Thursday, October 12, 2017

China Nearing One BIllion Bbls In "Excess" Crude Oil Reserves -- October 12, 2017

Crude oil inventories:

Preaching To The Choir -- But Even This Graph Got My Attention -- October 12, 2017

This is a NASA graph. Keep that in mind when looking at this graph. The graph is not from some crackpot -- unless of course ....

Anyway, it's a NASA graph.

Not only are sea levels falling, but sea levels have been "level" for the past year or so.

Source: iceagenow.

This has happened before. And, yes, the overall trend is UP ... at a rate of 3.4 millimeters / year.
  • One year = 3.4 mm
  • Ten years = 34 mm
  • 100 years = 340 mm
  • 100 years = 34 cm = 13 inches
From 1993 to 2016: a rise of 80 mm
  • 80 mm = 8 cms over 23 years
  • 3 inches over 23 years
  • it seems technology should be able to handle 3 inches over 23 years (or simply not building on the beach)
I assume Algore has already added this graph to his Nobel-Prize-winning Power Point presentation. LOL.

North Dakotans Stand For The National Anthem

Great story at KFGO. Be sure to listen to the interview.
The message even garnered the attention of President Donald Trump, who has been critical of NFL players who take a knee in protest during the national anthem. Trump took to social media to recognize Hanson:
"Thank you Gene Hanson — a GREAT American (and farmer) who is standing up for our flag, our anthem, and our country!"
See also this post

Oasis With Permits For An 8-Well Pad In Willow Creek -- October 12, 2017

Active rigs:

Active Rigs593368190184

Eleven new permits:
  • Operators: Oasis (8); WPX (3)
  • Fields: Willow Creek (Williams County); Reunion Bay (Mountrail County)
  • Comments: Oasis has permits for an 8-well Borden Federal / Fraser Federal pad in NESW 35-153-100; see graphic below


Making America Great -- Total Number Of Laid-Off Workers Receiving Unemployment Benefits Falls To Lowest Level In 43 Years -- October 12, 2017

Source: Washington Examiner.
The total number of laid-off workers receiving unemployment benefits fell to 1.89 million at the end of September, the Department of Labor reported Thursday, the lowest such mark in nearly 44 years.
And new claims for unemployment benefits dropped 15,000 to 243,000 in the first full week of October, according to the agency, as the job market bounces back from hurricane damage even faster than forecasters expected.
It goes without saying that President Trump was not mentioned in the article.

From Reuters:
  • expected: 251,000
  • actual: 243,000
  • previous week: revised downward by 2,000
  • from the article:
    Underscoring the labor market's underlying strength, claims have now been below the 300,000 threshold, which is associated with a robust labor market, for 136 straight weeks. That is the longest such stretch since 1970, when the labor market was smaller.

Re-Balancing -- Down To 40 Weeks -- October 12, 2017

US crude oil inventories: again, the original estimates were way off (posted last night). The EIA weekly petroleum report (a dynamic link) shows that there was a significant (?) decline in US crude oil inventories: declining by 2.8 million bbls. The number of weeks to "re-balance" decreased from 41 weeks to 40 weeks with that data:


Weeks to RB
Week 0
Apr 26, 2017

Week 1
May 3, 2017
Week 2
May 10, 2017
Week 3
May 17, 2017
Week 4
May 24, 2017
Week 5
May 31, 2017
Week 6
June 7, 2017
Week 7
June 14, 2017
Week 8
June 21, 2017
Week 9
June 28, 2017
Week 10
July 6, 2017
Week 11
July 12, 2017
Week 12
July 19, 2017
Week 13
July 26, 2017
Week 14
August 2, 2017
Week 15
August 9, 2017
Week 16
August 16, 2017
Week 17
August 23, 2017
Week 18
August 30, 2017
Week 19
September 7, 2017
Week 20
September 13, 2017
Week 21
September 20, 2017
Week 22
September 27, 2017
Week 23
October 4, 2017
Week 24
October 12, 2017

Gasoline, days of supply (source):

The Political Page, T+264 -- October 12, 2017

Death by a thousand cuts: Trump to start unwinding ObamaCare with executive orders. Following through on his campaign promises even as his party does not.

Twitter suspends account of woman involved with Harvey Weinstein. Fingerprints of Hillary's War Room all over this one.  Headline: Weinstein sex scandal exposes Hollywood's wall of silence. The good news: the story is not going away. The victims won't let it go away and unlike the women involved with Bill Clinton, the Weinstein women are well known and powerful in the movie industry. [Later: the story that Twitter suspended the account of Rose McGowan was a bit disingenuous. It appears the account was suspended within the rules of Twitter; it was suspended for 12 hours, but Ms McGowan still had her account -- she was still allowed to tweet, but rules were more strict during those 12 house. Her original offense (and it was probably picked up by a computer) was the "fact" she was posted the telephone number of a private individual). From what I've read, the suspension was a non-story; has now been resolved; and, the offense was a fairly serious offense, as social media things go. Probably had nothing to do with Hillary or her War Room.

Headline: no Obama documents in Obama library? Historians puzzled by Chicago center plans. The headline is a bit misleading. The documents will be digitized. Original documents will be elsewhere. This is how Fox News loses its objectivity, at least as far as I am concerned. I think I have visited only one presidential library -- I found the experience low on my list of things of how I would like to spend the day.

Clash: Turkey and the West clash -- pleasing Russia and Iran.
Here’s one measure of where Turkey stands in today’s world.
Russian and Iranian citizens are free to enter the country without a visa. Americans, following the recent spat over the detention of a U.S. consulate employee, are essentially barred from traveling to their fellow North Atlantic Treaty Organization ally.
And, a WSJ reporter is sentenced to prison in Turkey for story on Kurds. This is most disturbing:
Mr. Erdogan, however, entertained high hopes for a reset under President Donald Trump, who refused to criticize Turkey’s deteriorating human-rights record. These expectations seemed to be validated as recently as Sept. 21, when Mr. Trump proclaimed at a meeting in New York that Turkey and the U.S. are “as close as we have ever been” and Mr. Erdogan reciprocated by praising “my dear friend Donald.”
NAFTA: falling apart? Good riddance.

August, 2017, Crude Oil Production Data Has Been Posted -- October 12, 2017

Director's Cut: August, 2017, data posted; significant increase in production, month-over-month.

Active rigs:

Active Rigs593368190184

RBN Energy: rejection economics and capacity constraints will swing ethane prices.
As new ethane-only steam crackers come online and ethane exports accelerate, ethane demand is ramping up from 1.3 MMb/d today to somewhere between 2.1 and 2.3 MMb/d in 2022. The good news is that a lot of new ethane supply is becoming available — from high-Btu Permian associated gas, more gas from other oil-focused plays, and of course rapidly growing Marcellus/Utica production.
Depending on what happens to oil and gas prices, somewhere between 2.5 and 3.2 MMb/d of “potential” ethane could be available by 2022 to meet that demand. So, no problem, right? Not so fast. Some of this potential ethane will be very expensive to get to market, and some won’t be able to get to market at all due to pipeline capacity constraints. How these market dynamics play out raises the possibility of wide swings in ethane prices.  Today we will explore how this may play out.
We have talked a lot about ethane and its unique market dynamics in the RBN blogosphere — it’s the only energy commodity that can morph from being sold as natural gas to being sold to petrochemical plants as a liquid feedstock.
This is Part 3 of a series in which we look forward based on RBN’s most recent forecasts of ethane supply and demand.
In Part 1 we discussed one of the most important factors that will indicate how the current ethane market transformation will take place — namely, the ratio of Mont Belvieu ethane prices to the Henry Hub natural gas price on a per-Btu basis. This ratio is an indicator of the relative value of ethane as a petrochemical feedstock versus ethane sold as natural gas (ethane rejection). The higher the ratio of ethane to natural gas prices/Btu, the greater the volume of ethane that is recovered as a liquid feedstock for the petrochemical industry. That ratio is up from 1:1 last year to 1.4:1 this year, and that shift has been a major driver for increasing ethane production, which is up about 90 Mb/d (2017 year-to-date versus 2016 average), or 70% of the growth in total NGL production growth of about 130 Mb/d. In other words, ethane has been responsible for most of the increase in NGL production over the past year, with most of the volume coming from ethane that previously was being rejected.
Then in Part 2 we looked at what is happening on the demand side of the ethane equation, including the timing of new steam-cracker startups, how much additional ethane they will use, the pace of ethane export growth, and the trends in the cents-per-pound margin for producing ethylene from ethane.

August, 2017, Data Is Posted -- Director's Cut -- Total North Dakota Crude Oil Production Increased A Whopping 3.5% Month-Over-Month

Director's Cut for August, 2017, data.

Link here.

Story over at The Bismarck Tribune, data points:
  • The Bismark Tribune calls the increase slight; in raw numbers, the increase is slight but the percentage increase is quite remarkable; again, younger generation does not understand percentages
  • the natural gas capture statistic on BLM land has worsened significantly; it was remiss by the Tribune to not mention this
  • the Tribune did not mention that the number of DUCs and wells shut-in for various reasons totals almost 2,400 wells
The usual disclaimer applies. I do "this" quickly and there will be typographical and factual errors. If this is important to you, go to the source.

Oil production
  • August, 2017: 1,0084,690
  • July, 2017: 1,048,099
  • Delta: 36,591 bbl/day increase; +3.5%
  • compare with previous month -- last month (July, 2017), the delta: 14,653 bbl/day increase; +1.4%
Producing wells:
  • August, 2017: 14,080 (preliminary, if it holds, new all-time high)
  • July, 2017:13,992
  • Delta: an increase of 88 wells; 0.4% increase
  • compare with previous month --- last month (July, 2017), the delta: an increase of 55; 0.6%
  • September, 2017: 104
  • August, 2017: 101
  • July, 2017: 146 (huge jump)
Oil price:
  • today: $41.50
  • September: $39.56
  • August: $37.93
  • July: $35.83
  • June: $34.72
Rig count:
  • today: 57
  • September: 56
  • August: 56
  • July: 58
  • June: 55
Wells not producing:
  • waiting on completion: 863; down 26 from the end of July to the end of August
  • estimated inactive well count: 1,498; up 20 from the end of July to the end of August
Takeaway capacity:
  • August data: including CBR to coastal refineries is more than adequate
  • July data: including CBR to coastal refineries is more than adequate
  • June data: including CBR to coastal refineries is more than adequate
  • May data: including CBR to coastal refineries is more than adequate (major change in verbiage)
Natural gas capture:
  • statewide: 86% (trending down)
  • FBIR: 77% (huge disappointment; was 82% last month)
  • goal: 88% through October 31, 2020; then 91%
  • comment: the trend has worsened -- large amount of flaring on BLM land

It's Always A Surprise -- October 11, 2017

In about ten (10) hours we will get the official EIA data when the "Weekly Petroleum Report" is released. If the EIA data mirrors the industry data, there will be a surprise increase in US crude oil inventories. From Bloomberg:
Oil pared gains after an industry report was said to show a surprise increase in U.S. crude inventories.
Prices pulled back in after-market trading following the release of data from the American Petroleum Institute Wednesday, which was said to show crude stockpiles increased by 3.1 million barrels last week. A Bloomberg survey estimated that U.S crude stockpiles slid by 2.4 million barrels last week.
Crude supplies in Cushing, Oklahoma, the biggest U.S. oil-storage hub, climbed by 1.22 million barrels, the API data showed. That would be a seventh straight increase, if Energy Information Administration data released on Thursday confirms it.
“It was a little bit of a surprise. The last two weeks of exports-- I don’t think will be maintained. I think this is a reflection of that to a certain extent,”  Kyle Cooper, director of research at IAF Advisors in Houston, said by telephone. The recent builds at Cushing and the potential for another “is certainly a bearish factor for WTI.”
On Wednesday, OPEC said in its monthly report that 2018 demand will be about 200,000 barrels higher than previously predicted, and that output caps adopted by most producers are trimming a global glut. Yet at the same time, the EIA raised its forecast for U.S. crude production in 2018.
If this is accurate -- that US crude oil inventories have increased, it supports the view that WTI will not reach $60 by the end of next year (2018) and won't hit $70 until at least next decade. Previously posted.

Once the EIA data is posted tomorrow, I can calculate the length of time it will take to rebalance supply / demand.