Such Incredible BS -- June 26, 2018

Earlier it was reported that oil production in the Neutral Zone was being halted by Saudi Arabia and Kuwait for "technical reasons." What BS.

The reporting must have been done by Baghdad Bob (actually it was "Robert").

The "technical reasons"?

Saudi Arabia and Kuwait have some "political" difficulties.

It sounds like Kuwait made the decision to half production, but I have no idea. From the linked article:

He said the two sides were “tackling the matter” and production would resume “as soon” as they reached an agreement. Kuwait said in late 2016 it was preparing to restart production at oilfields in the zone after production was previously halted.

At the time the closure of the fields, mainly Khafji and Wafra, had become a political sticking point.

Khafji was shut in October 2014 for environmental reasons and Wafra has been shut since May 2015 due to operating difficulties.

Before its closure Khafji, operated by Kuwait Gulf Oil Company and a Saudi Aramco subsidiary, was producing between 280,000 and 300,000 barrels per day.

The Wafra field has an output capacity of about 220,000bpd of Arabian Heavy crude.

US oil major Chevron operates the field on behalf of the Saudi government.

Meanwhile, US shale companies "motor ahead" despite the OPEC+ announcement. From The WSJ earlier this week:

U.S. shale companies, which profited by continuing to pump oil as the rest of the world cut its production, are again poised to benefit as the Organization of the Petroleum Exporting Countries boosts its output.

OPEC’s decision last week to increase production modestly is seen as an attempt to keep prices elevated without creating a spike. The move eased concerns among the member countries about tightening supply and the potential for a price spike, but it also lifted the stock prices of U.S. oil producers, which have learned to survive at whichever price OPEC pursues.

U.S. production has grown at a record-setting pace this year, hitting 10.9 million barrels a day this month after oil prices exceeded $70 a barrel for the first time since 2014. That makes the U.S. the world’s No. 2 oil producer behind Russia, but ahead of Saudi Arabia.

By the way, the majority of Bakken oil enters the LLS pipeline system (via DAPL) and prices close to LLS. Right now, LLS is selling for about $5 / bbl more than WTI. Transportation is a "wash." WTI is at Cushing. LSS is in Louisiana.

Royalty checks may not reflect the spot price because operators "contract" prices months earlier. 

As usual, the article didn't say much, but the comments were very interesting. Note this comment:

One reporter has been writing about energy for the WSJ for three months. But she has a BA in Literature (Magna Cum Laude) from Harvard so I guess that qualifies her to write about energy. The other reporter has been covering energy for the WSJ for 1 yr and 7 months. Prior to that role he was a Legal Reporter.   But he has a Master's degree in Journalism so I guess that qualifies him.  So it's no surprise that they sound like they know little about the energy business.  It is a common occurrence in the Wall Street Journal.  This is what I am paying over $400 per year for.  And they cannot even get the print version to me on a regular basis.