable Care Act.
The decision to impose a 12.4% surcharge on silver-level health plans in 2018 means the total premium increase for those policies will average nearly 25%, according to Covered California.
Taxpayers, not consumers, will bear the brunt of the extra rate hike because federal premium assistance for policyholders, which is pegged to the cost of coverage, will also increase.
Statewide, rate increases will vary by insurer and region. What consumers pay depends on where they live, their income, what level of coverage they want and which insurer they choose.

Californians can get their first look at next year’s health plan prices and options on the state’s rate calculator, released Wednesday.
The state’s open enrollment period, which is longer than that for the federal exchange, runs from Nov. 1 to Jan. 31. About 1.4 million Californians buy their own coverage through the state marketplace and nearly 90% receive financial assistance that reduces what they pay.
In August, Covered California announced that 2018 premiums would rise by 12.5%, on average, statewide. That ticked down slightly to 12.3% during regulatory review. But the exchange also warned that the additional increase, averaging 12.4%, would be added to the silver-tier plans if President Trump failed to commit to continued funding for the so-called cost-sharing subsidies that help reduce some consumers’ out-of-pocket expenses. Those payouts total about $7 billion this year nationwide.
Trump has continued paying the subsidies on a month-to-month basis while repeatedly threatening to cut them off and repeal the entire health law. He has referred to the payments as “bailouts” for insurance companies.

Peter Lee, executive director of Covered California, said the surcharge is far from ideal but that the uncertainty in the nation’s capital left the state with no other option.
Don't blame Trump. It's Obama's health care plan, not Trump's. The state of California directed that rates be increased. Trump has not changed the funding. He is simply talking about it. 

Holy Guacamole, Batman -- They Forgot the Convenience Store Division -- October 11, 2017

You know you are rich when you forget to note $2.6 billion  -- that's billion with a "b" -- from The Street --
Shares of Kroger Co. resumed trading on Wednesday, Oct. 11, after accidentally omitting $2.6 billion in revenue for its convenience store business.
At its investor day Wednesday, Kroger announced that it had retained Goldman, Sachs & Co. to explore strategic alternatives, including a possible sale, for its convenience store business.
The press release stated that the business generated 2016 revenue of $1.4 billion. A few hours later, however, Kroger clarified that the convenience store business actually generates sales nearly triple that number.
So, if you were the VP for convenience store sales and were responsible for $3 billion in revenue and your company CEO forgot all about your division when submitting the quarterly report -- any Freudian thoughts about whether your boss likes you or not?

Eight New Permits; Four DUCs Reported As Completed -- October 11, 2017

Active rigs:

Active Rigs593368190185

Eight new permits:
  • Operators: QEP (4); Petro Harvester (3); Slawson
  • Fields: Spotted Horn (McKenzie); Short Creek (Burke); Big Bend (Mountrail)
  • Comments:
Two permits renewed:
  • Enerplus: one Brugh Bear permit in McKenzie County
  • Oasis: one Cornette SWD permit
One permit canceled:
  • EOG: an Austin permit in Mountrail
Four producing wells reported as completed:
  • 30176, 1,003, XTO, Stenehjem 31X-28H, Siverston, t8/17; cum 13K over 30 days;
  • 31524, 1,919, XTO, Stenehjem 31X-28DXA, North Fork, t8/17; cum 19K over 25 days;
  • 32849, 371, Enerplus, Redbelly 152-94-18A-19H-TF, Antelope, t9/17; cum --
  • 32909, 441, BR, Lillibridge 3B UTFH, Blue Buttes, t9/17; cum --

About That OPEC Oil Cut (Wink, Wink) -- Liar, Liar, Pants On Fire -- October 11, 2017

Weekly petroleum report: will be delayed one day. Will be released by the EIA October 12, 2017, due to Columbus Day earlier this week.

Hope springs eternal: from John Kemp --
Most analysts have expressed concern about the re-emergence of oversupply, a renewed rise in crude stocks, and how OPEC and its allies will exit from their current production deal in 2018.
But it is at least possible the market is moving towards a period of undersupply, when demand will be growing strongly, supply will be lagging, and stocks will feel uncomfortably tight.
Headline story, front page, The WSJ: OPEC oil production rose in September despite deal to limit output -- but that's okay -- cartel raises forecast for global oil demand growth for 2017 and 2018.
OPEC crude oil production jumped last month by nearly 90,000 barrels a day, complicating the cartel’s efforts to limit output and curb the global supply glut.
Output by members of the Organization of the Petroleum Exporting Countries rose by 0.27%, to 32.75 million barrels a day in September, compared with the month prior. The increase was driven by higher production in Libya, Nigeria, Iraq and Gabon, according to OPEC’s closely watched monthly oil market report.
OPEC and other major crude producers like Russia agreed nearly a year ago to cap production at around 1.8 million barrels a day below peak October 2016 levels, with the aim of alleviating oversupply and boosting prices. But the deal has been undermined in part by a surge in production in Libya and Nigeria, the two member countries not included in the deal because their oil industries had been damaged by civil unrest.
Yesterday: Iraq and Iran boost oil exports in sales battle with Saudis. And, OPEC asks US drillers to cut back. LOL. 
Iraq and Iran boosted crude exports in September, taking advantage of a slower pace of shipments from rival Saudi Arabia to win buyers in key markets like China and the U.S.
Iraq shipped 3.98 million barrels of crude a day, the highest since December, while Iran’s exports rose to 2.28 million barrels a day, the most since February, according to ship-tracking data compiled by Bloomberg. Saudi Arabia’s exports were 6.68 million barrels a day, the second-lowest for this year, the data show.
Iran and Iraq’s moves to grab market share cast a light on internal tensions within OPEC as Saudi Arabia, the group’s de facto leader and world’s top oil exporter, works to re-balance the global market. State-run Saudi Arabian Oil Co., known as Aramco, will make the deepest cuts in supplies to customers in its history in November, the energy ministry said Monday. [Sure.]
Drill, drill, drill; now, ship, ship, ship: US ships record amount of crude.
As crude oil gushes out of the U.S. like never before, it looks increasingly like North Sea oil will suffer collateral damage.
America exported a record high 1.98 million barrels a day of crude in the week ended Sept. 29, equal to the crude that normally gets shipped every day in the North Sea. Much of the U.S. outflow is going to Asia, which has become increasingly important in recent years in determining North Sea oil prices, effectively sandwiching Brent crude between bearish forces.
The impact of rising American oil shipments on Brent -- for many in the industry the most important crude benchmark -- shows the increasingly disruptive force of U.S. crude in international markets. Washington in late 2015 lifted a 40-year ban on most oil exports, in the process reshaping the world’s energy map with U.S. crude being sent by trading houses such as Vitol Group and Trafigura Group to faraway locations including Switzerland, China and Israel. The U.S. export restrictions were imposed in the aftermath of the 1973-74 oil crisis.

Vegas shooting. Hmmm. There may be a problem with the timeline.

Tax on soft drinks: well, that didn't last long. Chicago/Cook Country roll back tax on sweetened drinks. 

Now, The Bakken

Active rigs:

Active Rigs573368190185

RBN Energy: most diversified E&Ps fare well in second quarter; COP walloped by write-down.
The 13 diversified exploration and production companies we’ve been tracking would have posted second-quarter 2017 pre-tax operating profits of more than $4.8 billion — $1.1 billion more than their profits in the first quarter — if ConocoPhillips, the largest of the 13, hadn’t taken a $6.3 billion write-down in the value of the company’s crude oil and natural gas assets and registered a nearly $2.8 billion second-quarter loss as a result.
With an outlier radically skewing the group’s numbers, it’s best to put our baker’s dozen diversified E&Ps into two baskets — one for the 12 that didn’t take any significant impairments and the other for the lone E&P that took a huge one — and analyze each basket separately. Which is what we do in today’s blog.
The Energy And Market Page

All major indices on track for another record-setting day.

WTI: holding at $51.

GE: the sadness of General Electric in one graphic --