Something Is Happenin' Here But I Don't Know What It Is -- October 23, 2019

Too tired to go into this now, and I probably won't go into tomorrow, either, because it's not really a Bakken thing, but the twitter arena had a couple of interesting threads today.

One thread had to do with the weekly crude oil inventories. There were indications, based on trades between yesterday and today, that someone leaked the EIA numbers before they were publicly released (I assumed that was true and had always been true -- shocked, shocked, I say, to think that someone would leak "secrets" in Washington, DC). It seems many folks agree that API numbers are bandied about before being publicly released but EIA numbers are sacrosanct until released. I had not seen these discussions before; that suggests to me that some strange trading activity must have been going on for the past 24 hours. Remember: API showed a fairly significant "build" yesterday, whereas the EIA showed a fairly significant "draw" today. No one expected a draw today. Such a situation lends itself to a bit of skulduggery. [How many 'l's' in skullduggery/skulduggery?] Rick Perry, you had one job to do .... LOL.

The other thread -- and this I find most interesting because it addresses exactly what I mentioned yesterday (or the day before) -- where the price of crude oil was headed next July -- July, 2020. Some analysts are dead-sure that the combination of US shale production and non-shale, non-OPEC production will grow so fast that the price of oil will plummet by next summer. They argue that OPEC (i.e., Saudi Arabia) will have its hands full trying to maintain the price of oil.

Whether or not this comes to pass, regardless of the price of oil next summer, the entire issue is an existential issue for Saudi Arabia. For many (most) of us, "oil" is simply an investment; if the sector does badly (or if we think it's going to do badly) we move out of the sector and invest elsewhere. For OPEC, it's all they have.

I'm absolutely convinced that OPEC (i.e., Saudi Arabia) can read the tea leaves as well as the rest of us and they don't like what they see.

Idle rambling. I generally don't post nonsensical "stuff" like this but the energy sector right now (2014 - 2024) looks very, very interesting, to say the least.

Ballad of a Thin Man, Bob Dylan