Forty-Five Minutes -- June 11, 2020

Updates

June 15, 2020: from the Seattle Times, Seattle Fire Department Chief Harold Scoggins led talks on Sunday involving representatives of protesters, as well as property and small business owners to figure out how to reopen the area for traffic and local business, As predicted, negotiations have begun.

June 12, 2020: see new comments this date. I opined earlier that negotiations will begin by next week between "Seattle" and "CHAZ." CHAZ will start by ordering food and supplies. Wow, that didn't take long. Less than an hour later, this headline:

June 12, 2020:

Later, 11:02 a.m. CT: be sure to read Larne's comment in the comment section below. Things are not as simple as they might seem. I was going to write something along this line about the chaos in Seattle. "Chaos is self-organizing." Before you  know it, the anarchists in downtown Seattle will form a "police department" but they well it something different. But it will still be a "police department." 

Later, 9:00 a.m. CT: the note below was written before the market opened, or thereabouts. It looks like oil traders finally reacted to the record high US crude oil inventory numbers. And gasoline demand. And the "Fed's" remarks. And the jobless numbers even though those were telegraphed yesterday. WTI collapsed; down almost 8%; down almost $4.00; now at $36.44. Well, at least WTI is still above $36.

Original Note

Note: in a long note like this there will be typographical and content errors. 

7:16 a.m. CT: I have forty-five minutes. And then another day of Uber-granddaughter driving begins. Somehow YouTube directed me to CCR. Wow. I look at all the oil analysts over at Twitter. It appears their average age is 27. Twenty-seven years old. Children of the 90s. Wow -- all the great music they did not hear when growing up.

Lookin' Out My Back Door, CCR
And then my mind wanders to San Francisco, and Hunter S. Thompson.

I wonder what he would think of the freaks (his word, not mine) taking over Seattle. Wow, talk about sleepless in Seattle. LOL. No, I won't post that soundtrack. I don't know if I've ever even listened to that soundtrack. 

I've been to Seattle twice. Never impressed me. I've been to San Francisco. Many times. When it was great. Wow, great memories. 

But I digress.

I guess the theme for the day is going to be the US crude oil inventory. At record highs. A reader noted that this milestone generated no headlines, no stories. With all that is going on that may not be surprising.

Bloomberg reported it but Bloomberg reports everything. Headline: record US crude stockpiles reveals cracks in oil market recovery. And oil prices today reflect exactly that. Saudi Arabia in deep doo-doo. 

Swelling U.S. oil stockpiles are signaling that a difficult path lies ahead for OPEC and its allies who are trying to stabilize the market with record output cuts.

Just weeks after American explorers [sounds like lewisandclark] began shutting in wells in the wake of a slump in demand, a recent recovery in crude is prompting some producers to turn the taps back on at a time when a fresh onslaught of the virus challenges pockets across the country.

A month into the state’s reopening, Florida this week reported the most coronavirus cases of any seven-day period. In Texas, hospitalizations on Tuesday jumped to the highest since the pandemic emerged, rising for a third consecutive day. California’s hospitalizations are at their highest since May 13, 2020.

Those gains in cases are leading to concern that oil’s rebound may unwind if governments implement lockdowns again. The OECD is forecasting a sharp contraction in the global economy this year that could get worse if there’s a second wave of virus infections.

An aside: I doubt elementary schools will open on time this fall. Middle schools, high schools, and colleges will all go on-line at the start of the year.

But I think this is the real reason there were no headlines: we've been here before.

This is a huge number. A reader posted this as a comment at this post:

• That record is also 52.3% above the prior 5 year (2010 - 2014) average of our crude oil stocks for the first week of June; here's the math;
• 538,065 / ((355,221 + 365,179 + 358,610 +346,897 + 340,906 ) / 5) =1.5227

It is pretty laughable. The buzz word about two years ago, coming out of Saudi Arabia, was the need to "re-balance." As soon as I saw that, I started tracking global efforts to "re-balance." Miserable failure.Back on week 0, November 21, 2018 (date of report): 447 million bbls of crude oil in storage in the US; most recent report, week 79: 538 million bbls of crude oil and rising.

Johnny Cash: "How High Is The Water Mama?" LOL.

Days of crude oil supply in the US: dropped slightly from 41.3 days to 40.9 days. I'm pretty sure that's not statistically statistical.

Gasoline demand, four-week average, is beginning to flatten: that should worry everybody. But, the most recent one-week gasoline demand looks a bit better than the four-week average, so we'll see.

But I digress.

We've been here before. Crude oil storage in US:

• 538,065 thousand bbls (note the false precision) -- most recent report
• 533,110 thousand bbls -- March 17, 2017 -- about six months after Saudi ended "the surge" in production at an attempt to destroy US shale;

Sure, we've set another all-time record, but there's not a lot of difference between 538 million bbls and 533 million bbls (1%).

Check the math: 1.01 x 533,110 = 538,441. Close enough.

The Fed says we've been through the worst (no one really believes that) but "Jay" (as all his friends call him) says it will be a rough, long slog. Steve Mnuchin (or Mr Mnuchin, as all his friends call him) says US businesses will need more help. Administration will support another round of stimulus checks. US Senate introduces bill to "pay" each American $120,000 / year, and BET found Robert Johnson calls for $14 trillion (that's with a "t") for slavery reparations.

That kind of talk sort of drowns out talk of record oil in US storage. Not to mention sleepless in Seattle. Again.

Disclaimer: this is not an investment site.  Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here.

The market: Today should be an interesting day to watch. It is not unusual for the "market" to respond violently after a "Fed" announcement. The reaction usually happens on a late Wednesday afternoon, extends into Wednesday. Forgotten by Friday. Looks like the Dow could fall a thousand point at the open. This is where traders make their money. I wonder if the exchanges will put in a "stop" to halt the plunge. Once the computers take over, there's no telling how bad things can get.

Ask HAL.

My hunch: things are yet to get worse. Metric to watch: number of folks still wearing masks while driving their cars to empty malls. Alone in their cars.