Off The Net For Awhile

Many typos likely in the last few posts. I will correct them later.

Winter Storm Grayson: in addition to all the other ways to follow this storm, don't forget "Google winds."

Again, turn your attention to the nuclear plant that is (was?) out of service in Massachusetts earlier today.  It will take a lot of renewable energy, oil and natural gas to replace the energy provided by a nuclear power plant, one would think.

Re-Posting -- Winter Storm Grayson -- January 4, 2018 -- Nuclear Plant Along East Coast Shut Down?

Updates

Later, 10:03 p.m. CT: wow, wow, wow, see original post. Just after posting this, Don sent me this link from Reuters: 

The only nuclear plant in Massachusetts was shut just after 2 p.m. because of the failure of a line that connects the reactor to the power grid. Entergy Corp, which operates the Pilgrim Station, said it had not identified the cause of the line problem. ISO New England, which operates the region’s power grid, attributed the shutdown to blizzard conditions. The company did not say when the station would restart. 

The article says the nuclear plant was shut down just after 2 p.m. today; in fact, the grid suggests electricity from that plant was lost four hours earlier. 

As of 8:00 p.m. tonight, according to the grid data, it appears that the nuclear plant is not yet providing energy to the region. Again, a huge reminder, if interested in following the "energy story" for this winter storm, follow ISO New England.

Much, much more at the link. A huge "thank you" to Don and to the individual who sent me the original note (see below).

Original Post

Winter Storm Grayson, from a reader today, via e-mail:

FWIW ... Today, a phenomenal record was set for intraday spot price gas trading.

At $175 mmbtu at Transco Zone 6 (New York City), this price shattered the previous high of $125 mmbtu set at the height of the 2014 Polar Vortex. 

If the next 3 day frigid forecast comes to pass, we may witness a disaster up there.

Also this:

Looks like nuclear generation dropped at 10:00 AM today (see graphic below).

Seems to be about the amount the 700 Mw Pilgrim plant puts out. 

This nuclear plant is located on the coast where record high tides are happening. 

Just more issues for those folks to deal with.

Arctic Blast? What Arctic Blast? North Dakota Rigs Back Up To 54 -- January 4, 2018; WTI At $62

Active rigs:

$61.99→	1/4/2018	01/04/2017	01/04/2016	01/04/2015	01/04/2014
Active Rigs	54	40	59	171	184

Four new permits:

• Operators: MRO (3); Whiting
• Fields: Van Hook (Mountrail); Sioux (McKenzie)
• Comments:

Three permits renewed:

• BR: three Cleetwood permits in McKenzie County

A Single Slide Up-Ends The Entire PowerPoint Presentation -- January 4, 2017

We joke about this, but, in fact, it is probably more important than folks realize. Something tells me Scott Adams (of Dilbert fame) would understand the point I'm trying to make.

As just one example, when someone over at EPA is giving the president a briefing on the risks of / or the proof of anthropogenic global warming, a presidential advisor simply has to insert this slide in the 105-slide presentation. My hunch is the president forgets the other 104 slides and simply remembers this one.

End of meeting.

Predicting The Monthly Legacy Fund Deposit -- Something New, Something Crazy -- January 4, 2018

Updates

February 16, 2018: the official North Dakota state Legacy Fund deposit for January: $46,242,885.80. My average was off by $2,374,163 or 5% below the actual amount.


January 11, 2018: as of this date, this would be my projection -- Legacy Fund deposit for January, 2018, estimate --

• high end estimate: $50.0 million
• mid-range estimate: $43.9 million
• low end estimate: 38.3 million

	Price of Bakken	Legacy Fund Deposit Projected	Legacy Fund Deposit Projected	Legacy Fund Deposit Projected	Price WTI
Projection January 2018	$50.81	Average	High end	Low	$62.00
as of Jan 11		$43,868,722.22	$50,088,644	$38,280,059

January 4, 2018: from a reader via e-mail --

I noticed your discussion about the Bakken/WTI price differential as a factor in predicting Legacy Fund deposits (see original post below).

The director uses the North Dakota Sweet price from Flint for his number. See this post to see how to access this data.

The prices received on our production has consistently tracked well above the NDS price for a long time now. In fact, for the last 3 months the price received has been about $1 or so above WTI itself. Since the DAPL came on, the differential with WTI seems to have disappeared. I think it must be due to Bakken oil being shipped to more markets now so the Flint average doesn’t seem to work anymore. 

Original Post

Some data points:

• Historical price of WTI (EIA): link here
• Price of Bakken oil: based on Director's Cut which comes out monthly; tagged;
• Legacy Fund deposits: link here

The Chart:

	Price of Bakken	Deposit, Reported	Ratio	Forecast	Price WTI	Delta
	Director’s Cut	North Dakota State Legacy Fund	Deposit divided by price of Bakken oil	Based on average ratio and estimated price of Bakken oil	Last week of the month	WTI - Price of Bakken oil
					EIA data
February 2018
January 2018
December 2017	49.25	44,431,000	902,152.28		$60.46	$11.21
November 2017	49.75	37,479,000	753,346.73		$58.35	$8.60
October 2017	43.56	37,220,000	854,453.63		$55.63	$12.07
September 2017	39.56	33,461,000	845,829.12		$51.67	$12.11
August 2017	37.93	31,803,000	838,465.59		$47.32	$9.39
July 2017	35.83	35,319,000	985,738.21		$49.57	$13.74
AVERAGE			863,330.93			$11.19
*********	********	*********	**********	*********	**********	***********
	$49.81		863,330.93	$43,005,391.29		$61.00
	$50.81		863,330.93	$43,868,722.22		$62.00
	$51.81		863,330.93	$44,732,053.15		$63.00
	$52.81		863,330.93	$45,595,384.08		$64.00
	$53.81		863,330.93	$46,458,715.01		$65.00
			High end	Low end
			$45,841,364.74	$38,280,058.69

I don't know if this chart will make sense to anyone. That's fine. I'm doing this for my own benefit to see if it's possible to "predict" the monthly deposits going into the North Dakota state Legacy Fund  with any degree of accuracy  (and I use the word "accuracy" quite loosely -- LOL).

This is simply some "back-of-the-envelope" doodling. It's for my benefit only. Most folks will think it's completely bogus. That's fine.

There are way too many variables to be able to predict the the monthly Legacy Fund deposits, not least of which:

• which day of the month the deposits will be made
• the price of WTI
• the price of Bakken oil
• how closely the monthly deposits track with the estimated price of Bakken oil
• the crude oil and natural gas production data

This is the first time I've posted this graph. I will update it each time the monthly deposits into the Legacy Fund are released.

I think the the top half of the spreadsheet (above the asterisks) is self-evident and I won't add anything here.

The bottom half of the spreadsheet (below the cells with the asterisks)is a bit more confusing.

• start with the far right column; that's the hypothetical price of WTI ($61 - $65/bbl)
• from there, the estimated price of Bakken oil is derived (second column below the asterisks) based on the average delta between WTI and Bakken oil (top half of the graph)
• the fifth column, labeled "Forecast" is the estimate of the deposits for future months based on the average ratio (from the top half of the spreadsheet) and the estimated price of Bakken oil
• so, for example, based on a WTI price of $65, the estimated price of Bakken oil would be $53.81 (the delta, $11.19 is the average from the top half of the spreadsheet); in this case, the likely deposit for January, 2018, based on $62 WTI would be $43,868.722.22

Finally, two last boxes, the "high end" and "low end":

• for the "high end" case, I took the product of the highest ratio (902,152.28) and WTI at $62 and got $55,933,441.62
• for the "low end" case, I took the product of the lowest ratio (753,346.73) and WTI at $62 and to $46,707,497.49

This is simply an exercise to keep me entertained. I highly recommend no one pay any attention to this unless one has nothing better to do. 

Bottom line: it appears that the "likely" Legacy Fund deposit for January, 2018, will be:

• high end: $46 million
• most likely: $44 million
• low end: $38 million

It is interesting to see the delta between the EIA price of WTI and the Bakken price quoted by Lynn Helms/NDIC in the monthly Director's Cut. This spread is much wider than what is being reported elsewhere. I can think of a number of reasons but this post is already too long, so simply this: "it is what it is."

Winter Storm Grayson; Equity Futures; Truck Manufacturing -- The Stories Keep Coming -- January 4, 2018

Winter Storm Grayson, from a reader today, via e-mail:

FWIW ... Today, a phenomenal record was set for intraday spot price gas trading.

At $175 mmbtu at Transco Zone 6 (New York City), this price shattered the previous high of $125 mmbtu set at the height of the 2014 Polar Vortex. 

If the next 3 day frigid forecast comes to pass, we may witness a disaster up there.

Also this:

Looks like nuclear generation dropped at 10:00 AM today (see graphic below).

Seems to be about the amount the 700 Mw Pilgrim plant puts out. 

This nuclear plant is located on the coast where record high tides are happening. 

Just more issues for those folks to deal with.

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

Futures mean squat, but this is quite extraordinary. Last day of a short week of trading after the first of the new year. I don't know what this means ... but ...

I've seen this before only to see if turn negative overnight. This could simply be "overhang" from today's huge close.

I don't know how many saw Jim Cramer the other night -- I did not see him tonight -- he was "flabbergasted" that so many mom-and-pop investors pulled their money out of the market a year ago and have not yet gotten back in. He's been on that point for the last few days -- I wish I had seen him tonight -- and it looks like The WSJ decided to fact-check Jim. Here's a screenshot of today's headline story, taken at 6:35 p.m. CT, January 4, 2018

Link here.

Jim is not calling this a "bull" market. He's calling it a beast.

I would write much more but this is not an investment site. Do not make any investment, financial, travel, job, or relationship decisions based on what you read your here or what you think you may have read here.

Making America great again: I've talked about this several times. There have been many, many stories on the truck manufacturing business in the US, how it is surging. My son-in-law works for a truck manufacturing plant in the Pacific Northwest. He told me some months ago that his plant was booming; that was confirmed by a number of business stories in the mainstream business media about truck manufacturing in the US. Today, I learn that his plant had planned to begin hiring more workers; the original plan was to begin the hiring process in March, 2018, but they have moved that up to February, 2018.

Huge! US Crude Oil Inventories Decrease 7.4 Million Bbls -- January 4, 2018; Huge Increase In Distillate Fuel Production (Not Surprising); Billings Exxon Refinery Remains Shut Down

Updates

Later, 12:25 p.m. CT: see first comment --

I am surprised that there has been no mention of the Billings Exxon refinery being shut down due to an internal plant malfunction,around October 25th, disrupting power from the dedicated coke burning power plant next door and necessitating shut down of the entire refining operations.

This refinery normally produces around 62,000 b/d of diesel and other distillates.

Original Post

Pardon the interruption: At this point, 10:18 a.m. CT, it might be interesting to start following ISO New England. Normally by this time of the day, one does not see a spike in electricity demand -- but right now demand and price is spiking, apparently coinciding with Winter Storm Grayson moving into New England. Renewables are actually holding in there (which is a bit surprising), but coal and nuclear power has maxed out. The use of oil, of course, showing no change in pattern, is surging, as is natural gas.

• 12:16 p.m.: $307/MWh

Weekly petroleum report.  Link here for the report.

• US crude oil reserves decreased by 7.4 million bbls
• refineries now up to almost 97% of full operating capacity
• gasoline production decreased, now below 10 million bbls per day (actual: 9.7 million bbls)
• distillate fuel production increased, now solidly above 5 million bbls (actual: 5.6 million bbls)
• distillate fuel product supplied averaged about 4.1 million bbls/day over the last four weeks, up by almost 6% from the same period last year
• motor gasoline supplied averaged about 9.2 million bbls/day over the last four weeks, up by 2.1% from the same period last year
• the gasoline demand graph is posted here; scroll to the bottom of the page when you get to that link

Re-balancing: even with this huge draw, the number of weeks to re-balancing did not drop much in the big scheme of things (assuming I did the math correctly), dropping from 28 weeks to 25 weeks when crude oil reserves will be back to their historic norms. Interestingly enough, the EIA now says "US crude oil inventories are in the middle of the average range for this time of year," which would mean we are re-balanced.

Week	Date	Drawdown	Storage	Weeks to RB
Week 0	Apr 26, 2017		529.0	180
Week 1	May 3, 2017	0.9	528.0	198
Week 2	May 10, 2017	6	522.0	50
Week 3	May 17, 2017	1.8	520.2	59
Week 4	May 24, 2017	4.4	515.8	51
Week 5	May 31, 2017	6.4	509.9	41
Week 6	June 7, 2017	-3.3	513.2	60
Week 7	June 14, 2017	1.7	511.5	57
Week 8	June 21, 2017	2.5	509.0	62
Week 9	June 28, 2017	-0.2	509.2	71
Week 10	July 6, 2017	6.3	502.9	58
Week 11	July 12, 2017	7.6	495.3	47
Week 12	July 19, 2017	4.7	490.6	43
Week 13	July 26, 2017	7.2	483.4	38
Week 14	August 2, 2017	1.5	481.9	44
Week 15	August 9, 2017	6.5	475.4	35
Week 16	August 16, 2017	8.9	466.5	30
Week 17	August 23, 2017	3.3	463.2	29
Week 18	August 30, 2017	5.4	457.8	27
Week 19	September 7, 2017	-4.6	462.4	32
Week 20	September 13, 2017	-5.9	468.2	39
Week 21	September 20, 2017	-4.6	472.8	46
Week 22	September 27, 2017	1.8	471.0	46
Week 23	October 4, 2017	6.0	465.0	41
Week 24	October 12, 2017	2.8	462.2	40
Week 25	October 18, 2017	5.7	456.5	37
Week 26	October 25, 2017	-0.9	457.3	39
Week 27	November 1, 2017	2.4	454.9	38
Week 28	November 8, 2017	-2.2	457.1	42
Week 29	November 15, 2017	1.9	459.0	43
Week 30	November 22, 2017	1.9	457.1	42
Week 31	November 29, 2017	3.4	453.7	41
Week 32	December 6, 2017	5.6	448.1	37
Week 33	December 13, 2017	5.1	443.0	36
Week 34	December 20, 2017	6.5	436.5	30
Week 35	December 28, 2017	4.6	431.9	28
Week 36	January 4, 2018	7.4	424.5	25