Thursday, November 9, 2017

The Market And Energy Page, T+292 -- November 9, 2017

Another one of Aesop's fables -- updated for the 21st century:

Some blame the stock market plunge today (0.5% on the Dow) on the realization the Trump tax plan is dead (the GOP plan is on "life support"). But once traders get over the shock and realize the Trump tax plan was probably a "sour" plan anyway, the market will get back on track. I can hardly wait until traders realize Trump is going to be a one-term president. (Hint: huge buying opportunity.)

What me, worry?

Already, futures are back in the green.

For Those Who Believe It's Important, The Latest Atmospheric CO2 Readings -- November 9, 2016

For some reason "CO2 NOW" has not yet posted October, 2017, data. However, Scripps has:

One year ago, October, 2016, the reading was 401.57. That's a 0.7% increase year-over-year, 2017-over-2016.

Two years ago, October, 2015, the reading was 398.29. That's a 0.8% increase year-over-year, 2016-over-2015.

I assume most of the CO2 emissions are coming from China. Germany, which had shown decreasing CO2 emissions, has now flattened out, due to shutting down nuclear plants and turning back to brown coal.

Supertanker, After Two Years, Finally Unloads Crude Oil Cargo -- November 9, 2017

This is a cool story for anyone interested in oil and the Mideast. It's in the Financial Times and will probably disappear at some point. It is archived. Data points:
  • Mideast often uses sea-going tankers to store crude oil when prices are low
    • Seaways Laura Lynn: a supertanker as long as the Empire State building is high
    • has sat laden with oil off the coast of Oman for more than two year
    • storage for cargo of more than 3 million bbls of oil
    • the Laura Lynn is 50% larger than the second largest (and far more commnon) size of supertanker
    • the Laura Lynn is one of only two ultra-large crude carriers (ULCC) still in ocean-going sercie
    • converted into fixed-position storage and offloading service vessels for offshore oilfields
  • Vitol, private trading house run by British-based executive Ian Taylor, chartered the ship when the oil glut intensified in early 2015
  • the vessel was parked near the Strait of Hormuz for more than two year
  • this week, Vitol finally blinked: satellite tracking noted that the shiop rose out of hte water, suggesting that it had suddenly unloaded the majority of its oil
  • the 3 million bbls of oil would have been moved to smaller tankers to "hungry" refineries, which after a three-year feast during the oil glut are finally having to pay up to get the bbls they need
I have rarely blogged about Vitol before, including this post which provided some nice background to today's story.

For a story on another ULCC, see this post.

A Graphic Is Worth A Thousand Words, T+292 -- November 9, 2017

Second most misunderstood president in modern history.

From Yahoo!Finance (top story over at Yahoo!Finance when this screenshot was taken):

Rich States, Poor States

I've posted this graphic before and I will probably post it again. I hope the same source provides an update in 2018. I think it will be tough for North Dakota to move up in the rankings, but Texas should easily move up.  It's hard to believe but with the new state taxes, California and New Jersey could each more down, and New York might up. With some significant bankruptcies on the horizon, Connecticut could move lower. See these links:

Gasoline Demand -- November 9, 2017

Gasoline demand (link here):
  • significantly higher than same period last year; and,
  • interestingly, trending slightly higher
  • if 2016, was a record year for gasoline demand in the US, it looks like the latter part of 2017 could push 2017 into a strong second; due to huge difference in first half of the year, unlike that 2017 will set the record but it could be close

Natural Gas Pipeline Update

There is simply too much activity in the natural gas sector for me to keep up with. For those following that story, here's an update on ETP's Rover and Mariner East II. I probably wouldn't have taken time to link the story but the Rover pipeline is a big, big deal. Think DAPL for natural gas, I suppose.

The Apple Page

Jim Cramer has talked about the "$100-phenomenon." He says he looks for good companies whose shares are selling for $90 +/-, knowing that "$90-shares become $100-shares." It's simply a human quirk. As shares in publicly held companies approach $100, for some reason, investors get interested in buying the shares, and push the price to $100.

Likewise, as Apple approaches the trillion-dollar market cap the company will get more and more attention in the news, especially on CNBC. It's free advertising. The chatter will encourage investors to buy AAPL for a variety of reasons, not least of which to be able to brag to their friends that they own shares in the "only" trillion-dollar company.

Watch for Jim Cramer to start talking about this on December 15th. Just saying.

For All Those Folks At CNBC Who Doubted Apple's iPhone X

That's just a couple of highlights. It's spooky-scary how much Apple is bringing out, and how fast they are evolving. See more at macrumors and scroll down just for the headlines. Tim Cook is on a roll.

Seven New Permits; Ten Permits Renewed; One DUC Completed -- November 9, 2017

Active rigs:

Active Rigs523765193182

Seven new permits:
  • Operators: CLR (5); Oasis; EOG
  • Fields: North Tobacco Garden (McKenzie); Banks (McKenzie); Parshall (Mountrail)
  • Comments: CLR has permits for a 4-well Durham pad in section 2-151-99; as well as a permit for another single Durham well in that same section (see graphic below)
Ten permits renewed:
  • Murex (4): an Iner Skari permit; a Laura Skari permit; a Vernon E Skari permit; and, an Evar P Skari permit, all in McKenzie County
  • Resources Energy (2): an Armstrong permit and a Border Ranch permit, both in Divided County
  • Denbury Onshore (2): two CHSU 13 permits, both in Bowman County
  • Nine Point Energy Can-Am: a Novak permit in McKenzie County
  • Petro Harvester: a STR1 permit in Burke County
One producing well (DUC) reported as completed:
  • 33657, 552, Resonance Exploration, Resonance Lodoen 3-32H, Westhope, Spearfish/Madison, Bottineau County, t8/17; cum --

The Durham pad graphic:

Other wells in the graphic:
  • 23477, 493, CLR, Durham 2-2H, North Tobacco Garden, t4/13; cum 258K 9/17;
  • 24834, 214, CLR, Durham 3X-2H, North Tobacco Garden, t4/13; cum 149K 9/17;
  • 20973, 1,138, CLR, Durham 1-2H, North Tobacco Garden, t12/11; cum 200K 9/17;
  • 24490, 1,681, CLR, Durham 4-2H, North Tobacco Garden, t3/14; cum 328K 9/17;
  • 24491, 1,113, CLR, Durham 5-2H, North Tobacco Garden, t3/14; cum 232K 9/17;
  • 28735, 1,027, CLR, Durham 7-2H, North Tobacco Garden, t5/15; cum 292K 9/17;
  • 28736, 836, CLR, Durham 6-2H1, North Tobacco Garden, t5/15; cum 173K 9/17;

The Market And Energy Page, T+292 -- November 9, 2017 -- China To Invest $83 Billion In West Virginia Shale Gas Development (I Guess, In Case All That Solar Energy Talk Doesn't Pan Out)

Trump's tax cut bill on "life support."

Free fall: CNBC talking like the market is in free fall. The Dow is down about 1%. Nasdaq is down about 1.4%.

Jobs: first time unemployment claims -- surge; up 10,000 to 239,000
  • forecast: 232,000
  • actual: 239,000
  • four-week average: declined 1,250 to 231,250, the lowest point for the average since 227,750 in the March 31, 1973 week
Comments: so, with ...
  • Trump's tax bill on "life support";
  • the stock market plunging;
  • first time unemployment claims surge; so ...
  • ... great opportunity for Janet Yellen to raise rates in December (why not?)
Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on anything you read here or think you may have read here.

Markets: so, on a day when CNBC says the market is plummeting (about 1% drop), are there any issues hitting new highs? Let's see: 56, including Duke Energy;  DR Horton; SRE. It's possible many of those hitting new highs, hit their new highs early in the morning only to pull back later.
  • new lows: 53
  • buying opportunity
Worth re-posting: I was alerted to this by a reader -- huge story:
China Energy, the world’s leading power company, announced Thursday it plans to spend more than $83 billion on shale gas and chemical projects in West Virginia, a deal that represents a massive foreign investment in American energy. A memorandum of understanding between the the company and American officials was signed as President Trump meets with his Chinese counterpart. The agreement is part of a broader package of deals signed between the two nations totaling well over $200 billion. The investment is expected to stretch over two decades. The $87 billion will be spent on power generation efforts, chemical manufacturing facilities and liquefied natural gas storage projects.
Deserter: one person who may have a chunk of money to spend on investments (and lawyers): self-admitted US Army deserter Sgt Bowe Bergdahl who walked. He could receive $300,000 in back pay. What a great country.


From: A New Literary History of America, edited by Greil Marcus and Werner Solors, c. 2009, p. 569

The Johnson-Reed Act, May 26, 1924, was the culmination of a long campaign to designate certain ethnic groups foreign to the United States. It reduced immigrant admissions to 2% of the population of each nationality already present in the United States, as enumerated in the 1890 US Census. Data points:
  • this drastically curtailed immigration from countries in southern and eastern Europe, which included high numbers of Catholics and Jews
  • the act excluded all aliens who were ineligible for citizenship, which shut out almost all Asians (there were exceptions) because by 1924 US courts had ruled that Chinese, Japanese, and Indian immigrants were not white and therefore could not naturalize
  • the act called for the development of a system of immigration quotas proportionate to the allegedly discrete European national origins of the contemporary American population
  • nonwhites: including those of African and Asian ancestry born in the US and therefore citizens were not considered part of the American population when the quotas were being drawn up
  • the act, partly in deference to agricultural interests, put no numerical limitation on immigration from countries in the Western Hemisphere (like Mexico) and from American colonies, ...
  • ...but with the advent of the US Border Patrol, criminalized migrant workers of Mexican descent in the Southwest and broadened antimiscegenation statutes targeted at workers from the Philippines

This Explains It -- November 9, 2017

This is a most incredible story. "Incredible" as: does not seem "credible."

Part of the story does not ring true. The fact that this product is pretty much "no longer" available -- that part is true. I check daily. The statement by the writer suggesting that Lego has no plans to continue production of this set sounds plausible. The reason that Lego provides for discontinuing this incredibly successful set does not sound plausible at all. I think something else is going on.

We were able to get this one, but it was very, very fortunate and required a phone call to Lego.

You Can Lead A Horse To Water ...

After badmouthing the GOP tax cut bill for the past year, CNBC now seems surprised that the bill will be delayed or scuttled altogether. What did CNBC think would happen if the mainstream media convinced Americans that the GOP tax cut bill was bad?

I now understand "identity politics."

An extended family member who dislikes Trump (putting it mildly) complained that the tax bill favored the "rich" but is now upset that the tax bill is likely to be killed.

Making it worse, I reminded him that this is the one chance for taxes to be cut. If a tax cut doesn't happen now, it certainly isn't going to happen under the next administration which is likely to be a non-Trump administration. As Hillary keeps reminding us, most Americans voted for her, not Donald. Apparently most Americans like higher taxes.

Wow, Stuff I Never Knew About This Costly Lesson -- November 9, 2017

From Reuters via Twitter:
Two decades ago, BP set out to transcend oil, adopting a sunburst logo to convey its plans to pour $8 billion over a decade into renewable technologies, even promising to power its gas stations with the sun.

That transformation - marketed as "Beyond Petroleum" - led to manufacturing solar panels in Australia, Spain and the United States and erecting wind farms in the United States and the Netherlands.

Today, BP might be more aptly branded "Back to Petroleum" after exiting or scaling back its renewable energy investments.
Lower-cost Chinese components upended its solar panel business, which the firm shed in 2011. A year later, BP tried to sell its U.S. wind power business but couldn't get a buyer.

"We made very big bets in the past," BP Chief Executive Bob Dudley told Reuters in an interview. "A lot of those didn't work. We're not sure yet what will be commercially acceptable."

The costly lesson of the biggest foray yet by an oil major into renewable energy was not lost on rival firms.

Even as governments and environmentalists forecast a peak in oil demand within a generation - and China and India say they may eventually ban gasoline and diesel vehicles - leaders of the world's biggest oil firms are not buying the argument that their traditional business faces any imminent threat.

A Reuters analysis of clean energy investments and forecasts by oil majors, along with exclusive interviews with top oil executives, reveal mostly token investments in alternative energy.
Today, renewable power projects get about 3 percent of $100 billion in combined annual spending by the five biggest oil firms, according to energy consultancy Wood Mackenzie.

BP, Chevron, Exxon Mobil, Royal Dutch Shell and Total are instead milking their drilling and processing assets to finance investor payouts now and bolster balance sheets for the future. They believe they can enter new energy sectors later by acquiring companies or technologies if and when others prove them profitable.
"There is no sign of peak demand right now," said Chevron CEO John Watson, an economist by training, who is retiring in early 2018. "For the next 10 or 20 years, we expect to see oil demand growth."
Much more at the link. 

Thursday, November 9, 2017 -- China To Spend $83 Billion In Shale Gas Development In West Virginia

The market: futures suggest traders are seeing something they don't like -- or just taking some profits. 
Active rigs:

Active Rigs523765193182

RBN Energy: northeast gas pipeline takeaway capacity set to balloon this winter. (Archived with great graphic.)
Marcellus/Utica natural gas production volumes this past Saturday (November 4) set a record high of more than 23 Bcf/d, according to pipeline flow data. As a result, overall Northeast production flows on the same day also posted a milestone, with volumes approaching a record 25.3 Bcf/d. This is up ~2.7 Bcf/d from where they started the year. These gains have been made possible because of the numerous pipeline projects that have added takeaway capacity from the region, about 2.4 Bcf/d since last winter alone. Moreover, another ~4.3 Bcf/d in new takeaway capacity either was approved for in-service last week or is expected online before March 2018. Even at partial utilization through the winter, that’s a lot of capacity that could flood the market with new supply. Where is all that capacity headed? In today’s blog, we look at recent and upcoming capacity additions that will affect the gas market this winter season.
At this time last winter, Northeast gas production had just recovered from its seasonal dip that happens in the fall “shoulder season” — the time of the year when summer cooling demand is waning and winter heating demand has yet to show up. After an initial bump in January and February 2016 to more than 20 Bcf/d, gas production flows from the region, based on pipeline flow data from our friends at Genscape, pulled back to around 19.7 Bcf/d and hung right around there for much of the year. Then, storage constraints and mild demand, along with maintenance-related pipeline outages, pushed volumes down to 19 Bcf/d in October 2016. By November, however, they had recovered to that February 2016 level just above 20 Bcf/d, and over the winter months, through March 2017, regional production grew by a little more than 500 MMcf/d to about 20.8 Bcf/d. That compares to a 2.0-Bcf/d uptick in production during the winter of 2015-16 and more than 1.0 Bcf/d the year before that in the winter of 2014-15.
Fake news: lead story at Yahoo!Finance right now, a Bloomberg story with this headline -- "Trump's $250 billion China haul is big number, little substance." We are barely into the start of the visit, and already that conclusion.

Real news: The Bloomberg article failed to mention this story in ibttimes: Trump's China visit: Boeing inks $37 billion deal to sell 300 aircraft. Three hundred aircraft. Also, later, this story: China Energy, the world’s leading power company, announced Thursday it plans to spend more than $83 billion on shale gas and chemical projects in West Virginia, a deal that represents a massive foreign investment in American energy. A memorandum of understanding between the the company and American officials was signed as President Trump meets with his Chinese counterpart. The agreement is part of a broader package of deals signed between the two nations totaling well over $200 billion. The investment is expected to stretch over two decades. The $87 billion will be spent on power generation efforts, chemical manufacturing facilities and liquefied natural gas storage projects.

More real news: Eurozone economy seen expanding at fastest pace in a decade -- WSJ. I was disappointed to see the pathetic GDP numbers that are being touted as "huge expansion". Maybe all this talk of "fastest expansion in EU" is more fake news. Or, I suppose, it depends on how one sees "fastest pace."
The European Union said Thursday that it is poised to beat 2017 economic growth expectations, with strong private consumption and the global recovery propelling the fastest pace of eurozone expansion in a decade.
The EU’s regular forecast said gross domestic product in the 19-member eurozone would grow by 2.2% in 2017, beating its expectation of 1.7% in the previous forecast in May.
Tax cut update: tea leaves suggest nothing will happen this year, but at least we are not talking about tax increases which would be the story if Hillary, Chuck, Nancy and Pocahontas were in charge.

If Necessary, The Bakken Can Grow By 100,000 Bbbls / Day On A Monthly Basis -- NDIC

Link here.
"We should see oil production in a growth mode, 10-15,000 b/d month on month is where we expect to be," Helms said, adding that the North Dakota shale industry would need WTI at US$60 a barrel to start expanding production beyond the 1.1-million-bpd mark. "That's really the magic number that really begins to push us to 1.6 or 2 mil b/d." -- Lynn Helms.
Total Primary Energy Demand To Increase By 35% -- OPEC

Total primary energy demand is set to increase by 35 percent in the period to 2040, according to the 2017 OPEC World Oil Outlook report.
The rise, which will be driven by expansion in developing countries, will see demand grow from 276 million barrels of oil equivalent per day to 372 MMboepd.
Within the grouping of developing countries, India and China are the two nations with the largest additional energy demand over the forecast period, both in the range of 22 to 23 MMboepd, the report stated.
Long-term oil demand has been revised upward by 1.7 million barrels of oil per day, compared to WOO 2016, with total demand at over 111 MMbopd by 2040, and oil is expected to remain the fuel with the largest share in the energy mix throughout the period.
The report also forecasts that the demand for OPEC crude is anticipated to expand to 41.4 MMbopd by 2040 and US tight oil will peak just after 2025. In the period to 2040, the required global oil sector investment is estimated at $10.5 trillion.
How Bizarre Will This Get?

Headline from WSJ: prosecutors seek plea deal with Manafort's former son-in-law. Next, I suspect we will see a headline suggesting that Mueller is seeking a plea deal with the wife of a friend of a member of the housekeeping staff  formerly owned by a subsidiary of a company Ross Wilbur owned thirty years ago.

It's A Centipede: Next Shoe To Fall

No links, but there are rumors out there that Amazon could buy Kohl's. Oh, that's right. I read that in the print copy of Barron's at the library yesterday.