Making America Great Again -- Another Huge Jobs Report -- WTI Holding Stable -- April 12, 2018

Quick! Without looking at the caption in the second picture, in which country was each picture below taken? Hint: one picture was taken in the one of the most technologically advanced countries with the #1 economy in the world; the other was taken in a third world, developing country. This link will be blocked by the google app; the other is linked here.

*************************************

Making America Great Again

Jobs: first time unemployment claims --

• forecast: 230K
• actual: 233K
• change: a decrease of 9,000 from the previous week -- but last week was certainly an unexplained anomaly

From The WSJ:

The number of Americans claiming new unemployment benefits has never been so low for so long. Initial jobless claims, a proxy for layoffs across the U.S., decreased by 9,000 to a seasonally adjusted 233,000 in the week ended April 7, the Labor Department said Thursday. This means claims have now held below 300,000 for 162 consecutive weeks, cementing the longest streak for weekly records dating back to 1967. The current streak eclipsed the previous longest stretch that ended in April 1970. The consistently low claims levels point to labor market health because they mean relatively few Americans are losing their jobs and applying for benefits to tide them over until they can find new employment.

Someone noted at the WSJ linked article:

I can't give all the credit to Trump running for and being President.  162 weeks ago today was March 5th, 2015.  Trump didn't announce his candidacy until 14 weeks (102 days) later on June 16, 2015.

So Trump is only responsible for 90% of this good news.

We wouldn't be seeing this news if the pant suit grandma had won.

*******************************

Back to the Bakken

Active rigs:

$66.43→	4/12/2018	04/12/2017	04/12/2016	04/12/2015	04/12/2014
Active Rigs	59	51	30	93	190

RBN Energy: shifting E&P strategies and their impact on Permian growth, part 2.

As Permian crude differentials continue to widen, trading at a $8.45/bbl discount to Magellan East Houston this week, a lot of people are pointing fingers at midstream companies for not completing new takeaway pipeline projects quickly enough. But even in the oil patch, it takes two to tango and producers can also share some of the blame. Historically, the focus in the Permian has been on larger producers, with their sprawling acreage positions and their focus on creating long-term competitive advantages through efficient drilling programs. Many of the smaller, private equity-backed producers adopted more short-term strategies.  Their game has been to prove undervalued acreage and then flip those assets to more substantial players. But these strategies are beginning to change. Today, we continue our series on Permian differentials with a look at how the recent ramp-up in the development of second- and third-tier production areas is affecting the region’s crude oil output, pipeline takeaway constraints and price differentials.

Permian crude production is growing at a breakneck pace, pipeline takeaway constraints are worsening by the day and, as a result, Permian producers without takeaway capacity locked up have been taking a big hit on crude prices. We’ve seen this movie before (Figure 1), most recently back in 2014, when (like now) rising production pushed outgoing pipeline capacity to the max and the price spreads between Midland and destinations at the Cushing hub in Oklahoma widened dramatically (blue line, red oval to left). Earlier this week, the spread between West Texas Intermediate (WTI) at Cushing vs. WTI at Midland stood at $5.65/bbl (blue line, red oval to right), while the spread between Midland and Magellan East Houston (MEH; orange line, red oval to right), which we started tracking in 2016, was $8.45/bbl. Two weeks ago, these same spreads were only $2.70/bbl and $4.95/bbl, respectively.