Thursday, May 14, 2020

Turning On A Dime -- Mideast Exports -- May 14, 2020

From twitter today:

Corona Virus In The Mideast -- May 14, 2020

See this link. On this date, Saudi Arabia jumped to #8 among countries with most new cases. #8. Wow. This should get the attention of analysts.

OPEC Basket -- Error In Posting? Something Else? I Don't Know -- May 14, 2020

Later: this is clearly an error but it was interesting for a moment.

Original Post
We will have to sort this out tomorrow unless there's news tonight or a reader can explain it.

OPEC basket: $17.00 -- at -- I can't find anything on this; not reflected at "official" OPEC website, where it still shows $23.25/bbl; this has to be in error, but it's unusual to see errors of this magnitude at; note Brent jumped almost 7%; here's the screenshot:

If this is accurate, it could be a "calendar"issue like the one that dropped WTI into negative territory.

I can't find anything over at Twitter to explain this. 

But it's interesting to speculate.

If accurate, do movers and shakers think that Saudi Arabia / OPEC+ won't be able to cut production? Is it possible that movers and shakers think that Saudi Arabia and Russia can't risk shutting in wells in old fields; risk losing the fields?

Saudi Arabia has a severe cash flow problem (previously posted) -- paying daily rates averaging $50,000/day or more for VLCCs / ULCCs with at least twenty of them off Long Beach Port with no plans to unload -- is Saudi Arabia looking to unload those VLCCs / ULCCs regardless of cost / loss?

I really don't know but a 30% drop in the OPEC basket has to be in error unless it can be explained.

Later: a reader commented - this is definitely an error. So, we'll see a correction first thing in the morning.

Notes From All Over, Late Afternoon Edition -- May 14, 2020

For now, just a song or two, nothing much going on in my little world. On my way to looking for something else:

Heads will roll:

Heads Will Roll, Yeah Yeah Yeahs

Wow, if this didn't remind me of Bulletproof by La Roux, released on June 21, 2009. Heads Will Roll was released .... drum roll ... June 29, 2009.

I've posted this before:

Bulletproof, La Roux

Development for the movie The Girl With The Dragon Tattoo began in 2009 by Sony Pictures Entertainment.

Lisbeth Salander -- Elly Jackson/La Roux -- Karen O/Yeah Yeah Years.

Three peas in a pod, as they say.

Three New Permits -- WPX Reports A Nice Well -- May 14, 2020

Later: see first comment. 

OPEC basket: $17.00 -- at -- I can't find anything on this; not reflected at "official" OPEC website, where it still shows $23.25/bbl; this has to be in error, but it's unusual to see errors of this magnitude at; note Brent jumped almost 7%; here's the screenshot:

Back to the Bakken

Active rigs:

Active Rigs1565605127

Three new permits, #37576 - #37578, inclusive:
  • Operator: BR
  • Field: Little Knife (Dunn County)
  • Comments: 
    • BR has permits for a 3-well Keene pad inSESW 35-147-97, Little Knife oil field
One permit renewed:
  • Crescent Point Energy: a CPEUSC Dorothy permit, Williams County
Three producing wells (DUCs) reported as completed:
  • 36550, drl/A, WPX, Blue Racer 14-11HUL, Mandaree, no production data,
  • 36506, drl/A, WPX, Blue Racer 14-11GH, Squaw Creek, t--; cum 35K over 26 days extrapolates to 40K over 30 days;
  • 26804, SI/A, XTO, Cole Federal 44X-32H, Siverston, t--; cum --;
The Cole Federal Wells (and Lucy Wells Sited In Same Section)

The wells:
35603, SI/NC, XTO, Cole 44X-32DXA, Siverston, t--; cum --;
26804, SI/A, XTO, Cole 44X-32H, Siverston, t--; cum --;
35602, SI/IA, XTO, Cole 44X-32D, Siverston, t--; cum --;
26802, SI/NC, XTO, Cole 44X-32G, Siverston, t--; cum --;
26803, SI/NC, XTO, Cole 44X-32C, Siverston, t--; cum 98K over two months, see below;
35601, SI/NC, XTO, Cole 44X-32F, Siverston, t--; cum 50K; a 39K month;

26945, 1,978, XTO, Lucy 14X-32A, Siverston, t5/14; cum 245K 9/19; remains off line 3/20;
26946, 1,806, XTO, Lucy 14X-32F, Siverston, t5/14; cum 196K 8/19; remains off line 3/20;
26947, 1,980, XTO, Lucy 14X-32B, Siverston, t6/14; cum 221K 8/19; remains off line 3/20; 

PoolDateDaysBBLS OilRunsBBLS WaterMCF ProdMCF SoldVent/Flare

Weekly US Days Of Supply Of Crude Oil Excluding SPR -- 42.0 Days -- EIA -- May 14, 2020


Link here. The amount of crude oil in storage, excluding the SPR, now equals 42.0 days of supply.

This is unprecedented. That's more than twice what would be healthy for the oil industry.

By the way, I was wrong on this. I thought "days supply" would max out at 38 days. Maybe 39 days. I forget what I wrote about a month ago.

There are two variables; I forgot about the second variable. I was only looking at the first variable.

Actually, the first variable is not a variable at all: it is a fixed number -- relatively fixed -- the amount of onshore storage. Of course that is not "completely" fixed but week-to-week it should not change much.

The second variable is a true variable and requires a talent for very sophisticated calculus and a crystal ball -- neither of which I have -- and that's "demand."

If one assumes "steady demand," then "storage" becomes the only "relative" variable.

But if demand for the foreseeable future drops to zero, a ludicrous proposition, then any amount of oil in storage would be "an infinite number of days in storage."

And as long as I've digressed this much, the on-shore US storage greatly under-estimates the amount of oil that affects the EIA's "US days of supply." Certainly those twenty or so VLCCs/ULCCs off the coast of Long Beach holding Saudi oil would have some effect. Like so many data points, the US days of supply is simply one data point, and I guess, not a very good one at that, either.

A reader by the way, via comments suggests there may be some under-reporting of US production. To back him up:


California Plan To Prevent Some Homelessness -- May 14, 2020

$80 billion. Hold that thought.

$80 billion -- that's the current estimate to complete the California bullet train, and the state has not given up on this idea. Actually, this is pretty funny. The powers that be seem to be orchestrating a classic head fake. There is now talk that to control costs, it might be better to stick with diesel locos rather than electric. Are you kidding me? LOL. They say the "transfer" time between buses from the bullet train and the bus time itself to start/end one's journey takes so much time, there's no sense in pushing for max speed through electrification. So many story lines, but I digress and that was not the purpose of this post.

The head fake: I doubt that "electrification" is the long pole in the tent when it comes to costs for the bullet train. It was my understanding that laying the track was 90% of the cost. I don't know; I just pulled that number out of thin air. But whatever the percent, the cost of laying track is the real problem; electrification vs diesel is a red herring. And a head fake.

I track California's bullet train story here.

So, hold that thought.

Coming out of Sacramento, there is now discussion of "sweeping relief" for homeowners and renters.

Links everywhere, but here is one.

Under one plan: homeowners could delay mortgage payments for a year.

But that was an add-on.

The story that first caught my attention a couple of days ago: tenants -- those folks that pay rent -- would have ten years in which to make up missed payments, starting in 2024, and these make-up payments would be interest free.

My initial reaction was: this is crazy. Absolutely crazy.

But after a bit of thought, this is truly brilliant.

But one needs to put it in perspective: compare the "advertised" cost to the state for rental relieve vs the cost of the Bullet Train.

One also has to add this caveat: the "advertised" cost to the state (taxpayers) will be a whole lot less than what it will likely end up being, but that's another story for another time.

So, to paraphrase Pocahontas, here's the deal:
A plan put forward by Sen. Toni Atkins, Democrat from San Diego and leader of the state Senate, would grant qualifying renters 10 years to repay missed payments directly to the state, which would in turn compensate landlords for the missed rent with tax credits that could be sold to pay mortgages and other bills.... the tax credits would equal the lost rent, and would be transferable. 
Apparently this would start in 2024 in California -- I'm not sure why it should not start immediately -- now  is when renters need relief -- and would stay in effect for ten years. Maybe the rent relief starts immediately and the other components kick in in 2024. I don't know.

This is what it is all about: homelessness. There will be much more to say, but at the end of the day, this is all about homelessness in California.

There is a certain segment of the population that will always be homeless, but the folks I'm worried about -- and the folks this bill apparently targets -- is those folks on the margin, those folks that under "better" times would be able to make their monthly payments. This is for those families whose breadwinner is out of job for ten months and savings have run out.

So, stop right there, it's an incredibly brilliant idea.

But, the cost? Not affordable? Upwards of $500 million per year, or at ten years, or $5 billion. I think the math is correct. A billion a year for ten years would be $10 billion, so at half-a-billion/year, it would be $5 billion over ten years.

Now back to that thought you were holding: ff the state can find $80 billion to fund a short diesel train to nowhere, certainly it can come up with $5 billion over ten years to save a few families who would otherwise go homeless.

Other Thoughts

The most important thing about this bill: it attempts to address part of the homelessness problem in California. That's enough right there to defend this proposal.

But think of the economic stimulus. A family that cannot afford monthly rent will not become homeless, with additional costs to the state.

They can use the money that would otherwise be spent on rent for transportation, food, education.

I don't like the idea of tax credits. I would prefer that the state simply pay the missed rent money directly to the landlords. If the state sponsor is being truthful that tax credits would equal missed rent payments, then it would be a wash for the state, and the landlord would not have to wait until the end of year to "break even" on the missed rent payments.

RBN Energy With Bakken Natural Gas Update; Four Wells Come Off The Confidential List Today; NDARC Drops To 16 -- May 14, 2020

US oil supply: another record -- an incredible 42 days of crude oil supply in the US. Link here. 

Jobless claims, link here:
  • prior: 3.169 million
  • revised: 3.176 million
  • consensus: 2.5 million
  • actual: 2.981 million
  • we must be trending toward 40 million first-time jobless claims in last couple of months
  • best estimate: US unemployment jumps to 10%
Rasmussen daily president poll: at same point in presidency, May 13:
  • Trump: 47%
  • Obama: 46%
One giant re-set: think about the implications with $20-oil for the next two decades.
  • the geo-political effects would be breathtaking
  • changes in the global economy would be likewise breathtaking
Twitter scroll:
  • Saudis slash oil sales to Asian buyers: well, so much for this latest attempt to regain market share
  • IEA: oil producers the world over are shutting in supply faster than anyone had anticipated; a historic decline (see below) 
  • US crude oil production, most recent: 
    • 9.44 million bpd
    • a drop of about 3 million bpd from Marc
  • Kuwait: tells buyers to load less crude on ships in June
  • oil on floating storage soars to record highs, but peak still some way off;  link at S&P Global Platts
  • SPR to buy up to one million bbls of sweet crude oil from small to midsize domestic producers
  • Beijing traffic:
    • rush hour traffic is now above 2019 congestion
    • off-peak hours: traffic well below 2019 levels
    • analysis: folks using private transportation to get to work; shunning buses, subways. light rail (same thing we're seeing in US)
  • US to be biggest contributor to global supply cuts by year-end
    • US shale, as swing producer, turns on a dime
    • but can it recover just as quickly if necessary to prevent oil price crisis at other extreme?
  • Saudi crude oil output may drop to 2002 low (and sell for $25 -- think about that)
  • demand to fall to 8.6 millio bopd in 2020
Saudi Arabia: well, so much for this latest attempt to regain market share
  • cutting sales of oil to the US and Europe by about half 
  • Saudis slash oil sales to Asian buyers
Fascinating: look at these numbers --
  • global oil supply rose by 260,000 bpd -- talk about false precision but that's another story -- but global oil supply rose by only 260,000 bpd inApril
  • global oil supply at 100.05 million bpd in April
    • 260,000 / 100.05 = 0.26%
  • forecast by EIA: global oil supply will fall by 12 million bpd month/month in May
  • forecast by EIA: global oil supply will fall to 88 million bpd in May -- I find that amazing
IEA's May oil market report has been released (note this is the IEA report, not the EIA report):
  • the report is here;
  • global oil demand will fall by 8.6 million bpd in 2020
  • oil supply is set to fall by a spectacular 12 million bpd in May 
  • this will be a nine-year low in global oil supply
  • the peak decline for global refining activity has shifted to May
Comment: I don't recall any government bureaucracy, in recent memory, using the word "spectacular" to describe anything.

OPEC basket, link here $23.25. Even if the price of oil doubles, Saudi can't make it on $46-oil;

Floating storage: link here to S&P Global Platts.
  • currently: 180 million bbls crude oil on floating storage
  • highest level in the history of the oil oil market
  • a rise of almost 95% in the past two months
  • but peak is still "a far way off"
  • floating storage
    • day rates: 
      • during the rush at the end of March: 
        • $120,000 / day for VLCCs
        • periods up to one year at $85,000 / day
      • currently (this week): $55,000/day storage costs on VLCCs
    • will likely take a very, very long time to balance
    • currently 200 million bbls of oil and products on floating storage
    • represents 5% of global carrying capacity
    • estimate: 10 - 20% of the global tanker fleet represents a "reasonable" ceiling for floating storage
    • would allow 400 million to 800 million bbls of crude oil and products
    • freight rates stay elevated as storage tightens spot tonnage
    • inland storage crisis may have been averted but demand still in doldrums;
  • biggest loser? West African crude oil
  • parting shot:
"The current supply losses, OPEC's determination, and trend towards opening up point to stronger oil prices than we believed earlier," it said in a note. "[But] we are not overly bullish as much anxiety persists, particularly around demand and the impact of opening up from lockdowns on the infection rate."

Airbnb: industry crumbles;

Disneyland? to be closed for one year?

Back to the Bakken

Active rigs:

Active Rigs1665605127

Four wells coming off the confidential list today  -- Thursday, May 14, 2020: 46 for the month; 96 for the quarter, 323 for the year:
  • 36799, drl, WPX, Nighthawk 6-34HUL, Heart Butte, no production data,
  • 36459, SI/NC, BR, Glacierfill 1F, Clear Greek,
  • 35746, SI/NC, Zavanna, Usher 28-21 4TFH XW, Patent Gate,
  • 35386, SI/A, CLR, Palmer 4-25H1, Haystack Butte, t--; cum 6K over 9 days;
RBN Energy: Bakken gas supplies plunge as oil production pulls back. Archived. This is really, really cool. Not only is this an RBN Energy post on the Bakken, but it features one of my all-time favorite poet-writer-singer-Zen master. LOL.