Monday, March 5, 2018

US - Saudi Crude Oil Imports Decrease Month-Over-Month -- December, 2017, Data Just Posted

Link here.

Saudi's Foreign Exchange Reserves Take An Unexpected Dip -- March 5, 2018


March 9, 2018: Kemp must be reading the blog. I assume he has posted this data before but if he has, I have not seen it before. But now, after my monthly reporting of this data, his most recent post jumped out at me:

Story lines:
  • Saudi reserves were already dropping significantly by the time Saudi reacted with flooding the market with oil, hoping to "break" US shale
  • we will never know how "bad" it would have gotten for Saudi if they had not announced they were going to open the spigots
  • it is interesting: I think "we've" all forgotten the reason Saudi said they were opening their spigots; I do distinctly remember that the Saudis said it was not in reaction to US shale, and that they were not doing this to "break" US shale; I think they said they were trying to get the attention of the Iranians, which, in hindsight, seems an incredibly weak argument
  • look how long it took for the "recovery" even after Saudi said they would cut production
  • even with the cut in production and the "shakedown of the sheiks," the recovery is not particularly noteworthy

March 6, 2018: Saudi Arabia cuts price on its oil. Trying to re-grab market share. Good old "free markets." From Bloomberg via Rigzone:
Saudi Arabia cut pricing for Arab Light crude to Asia for the first time in eight months, a sign that the world’s largest oil exporter is fighting harder for sales in its biggest market.
State-owned Saudi Arabian Oil Co. lowered its official selling price for Arab Light crude for April shipment by 55 cents to $1.10 a barrel more than the Middle East benchmark, the company said Monday in an emailed statement. It’s the first cut since August. Aramco had raised its January pricing to the highest since 2014 and kept it there for the next two months. The producer, known as Saudi Aramco, was expected to lower pricing by 45 cents a barrel, according to a Bloomberg survey.
Original Post 

Well, well, well, isn't this interesting. Just when it appeared that Saudi Arabia had turned the corner with regard to "foreign exchange reserves," a small hiccup, as they say.

In September, 2017, Saudi's foreign exchange reserves hit a recent low but then gradually increased (coincident with a number of things, including a shakedown of a hundred or so Saudi princes, but that's another story for another day).

Saudi's foreign exchange reserves showed a small increase over the next three month, but then, in January, 2018, the most recent month for which we have data, foreign exchange reserves fell. Considering that the price of oil has trended upward this past month, the decrease was unexpected. See chart below at this link:

Foreign Exchange Reserves in Saudi Arabia decreased to 1854380 SAR Million in January from 1861588 SAR Million in December of 2017. Foreign Exchange Reserves in Saudi Arabia averaged 2209808.62 SAR Million from 2010 until 2018, reaching an all time high of 2796941 SAR Million in August of 2014 and a record low of 1569145 SAR Million in April of 2010.

Update On Shell's Whale Of A Discovery -- March 5, 2018

On February 1, 2018, this post at the blog:
Peak oil? What peak oil? I assume this is a different "major" oil discovery than the one reported earlier today. From a press release:
Shell today announced one of its largest U.S. Gulf of Mexico exploration finds in the past decade from the Whale deep-water well. The well encountered more than 1,400 net feet (427 meters) of oil bearing pay. Evaluation of the discovery is ongoing, and appraisal drilling is underway to further delineate the discovery and define development options. 
"Deep water is an important growth priority as we reshape Shell into a world-class investment case," said Andy Brown, Upstream Director for Royal Dutch Shell. "Today's announcement shows how, through exploration, we are sustaining a strong pipeline of discoveries and future projects to sustain this deep-water growth."
Whale is operated by Shell (60%) and co-owned by Chevron U.S.A. Inc. (40%). It was discovered in the Alaminos Canyon Block 772, adjacent to the Shell-operated Silvertip field and approximately 10-miles from the Shell-operated Perdido platform. 
And, look at the thickness of this play: more than 1,400 net feet. Compare that to the earlier story being reported by Chevron: 670 net feet of play.
Today, from
Shell’s aggressive bidding, especially on the blocks in the Perdido area next to the U.S. border, puzzled some analysts and observers.      
But Shell knew something that its competitors did not. Six months earlier, Shell had made a large deepwater oil discovery on the U.S. side of the Perdido area. Since oil firms are not legally obliged to announce discoveries, Shell postponed the announcement of the discovery until the day of the Mexican auction, as it wanted to secure the adjacent blocks in the Mexican waters.
While the cat was out of the bag as early as in July 2017, Shell issued the official announcement about the Whale discovery in the U.S. Gulf of Mexico on January 31, 2018—the day on which Mexico held its deepwater auction and all bids had already been submitted.
In the six months following the Whale discovery­­—which Shell described in the January release as “one of its largest U.S. Gulf of Mexico exploration finds in the past decade”—the oil major had the time to additionally study the geology of the Whale. It was also such good fortune that Mexico was offering Perdido areas in its deepwater auction. So Shell—hoping that the Mexican blocks would have geological characteristics similar to Whale’s and could hold more oil—moved on to secure most of the adjacent blocks.
Commenting on the timing of the Whale announcement, Andy Brown, Upstream Director at Shell, told Reuters:
“Post the Whale discovery we had some geological insights. It is not by accident we didn’t announce it until the day of the bid.”

The Political Page, T+5 -- March 5, 2018

The top cable cable news shows for February, 2018: this is a watershed report considering all this going on. Two takeaways:
  • Rachel Madcow dropped to 3rd place in the "demo period" after being #1 in the prior period
  • Fox & Friends (6 – 9 a.m.) marked 196 straight months as the most-watched morning show on cable news.
March 5, 2018, T+5: Oscars rating down 19% from 2017, may plumb all-time low! Early numbers suggest an 18.9 overnight rating from 8-11 p.m. ET, down 16% Y/Y. Last year's Oscars earned a 22.4 and drew 32.9M viewers, second-lowest total ever (though today's overnights don't yet reflect the end of the show with the biggest awards). An 18.9 rating suggests a viewership of 28 million. [Later: yup. An all-time low -- 26.5 million. Wow.]The 2008 show's 31.8M viewers drew the lowest viewership. Full numbers come from Nielsen later on. March 5th deadline for "Dreamers": six months ago, Trump set March 5th as the deadline -- and the Democrats? Nowhere to be found. Not interested in solving the problem.

From the linked article:
The telecast, nearly four hours long, stumbled 19 percent from the previous year to 26.5 million viewers. That's easily the least-watched Oscars in history, trailing 2008 by more than 5 million.  Overnight returns had the lengthy ABC telecast averaging a 18.9 rating among households between 8 and 11 p.m. ET. Compared to the same stat for 2017, the night the wrong best picture winner was named, that was down a more modest 16 percent. 
The 2017 Academy Awards, which earned a 22.4 overnight rating, ultimately fetched 32.9 million viewers for ABC — as well as a handsome 9.1 rating among adults 18-49. Still, those numbers reflected the second-lowest in Academy history. (ABC did not immediately report the adults 18-49 rating for Sunday's Oscars, and Nielsen won't widely distribute that information until Tuesday.) 
The night was not as political as many recent award shows, with showings of partisanship few and far between. [But the damage was already done. Like NFL football games, the anticipation of the event outdoes the event itself.]
Ten top reasons why the Oscars crashed and burned:
10. Very few A-list actors actually bothered to attend
9.  Families no longer dare watch (as families): parents never know when PG will go to R (or worse)
8. Quick! Name three of the best movies nominated
7. Best actress nominee likely to win: her character, non-stop x-rated language
6. Meryl Streep
5. Meryl Streep
4. #MeToo -- that's not why we tune in
3. Way too political; Trump now has 49 - 50% approval ratings; half the audience that might have tuned in, tuned out
2. Kimmel: can see him every night on late night television
1. Kimmel: no pizzazz (think Billy Crystal)

So Much For All That Talk That A "Trade War" Would Kill Oil Prices And The Equity Market -- March 5, 2018

Making America great again: heavy-duty truck orders soared 76% in February. Analysts raise production targets for the year (and this is only February data) as strong shipping demand boosts outlook for truck makers. Seventy-six percent rounded up is one-hundred percent, and a one-hundred percent increase in anything is a "doubling." We've talked about this a number of times in the past few months. From The WSJ:
North American fleet owners last month ordered 40,200 Class 8 trucks, the vehicles used to haul goods long distances, a 76% jump compared to the same month in 2017, according to preliminary figures from freight analysts FTR.
Trucking companies that held back on deciding whether to upgrade or expand fleets in the fall, as freight demand accelerated, now are racing to reserve slots on production lines. Truck orders hit a nearly 12-year high in January, when freight prices soared as shippers scrambled to find capacity amid the tightest trucking market in years.
Fake news: I guess folks didn't believe the news that a 10% tariff aluminum would kill off aluminum-wrapped Hershey's Kisses and Life-Savers (or perhaps they know Congress will thwart Trump's plans).

The anticipated four "Fed" rate increases will have a bigger effect on the equity market than the cost of aluminum foil wrapping Hershey Kisses. Beer? The cost of aluminum in an aluminum can? Half a cent. Price for a 12-ounce can of beer: $1.50+ (north Texas, 6-pack, neighborhood stores)

The latest GDP forecast for 1Q17 jumped from 2.6% to 3.5%. Previously posted.

Back to the Bakken

"Arctive" rigs:

Active Rigs614535113192

Four new permits:
  • Operators: WPX (3): Eagle Operating
  • Fields: Spotted Horn (McKenzie); Wildcat (Renville)
  • Comments: Eagle Operating's wildcat is Popinga 32-16, a vertical well; a Madison well; back in 1990 a dry well was drilled in this same section; Eagle Operating has another "location" in the section immediately to the north;
No permits renewed.

No permits canceled.

No producing wells (DUCs) reported as completed.

That's all.

State employees were released at 3:00 p.m. due to Arctic storm bearing down on north-central US.

When Does Spring Start? March 5, 2018


Later 9:05 p.m. CT: I believe this is Winter Storm Quinn

Later, 8:12 p.m. CT: Earlier I had been told -- and had seen articles -- regarding how much snow East Glacier was getting but I didn't pay attention until today. Now this -- see comments -- from a reader:
"Old-timers" in Seeley Lake, MT tell me this year's snowfall is the most they've seen in over 20 years. 1996 to be exact. My unscientific totals in my back yard are over 5 feet of snow. East Glacier has over 240 inches.
That would be ... about ... 20 feet. Wow.
Original Post

Huge "thanks" to Don for keeping me up to date on this storm.

A note from our daughter in Portland, Oregon:
My friend, who's husband is in the Air Force, lives in Montana (off-base).  Today, she ventured on base and said 19 degrees is warm enough to get out of the car and take pictures.  She showed some nice pictures of streets on base that don't get plowed.  :)  No worries, it's all packed and easy to drive on (she noted that unlike the Pacific Northwest, snow [in Montana] is easy to drive on and not icy.)  Her house had a foot of more snow (so on top of what was already there) this weekend. 

GDP Now -- Back Up To 3.5% -- 1Q18 -- March 5, 2018

Well, this is good.
Latest forecast: 3.5 percent — March 1, 2018.
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2018 is 3.5 percent on March 1, up from 2.6 percent on February 27.
The nowcasts of first-quarter real consumer spending growth and first-quarter real private fixed-investment growth increased from 2.0 percent and 2.7 percent, respectively, to 2.9 percent and 4.4 percent, respectively, after this morning's data releases.
The model's estimate of the dynamic factor for February—normalized to have mean 0 and standard deviation 1 and used to forecast the yet-to-be released monthly GDP source data—increased from 0.23 to 1.68 after this morning's Manufacturing ISM Report On Business from the Institute for Supply Management.

Money, Pink Floyd

Global Warming Impacting The Bakken Today -- March 5, 2018 -- You Know It's Severe In The Bakken When They Start Closing Schools -- They Never Did That When I Was Growing Up In Willston

Monday, March 5, 2018 -- Active Rigs In The Bakken Back Up To 60; WTI Holds Steady After Last Week's Scare

Blogging will be intermittent today -- I will be biking all day (until 4:00 p.m. when I pick up Sophia from Tutor Time). The forecast for today: "increasingly sunny." It's already 70 degrees. I will bike from wi-fi spot to wi-fi spot to blog and get something to eat.

My first stop: McDonald's. They've completely renovated the inside area and the process. They do it very much like What-A-Burger here in Texas and Chik-Fil-A. You place your order and then take a seat. They deliver your order to you. No more standing in line. One also has the option to order on-line on on the huge iPad-like kiosks. Plenty of outlets for those wanting to charge their mobile devices. This is a completely different McDonald's. I normally don't bike to this McDonald's -- it's a bit farther from home, but the one closer to home is also in the process of being renovated.


Making America great again: A global energy watchdog says booming production in the United States will meet 80 percent global growth in demand for oil over the next five years.

Rigs: US explorers lift rig count to 800 for first time since 2015.

US: the US will be the world's largest oil producer by 2023 -- IEA. That's only five years from now. That may be the headline story, but this is the really, really big story:
Consumption of oil will remain robust, shrinking the gap between demand for crude and producers’ capacity to pump it to the lowest level since 2007—when oil prices were on a run toward record levels over $140 a barrel.
The IEA sees little sign that oil demand will peak in the next five years, weighing in on a debate over whether efforts to curb the impact of climate change could eventually limit global oil consumption. Oil demand is expected to go above 100 million barrels a day for the first time next year, rising by a total of 6.9 million barrels a day to 104.7 million barrels a day by 2023.
Peak oil. The WSJ article linked above does include this trope:
Still, without more investment outside the U.S., growth in production begins to slow after 2020, the IEA said. A dramatic slump in oil prices since 2014 has eviscerated investment in the sector outside U.S. hot spots.
Greece: the country's only energy explorer and producer signed a financing agreement for $1.27 billion to finance development of two natural gas fields off the coast of Israel. Huge threat to Russia, Qatar, others.

Tesla: cars/week production continues to tick downward.

Oil states: Reuters says "oil states" fight budget deficits for fiscal year 2019. Three-quarters of the article is devoted to Alaska. The "other states" mentioned, almost in passing, Louisiana and Oklahoma. North Dakota was not mentioned.

Alpha olefins (AO): Shell's Baton Rouge (LA) was North America's largest AO producer even before the company decided to expand. Expansion is on track; set up open later this year. Once on-line, production will expand to 1.3 million tonnes per annum, making the site the world's largest AO producer

Back to the Bakken
Active rigs -- pleasant surprise -- back to 60 rigs:

Active Rigs604535113192

RBN Energy: fight's on! Oil and gas exports, trade wars, and the implications for US producers.