Later, 9:03 p.m. CT: see comments. A reader writes --
I actually had heard that BR was picking up one rig next month. I do know that WPX is picking up a rig in January as well. I think Sinclair may be picking up a rig soon as well.
Later, 10:36 p.m. CT: a reader writes that BR will add two rigs in the Bakken in January, 2022.
Firster things firster: just after jobless numbers came out this morning, Dow futures jumped from 230 points to 250 points UP at the opening. Predictable in light of Jay Powell's comments yesterday; see below.
First things first: ISO NE
- spike to $100 earlier this morning; that just blows me away; should be below $20; are people paying attention?
- now down to $45 -- autumn: heating / air conditioning should not be a factor
- natural gas + nuclear: 90%
- none of the rest matters
- significant portion of renewable energy is nondispatchable
The aha moment: EU / UK leaders are not concerned about high energy prices, despite the rhetoric.
Resident Biden is certainly not concerned. It's all part of the plan to move renewable energy to the front burner (pun intended). "They" know they can get away with it. Any doubts? Follow the Covid-19 mandates this past year. Bureaucrats set policy, and the courts did not step in to prevent loss of individual freedoms.
- Dow: up 230 points, futures
- DXY: 93.130; down 0.308;
- WTI: $71.87
- TYT: 1.341%; flat
- dividend announcements today
- Accenture raises dividend
- no change: Darden Restaurants, Pfizer, Target
- Jobless: first time jobless claims at 351,000, worse that expected
- yesterday: Jay Powell clearly said that tapering would not begin until he sees a good jobs report
- let's see if Steve Liesman reminds us of that today; my hunch: nope.
UPS: most interesting number to watch this next month -- the UPS earnings report -- not sure when they will report but possibly October 27, 2021 -- in light of the FedEx numbers this week.
My hunch: UPS will do just fine; FedEx has its problems unrelated to Covid, though they will blame their problems on labor shortages due to Covid -- to some extent true -- but FedEx problems began long before Covid.
Investors: news coming out of China early this morning. Will today be a repeat of Monday -- when there was a 500-point sell-off on the Dow?
COP: this COP/Shell story has legs. Still making headlines. Over at SeekingAlpha today: COP: hungrily snapping up Shell's discarded acreage. Link here.
- Long rumored to be for sale, ConocoPhillips picked up Royal Dutch Shell's Permian land holdings.
- Price tag was a solid one, given the quality and resource depth. Shell is just a somewhat forced seller, given its corporate direction.
- Deal is highly accretive to ConocoPhillips shareholders, generating billions of additional free cash flow over the coming years. A good chunk of that is ending up in investor pockets.
COP: WAR52 suggests new name for COP -- ConConchShell. Link here with proposed logo. New ticker: CCS?
But my favorite all week: Apple and Epic.
Gasoline demand: took a significant downward turn this past week. Link here.
EU / UK energy crisis:
- Nord Stream 2: Russia is gonna control .... link to The WSJ.
- crude stocks drawing down bigly: drawing down in the US (thanks in part to GoM outages; in Europe, Japan, China. Floating crude is down sharply in the last two weeks, falling at a 2.5 million bopd rate; floating storage now at the lowest since early March, 2020. Link here.
- oil product inventories: at lowest level since reporting began in 2017; total oil stocks fall 8% week-on-week; but look at this:
- fuel oil demand up from natural gas switching
- significant draw in middle distillates
- Vitol Group teams up with BYD. The former: largest independent oil trading house; the latter: Chinese EV maker backed by Warren Buffett. Link to Charles Kennedy. Reported by someone else, it's a non-story; written by Charles Kennedy, a big story.
Vaccines: The WSJ.
Covid: it's official. FDA says I'm eligible for a booster shot. Six months after two-dose regimen. For me, that means December. Whoo-hoo.
Need to fact-check: it's being reported that EOG is using natural gas to mine bit coin. Some suggest EOG realizing $10 - $12 / MCF. Link here.
Back to the Bakken
Rigs: a reader writes that BR will add two rigs in the Bakken in January, 2022.
Active rigs, no longer being reported by NDIC, best guess:
No wells coming off confidential list, being reported by NDIC. We'll see later today.
Global gas and LNG prices are currently at record high levels. If we sound like a broken record, it’s because this epic bull run that started in the spring, has been roaring in recent weeks and showing little sign of slowing down. European prices have hit new post-2008 or all-time highs more than 25 times since late June, and prices in Asia, which had been at seasonal all-time highs for most of the spring and summer, finally last week also topped its previous all-time record from last January. A confluence of bullish factors, including high global demand, low storage inventories, weather events, and supply outages, have all contributed to the surge in gas prices. While many of these are near-term drivers and will eventually flip in the other direction, there is one bullish driver of global gas demand — European carbon prices — that will remain a constant in the years to come. That is by design because the carbon market is meant to serve as an incentive for the industry to seek greener solutions over fossil fuels. In today’s RBN blog, we look at the European Union’s Emission Trading System (EU ETS) and how it interacts with the global gas market.
Europe has the world’s oldest and largest carbon trading system. We’ll start with its origins to get a better understanding of how it works. The market, which now covers all the countries in the EU as well as Iceland, Liechtenstein and Norway, was established in 2005 to regulate emissions from power generation, manufacturing and some airline operations. Together, the sectors that fall under the ETS regulations account for about 40% of the EU’s total greenhouse gas (GHG) emissions. The EU ETS is a cap-and-trade system, meaning that there is an annual limit or “cap” on the total allowable GHG emissions from each of the roughly 10,000 installations covered by the ETS regulations. Each of the installations (say, a power plant or factory) receives a certain number of emissions allowances for a year. If an installation emits its exact allowance, then it is all set, but if it has extra allowances or needs more, that’s where the “trade” portion of cap-and-trade comes in. If an installation has extra allowances, it can bank them for the following year or sell them using the ETS and, if it needs more allowances, it has to purchase them. The open trading of emissions allowances provides a financial incentive for participants to go green and does it in a least-cost-first way. Basically, those who can reduce emissions cheaply, do so and then sell credits, and those who can’t, buy them. Either way, the overall market is capped, guaranteeing that the emissions don’t go over that level even though individual participants may emit more or less than what they were allotted.