Notes And Comment -- Later-Morning Edition -- April 15, 2021

Dow, new record: Dow goes over 34,000 for first time ever. Happened only one month after it hit 33,000. 

Jobs report: first time jobless claims way below forecast; not only did the number drop below 700,000, first-time claims dropped below 600,000. At 574,000 this is a "pandemic-low." Link here. 

S&P: solidly above 4,000.

NASDAQ: fluctuate around 14,000.

Banks show the "Reddit" crowd how to do it, Bloomberg:

• SPACs and meme stocks feed windfalls for big Wall Street banks
• Goldman traders beat highest analyst estimates by $2 billion

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All In The Eye Of The Beholder

After yesterday's EIA weekly petroleum report was released, a reader wrote:

Looking at EIA reports for several weeks. Domestic production stagnant at 11mm bbls/day. Report yesterday shows inventory of crude and product drop of 9 mm bbl and imports for the week 4.5 mm bbl. Imports of crude and product now 2 mm bbl/day. 

My not-ready-prime-time reply:

I'm looking at the EIA report released yesterday:

• US crude oil imports averaged 5.9 million bpd, down by 411,000 bpd from the previous week;
• Total motor gasoline imports last week averaged 830,000 bpd and distillate fuel imports averaged 261,000 bpd. [No previous data provided.]
  

I would hardly call US production of 11 million bpd stagnant at this point. What's the max the US has ever produced? "Stagnant" = unchanging, but in this context that word has a "negative" connotation for me. US crude oil production has been unchanged for quite some time, but it's hardly an interesting metric.

Link here: https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mcrfpus2&f=a.

See graphic at that link. Amazing. Eleven million is certainly not a bad number.

US production:

• in 2017: a new record at 9.4 million bopd
• in 2018: a new record at 10.964 million bopd
• in 2019: a huge new record of 12.248 million bopd
• in 2020: back to 11.315 million bopd
• current EIA estimated: 11.00 million bopd
  

If you want to see oil drop precipitously in price, let US production jump to 13 million bopd and see what Saudi Arabia does in response.

The delta between 11 million bopd and 12 million bopd could be made up in weeks if necessary.

I'm not focused on production at this point. To a great extent, it's meaningless for me as a metric to follow. 

The "re-balancing" numbers prove that -- crude oil in storage essentially unchanged for years. I'm focused on demand; refinery operating capacity, and most importantly, not the change month over month (the velocity, not speed) but rather the rate of change month over month (acceleration).

By the way, crude oil in storage is less important to me than the number of days of crude oil in storage: the best number for me is about 21 days and under. 

Crude oil days in storage: currently we remain at record high levels; recently over 40 days in storage and currently (most recent data): 33 days, down from 36 days two weeks ago, and down from 40 weeks about a month ago. 

Days in storage at this link: https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=W_EPC0_VSD_NUS_DAYS&f=W.

Yesterday's report is perhaps the most bullish report I've seen in the past twelve months -- it speaks volumes about the US re-opening. 

I'll add this:

As a consumer, not an investor, and not as an American, I don't care where oil is produced or where it comes from. I'm only interested in a reasonable price and no interruption in supplies.