WTI: will it hit $75 today; pre-market up 1.3%; up almost a dollar; trading just below $75 at $74.93.
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.
A quick look at the news this morning suggests:
- ten year treasury: moving higher and really, really helping the market (especially the banks)
- re-opening trade -- WTI flirting with $75; oil and oil services surging; Goldman Sachs has lifted substantially its Brent crude forecasts to $90/bbl by year-end; will continue into 2022, 2023 and what it calls the mid-cycle price; link here.
- some mainstream media starting to link renewable energy policies with current energy crisis
- one respected pundit calls for a "natural gas reserve" for Europe, the UK
- hush: isn't this a bit late?
- hush: they had one until faux environmentalists shut it down; it was called Groningen
- the UK gasoline crisis is not getting better;
- China's sudden thirst for energy seems to have surprised analysts; link here or direct link to a Bloomberg paywall;
- the Chinese winter has not started yet, but China's thirst for more energy right now is a big, big deal; all of this in context with the Winter Olympics in China in February 2022; link here;
- Equinor has quietly increased significant amounts of oil to Asia; link here;
- India: may need additional two-million bpd refining capacity by 2030; link here to Reuters;
- many years of underinvestment; discussed often on the blog; I never bought into them; looks like it may happen: Hess sees tight oil market in near term; underinvestment risk ahead; link to Reuters; reminder: Reuters is London-based; has great world view, but at same time, sees things through European socialist spectacles. [The Economist is so much worse; explains why it never shows up on my twitter feed];
- one begins to wonder what might happen if gasoline prices spike here in the US, from current average of around $3.10 / gallon to $5.00 / gallon
- indications some folks are again hoarding basic non-perishables
- Costco in some regions limiting volume purchases of some paper items
- in the US equity markets; there appears to be a sector rotation; folks are selling small amounts of AAPL to buy moderately into oil sector
- overnight futures starting to drop back; those who thought the market might close "green" today may be surprised; watch for day's lows to occur at 10:30 a.m. CT
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.
Asymptomatic Covid: is it just me or are we seeing an increasing number of television presenters with a hacking cough; JoBid had a hacking cough there for awhile; folks commented on it; seems to have resolved; hosts on The View were said to have been coughing at the time two tested positive for Covid-19;
CNBC: because I generally don't watch the network at dawn but wait until later, I had not noticed but isn't Becky Quick looking a bit older; Joe seems not to have aged; Andrew Ross Sorkin's hair looks incredibly black -- incredibly black, but most noticeable, not one grey hair along the temples where one would expect it; I watch the screen; no volume or captions; way too political and nonsensical; video now airing highlights of the Ryder Cup (numbers to recall, all in yards: 345 71 47). I did turn on the volume for that; well-worth hearing the conversation; these guys knew what they were talking about;
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Back to the Bakken
Enerplus: the Enerplus "String Instrument" pad is going to be huge. See below. Tracked here.
Active rigs: no one knows. My best guess*:
$74.93
| 9/27/2021 | 09/27/2020 | 09/27/2019 | 09/27/2018 | 09/27/2017 |
|---|
| Active Rigs | 24* | 11 | 57 | 65 | 57 |
Wells coming off confidential list today; ditto, but NDIC says these will report today:
Monday, September 27, 2021: 31 for the month, 42 for the quarter, 222 for the year:
- 37029, conf, Enerplus, Fiddle 149-94-02C-01H-TF,
- 37028, conf, Enerplus, Mandolin 149-94-02-01H,
Sunday, September 26, 2021: 29 for the month, 40 for the quarter, 220 for the year:
- 38181, conf, Petro-Hutnt, Hurinenko 144-98-2B-11-1HS,
- 37245, conf, MRO, Armstrong 14-34H,
Saturday, September 25, 2021: 27 for the month, 38 for the quarter, 218 for the year:
RBN Energy: OPEC's giants claiming ground despite uncertain crude oil market.
Producers of crude oil face historic insecurity about their market. Not
only is there still uncertainty stemming from COVID, oil demand is also
under pressure as governments and international organizations push to
replace fossil fuels with energy forms free of hydrocarbons. Members of
the Organization of the Petroleum Exporting Countries (OPEC) face
special challenges from measures taking shape to discourage oil use.
Their economies, more than most others, depend on oil sales and many
members of the exporters’ group have limited sources of replacement
income. Yet OPEC producers do not lack leverage in a market expected to
grow at diminishing rates and eventually shrink. Many of them can
produce crude oil much less expensively than counterparts elsewhere and
some of them plan to profit from that advantage by increasing output,
even as the market flattens, and are investing to raise production
capacity to ‘get while the getting is good.’ In today’s RBN blog, we
look at capacity-boosting plans within OPEC, explain why most members
cannot take part in the effort, and describe how this developing
priority might intensify market competition.
A bit of "Oil-101":
In fact, analysis of undeveloped reserves suggests that six OPEC members
face trouble clearing even the geologic hurdle, the one we’ll examine
most closely. To assess this requirement for raising production
capacity, we look at reserves-to-production (R/P) ratios. Because
dividing reserves by annual production yields a quotient measured in
years, R/P ratios are sometimes called reserves lives indexes and are
taken to mean time remaining before resource exhaustion. But that can be
misleading because oil fields don’t follow formulas. Reserves estimates
change as knowledge grows about productive reservoirs and production
doesn’t decline in a straight line as oil-bearing rock — the reservoir —
depletes. Typically, a field peaks relatively soon after production
starts then falls rapidly before flattening later in its life and
beginning a slow decline that can last for a long time. Also, output can
jump during a field’s life in response to techniques such as water or
gas injection and enhanced recovery. For these and other reasons, a
mature oil field — or a long-producing country with many such fields —
can have an R/P ratio of 9-10 for much longer than 9-10 years.
Regardless, an R/P ratio in that low range usually indicates that there
has already been extensive field development and so there is limited
potential to increase capacity by drilling more or installing surface
equipment. Conversely, much higher R/P ratios imply room for further
development of existing reserves and, therefore, potential for net
capacity hikes to the extent that new production offsets declines from
existing wells.
In Figure 1, we calculate R/P ratios for all 13 OPEC members with
reserves and production data from the 2021 BP Statistical Review of
Energy published in July. We use data for 2019 instead of 2020 because
last year’s production suffered from oil-demand losses related to the
coronavirus pandemic, making the prior year more reflective of long-term
trends. The table shows reserves estimates (A) divided by the product
of daily production (B) multiplied by 365 which yields annual production
(C) to derive R/P ratios. The R/P ratio range among OPEC members is
huge, from Angola’s and Equatorial Guinea’s 15 (blue ovals) to
Venezuela’s whopping 925. We should point out that Venezuela’s R/P ratio
is distorted by production suppressed by the economically beleaguered
country’s inability to invest in its oil fields and by inclusion in its
reserves number of heavy oil in the mostly undeveloped Orinoco Belt.
Subtracting Orinoco reserves of 262,000 MMbbl leaves conventional
reserves of 41,800 MMbbl and lowers Venezuela’s R/P ratio to a still
high 127. That happens also to be the R/P ratio of Iran, another country
with high reserves and suppressed production — in Iran’s case by
international sanctions limiting exports and oilfield investment.
Venezuela and Iran are the two countries mentioned earlier that, because
of investment restrictions, are unlikely to raise production capacity
soon despite their high R/P ratios. For countries with low R/P ratios,
raising capacity is not impossible, but the resulting production
increments probably would not be large. An alternative, not practicable
on a large scale for many of the low-R/P countries, is to find new
fields or extend existing fields through costly and risky exploration
and development.
Figure 1. OPEC Reserves, Production, and R/P Ratios in 2019. Source: BP
Much, much more at the link.
