Anticipation: this may be the most interesting two, six, twelve, twenty-four months ahead of us with regard to the price of oil that we have seen in some time. Right now backwardation is the word of the day. I have no idea if this Bloomberg link is just background noise or if it's a big deal. The Bloomberg writers seem to think it's a huge deal.
- futures contracts, premium traders are willing to pay for WTI:
- traders are willing to pay $1.12 more per bbl in September than in October (2021);
- prior to this, the gap between the third- and fourth-closest contracts had only traded above $1 over two periods in the past thirteen years: in 2008 and from mid-2013 to mid-2014;
- during both of those previous spans, oil prices were well above $100/bbl
- "futures are now trading below $75 a barrel, making the current gap all the more extraordinary"
- bottom line: this spread suggests traders see supplies of crude oil to significantly tighten by the end of the driving season in the US
- Bank of America: "forecasts that oil may surge to $100 a barrel next year (2022)" -- next year could be as early as seven months from now but more likely a year from now;
- Cushing storage tanks are being emptied (tends to corroborate backwardation); previously posted;
Watching: who will "move" first to take advantage of $75-oil?
- Saudi Arabia?
- US majors?
- Permian shale operators?
- July is almost here; if the tea leaves are being read correctly, we're going to see a lot of articles being written before the end of July (2021) that the supply crunch is going to be much than anyone saw coming;
Focus on fracking: see this link. Do the current numbers foreshadow a huge shortage of crude oil by Labor Day?
- oil hits 32-month high -- that includes the two years prior to the pandemic lockdown;
- refineries are already operating at a post-pandemic high
from that link, the latest on the US oil supply:
- US oil data from the US Energy Information Administration for the week ending June 11th showed that because of a big increase in our oil exports and another increase in our refinery throughput,
- we again needed to withdraw oil from our stored commercial crude supplies for the sixth time in the past seven weeks and for the 20th time in the past thirty-one weeks
- our imports of crude oil rose by an average of 108,000 barrels per day to an average of 6,746,000 barrels per day, after rising by an average of 1,007,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 953,000 barrels per day to an average of 3,884,000 barrels per day during the week,
- which meant that our effective trade in oil worked out to a net import average of 2,862,000 barrels of per day during the week ending June 11th, 845,000 fewer barrels per day than the net of our imports minus our exports during the prior week
- over the same period, the production of crude oil from US wells reportedly rose by 200,000 barrels per day to 11,200,000 barrels per day, and hence our daily supply of oil from the net of our trade in oil and from well production appears to total an average of 14,062,000 barrels per day during this reporting week...
Does the EIA "US days of supply of crude oil" corroborate what so many seem to be saying? Link here. It's a pretty amazing graphic:
- during the first three weeks of March, 2021: the US had 40+ days of crude oil inventory:
- that's a huge supply inventory if things were not changing, but coming out of the global lockdown, things are changing;
- the number of days of crude oil supply in the US dropped steadily for the next three months
- most recent data, the second week of June, 2021, 6/11/21: down to less than 30 days.
Thirty days is more than enough; but it's the rate of decline that is being noticed by those who are watching this.
Back to the Bakken
Eight new permits, #38385 - #38392, inclusive:
- Operators: Hunt Oil (5); Petro-Hunt (2); Whiting
- Fields: Green Lake, Smoky Butte, West Ambrose (Divide); and, Sanish (Mountrail)
- Hunt Oil has five new permits in Green Lake / Smoky Butte; they will be sited in lot 3 section 6-159-100;
- they will be sited between 265 FNL and 345 FNL and between 1370 FWL and 1460 FWL; these wellheads are spaced 30 feet apart;
- Petro-Hunt has two new West Ambrose permits:
- the two wells to be sited in NWNE 13-162-100; 195 FNL and between 1635 and 1670 FEL;
- Whiting has a new Sanish permit:
- one permit for a Rudman well to be sited in NWNW 12-153-91, 515 FNL and 975 FWL
Two permits renewed:
- Oasis: one Weisz and one Grad permit, both in Mountrail County;
One permit canceled:
- EOG: a West Clark permit in McKenzie County canceled
Name change: This is pretty cool: Rimrock Oil changes names on four wells, from Charging Eagle wells to: Unicorn 15, Dragon 15, Mermaid 15, and Sasquatch 15, all sited in SWSE 19-147-91, Dunn County;