WTI Plunges; One Well Coming Off Confidential List Today -- June 15, 2022

Top story to follow today:

• White House: more evidence of panic in the White House
• there are so many YouTube videos of Biden "keystoning" America
• these clips will start to be shown this September
• every day, we get a new WH talking point suggesting exacerbation (and panic) with regard to current situation
• today Biden turns to refiners, and, again, of course, gets it all wrong
• blames refineries for high-priced gasoline; demands that refineries explain why not operating at higher capacity (of course, they are operating at highest levels ever)
• Biden demands oil companies explain lack of gasoline -- CNBC
• I can hardly wait for Biden to demagogue that not enough pipelines have been built even though oil industry has more money than God to fund those pipelines

Big story with which I'm struggling:

• reason why WTI plunged from $123 (and trending higher) to $117 (and trending lower) in matter of six hours or less, yesterday
• first thought: FOMC could scare the heck out of investors today, not only with rate hike but frank words regarding how bad it really is
• frankly, my dear, we are between Scylla (out-of-control inflation) and Charybdis (a severe and record-long recession)
• second thought: Biden's breathless announcement yesterday the largest SPR-release ever, at his direction
• but this makes no sense: this is simply a continuation of the original plan announced earlier this year;
• amounts to an additional one million bopd
• if one connects the dots, it now makes sense why Biden released SPR heavy oil when US refiners can't use it / don't need it -- posted yesterday
• first dot to connect and then work backward from this: which BLUE state has been most impacted by high prices
  
• third possibility: perhaps it's no more than Biden's jawboning that spooked traders that caused WTI to plunge
• maybe readers have explanation, but I certainly don't: explanation why:
• WTI plunged from $123 (and trending higher) to $117 (and trending lower) in matter of six hours or less, yesterday

Going into mid-terms:

• White House knows gasoline needs to get back to 3-handle gasoline by mid-terms
• Americans won't accept 4-handle gasoline any more than they accept 6-handle gasoline
• tea leaves:
• most Americans will see $6-gasoline during height of driving season
• Biden's initiatives risk regional spot shortages of gasoline and photos of gas lines
• the good news for the Biden administration: by the end of September, prices start to drop -- but again, gasoline needs to drop to less than $3.79 to improve mid-term prospects
• does anyone see national gasoline price to be below $3.79 by October, 2022?
  

Other stories to follow today:

• cryptocurrency: could fall faster than Lehman; 
• at least two cryptocurrencies announced withdrawal freezes this week
• one of those two cryptocurrencies is apparently seeing bankruptcy protection
• crypto bankers have gone from $4 trillion a year ago to $1 trillion tooday
• took a lot of white collar and blue collar folks with them
• I have no idea how "big" story is at it affects the national economy and the Fed's dilemma but when we're talking "trillions" it has to be a bigger threat than most think
• Fed mandates: dual -- inflation and jobs
• "Schwab" no longer even pays attention to weekly jobs report
• historically, Schwab analysts breathlessly await each weeks jobless claims report
• now, not even interested. Why?
• Fed no longer focused on jobs: way too many job openings and not enough workers
• one of two mandates, employment, no longer anything the Fed even discusses
• only mandate on which the Fed is focuses: inflation
• Fed has turned more hawkish than some expected, but it's finally happened
• apparently a recession is better than out-of-control inflation
  
• politics: South Carolina pol that voted to impeach Trump defeated by Trump-supported opponent
• Australia: energy crisis; anticipating blackouts
• supply / demand: IEA has surprise announcement --
• global oil demand will "accelerate" to 2.2 million bpd in 2023 (that's next year)
• up from 1.8 million bpd in 2022
• "global oil supply may struggle to keep pace with demand next year" -- IEA
• right or wrong, I always associate IEA with Saudi Arabia
• regardless: both are now on same page of music -- spare capacity has been for quite some time
• here we go: Saudi Arabia told OPEC it raised its crude production by 97,000 bopd m/m to 10.538 million bpd
• this is nothing new
• they increase production this time every year to meet domestic demand
• Saudi burns oil to run air conditioning
• 97,000 bpd / 10.538 million bpd = 0.9%
• Bakken will increase production by 100,000 bopd m/m when May, 2022, data released
• LNG: with Freeport explosion, Asia's energy crunch turned from bad to worse

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Back to the Bakken

NDIC GIS map server update

• NDIC goal: to have the GIS Map Server up and running as of yesterday, June 14, 2022
• NDIC front page (doesn't work on all browsers)
• at that "front page," at the sidebar at the left, click on "GIS Map Server" about halfway down:
• not only is there no "URL" for the "GIS Map Server, one gets the following:

Far Side: link here.

WTI: $118.40

Active rigs: 37 or thereabouts

Wednesday, June 15, 2022: 23 for the month, 161 for the quarter, 321 for the year

• 38434, conf, WPX, Wounded Face 14-15HB, McGregory Buttes, no production data
  

RBN Energy: producer restraint, tighter balances disrupt Appalachian gas market trends.

Before the bullish winter of 2021-22, it appeared the Northeast natural gas market was headed for familiar territory: worsening seasonal takeaway constraints and deeper, constraint-driven price discounts starting as early as this spring. Instead, the market went in the other direction the past few months. Takeaway utilization out of Appalachia has been lower year-on-year and, for the most part, Appalachian supply basin prices have followed Henry Hub higher even as that benchmark rocketed to 14-year highs. That’s not to say that constraints out of the Northeast aren’t on the horizon. But the market is now poised to escape the worst of it this year, despite the completion of the last major takeaway pipeline project in the region, Mountain Valley Pipeline (MVP), being pushed out another year or longer, if it crosses the finish line at all. In today’s RBN blog, we provide an update on regional fundamentals and what recent trends mean for gas production growth and pricing in the region.

As we’ve discussed many times in the RBN blogosphere, the Appalachia production basin has long struggled with midstream constraints. For much of the Shale Era, Appalachian producers were champing at the bit to grow production with every little piece of incremental takeaway capacity that came online. The situation became particularly dire by the middle of the last decade, when Northeast supply outgrew intra-regional demand and local production growth became constrained by producers’ ability to access markets outside the Northeast region. Production growth “slowed” to an average of 2.5 Bcf/d each year in the 2015-17 timeframe, compared with close to 4 Bcf/d in 2013 and 2014, as midstream capacity couldn’t keep up. Producers got a respite in 2018-19 as major capacity additions were completed and for the first time in years there was unused egress out of the basin, easing constraints and allowing Appalachian prices to strengthen relative to Henry Hub. But with conditions improving, production took off again, increasing by more than 4 Bcf/d in 2018, once again resuming the march toward midstream constraints and weaker prices. The pandemic slowed growth, of course, as rig counts fell and domestic and export demand evaporated, but Northeast production still grew by nearly 1 Bcf/d in 2020 and nearly 2 Bcf/d in 2021 to a record of 35.5 Bcf/d by December 2021, bringing with it record outflows.