WTI Plunges; No Wells Coming Off Confidential List; RBN Energy Has It Exactly Right -- March 9, 2022

Things are not going all that badly for Europe with regard to the war in Ukraine. Exhibit A? Kamala Harris is in charge of US affairs regarding this war. 

Wow: one British speech, and oil prices plummet! Biden bans Russian oil, natural gas, and coal. Everyone panics (including me) and oil prices plummet. It's a fool's errand to predict oil prices. I can't wait to fill my car with gasoline today. So much for all the renewable energy talk. Right now:

From yesterday: wow, well played by the Biden team. Huge head fake. 

President Biden announced the ban on Russian oil, natural gas, and coal and then flew to Ft Worth, Texas. It was rumored that he was going to Texas to talk oil, which, of course, made no sense at all (see original post: going to Ft Worth to talk oil? Oh, give me a break). 

He kept to his schedule. Following the SOTU speech in which he spent a good deal of time talking about curing cancer and medical care for veterans, where does he go? He heads to a VA hospital in Texas to talk, not about oil, or Ukraine, but about curing cancer and providing better medical care for veterans. Wow, huge head fake. Well played.

Just like that, there's no oil or gas shortage. Biden announces that the US will ban all oil, natural gas, and coal from Russia, the markets panic, the price of oil surges. This morning, the price of oil dropped back significantly. What happened. Some Brit made a speech saying they would have enough natural gas to get them through the winter. Just like that, no oil or gas shortage. One speech. And just like the market (actually, pre-market) surges.

As I've said before, I would prefer "a Biden" in the White House right now than "a Trump." 

Hey, by the way, why is the pre-market surging? The market does not react this way to Ukraine or the price of oil. 

The market reacts to the Fed. Right now the Dow is up almost 600 points, and this despite shares in oil sector plummeting. What's up. Is the market trading on a bet that Jay Powell doesn't raise rates this month, or that he sticks to 25 basis points which is, like, still free money? Perhaps the market is simply "up" because it was oversold. If so, there is still a lot of time to get in. Ford is still trading below and $17, and up 4% in pre-trading it's still below $17. ATT (T) is perhaps the most interesting. Despite all the headwinds it has really held up. The six-month high was $28 back in September, 2021. It slumped to $22 in December, 2021, but is now back to $23 after some wild gyration but still in a trading range. 

And it's paying 9%. Are you kidding me. Of course, that's an "accidental yield." Not only will the yield come down as the price of T comes back up, but the dividend will be cut in half when TimeWarner is spun off.

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.

$150 oil: that's what Yahoo!Finance "morning brief" is calling for. 

Like me, Yahoo writers panicked when Biden made "the" announcement to ban Russian oil. Now, less than 24 hours later, never mind. WTI and Brent slump. Britain now says they have enough natural gas to get through the winter. And just like that, thee panic is over.

The big news, of course: Kamala Harris is going to Poland (?) to sort out this mess. No one takes her seriously, of course, but it doesn't matter. I saw this all the time in the military. Everyone shows up at the meeting; everyone listens to the "big guy" in the room, and then we all went back to our offices and continued to do what we were doing before the meeting.

Oil: "way down" this morning, but nothing has really changed. Nice sector rotation in the market.

Pretty amazing: oil is "way down" and energy stocks (equity) have dropped significantly in pre-market trading, and yet .... drum roll ... WTI is still more than $120. I'm lovin' it.  I was thrilled to see oil drop overnight, while noting that fundamentally nothing has changed. Or has something changed?

Is GasBuddy gaslighting us? 

Pet peeve: all this talk about "demand destruction" -- a concept that is undefined, and has no metrics. A worthless meme. Was that "demand destruction" when gasoline demand in 2020 bottomed out? 

First group "financial / economic" indicators:

• 10-Year Treasury: link here. Trending toward 2% again. Yield at 1.913%.
  
• DXY: link here. Dollar down almost one percent; now at 98.21. This is not why WTI is selling off. Someone suggested the strong dollar caused WTI to sell off today. The dollar was stronger yesterday, weaker today.
  
• Silver: link here. DOWN over 2%; trading at $26.35.
  
• Gold: link here. WAY DOWN; down over 3%. Trading well below the high of $2,056 yesterday; now trading at $1,991.
  
• CBOE volatility index: link here. Explained at Investopedia.VIX drops 7.2%.
  

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Back to the Bakken

Active rigs:

$120.7	3/9/2022	03/09/2021	03/09/2020	03/09/2019	03/09/2018
Active Rigs	32	15	55	67	59

Wednesday, March 9, 2022: 10 for the month, 118 for the quarter, 118 for the year

• None.

RBN Energy: a reality check on energy prices and their impact. 

WTI is selling for north of $120 a barrel, gasoline and diesel are retailing for more than $4.10 and $4.80 a gallon, respectively, and, with Russia continuing its unprovoked war against Ukraine, it’s hard to imagine prices for hydrocarbons easing by much anytime soon.

As startling as the recent spikes in crude oil and refined products prices may be, however, it’s worth keeping in mind that, in real-dollar terms, prices for these commodities have been considerably higher in the past, including through much of the 2006-14 period and back in 1979-81.

And don’t forget, the car, SUV, or pickup you’re driving today consumes about two-thirds as much fuel per mile, on average, as the vehicle you (or your parents) drove back when Ronald Reagan was running for president and Pink Floyd’s The Wall was the best-selling album. In today’s RBN blog, we put today’s “record-breaking” prices for crude oil and motor fuels in perspective.