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Monday, July 18, 2022

Why Oil Spiked Today: Reality. Biden Really, Really Screwed Up -- July 18, 2022

Covid: before we get started, in case you missed it, check out the Covid curves in Australia and New Zealand.  

  • Quite amazing. Speaking of which, I got my second Pfizer booster today; so now:
    • I've had four shots; and,
    • I should be good for six more months.
  • Right after the vaccination, I went swimming. Pool water crystal clear and cool.
  • ABC News, according to my wife, is reporting that it was 110 or 111°F in Dallas today. It was only supposed to get to 110. As far as I know, according to the ERCOT website, the grid never came close to failing. Wind held.

For those paying attention:

WTI:

  • WTI up over 5% today;
  • trading up over $5 / bbl
  • trading at $102.60.

Why oil spiked today. Reality.

Reality: Saudi Arabia could not be more clear: they don't have spare capacity. Period. Dot. Saudi made it very, very clear. You simply cannot be any clearer than this.

Saudi Arabia, the world’s top crude oil exporter, will not have additional capacity to increase production above the 13 million barrels per day (bpd) it has pledged to have by 2027, Saudi Crown Prince Mohammed bin Salman told the leaders of the United States, the Gulf Cooperation Council (GCC) states, Jordan, Egypt, and Iraq at a summit this weekend. 

From Josh:

In addition, after President Biden left the meeting he said he told MBS that he, Biden, still considered MBS a cold-blooded murderer; the Saudi finance minister says he never heard President Biden confront MBS on this issue, so either:

  • Biden is lying; or,
  • he's not.

Either way, MBS will have little desire to export more oil to the US.

It's probably not good form to say what was said when it was a private meeting. But that's another story. 

My hunch: MBS is even less enamored with Biden after the visit than before. For MBS that's 24 hours of his life he will never get back. Spending a day with Joe Biden. 

There are already reports that Saudi will end exports to the US. Oil is fungible, so that won't mean anything, but Saudi does have a refinery along the US coast, so who knows?

Fascinating. But bottom line, it's $100-oil for the long haul. -- Charles Kennedy. My favorite analyst? Charles Kennedy.

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Discipline?

Rig count: XOM and CVX running 75% less rigs in shale plays versus 2019. Link here

Discipline or better rigs, better technology, and more crude oil than refiners can handle right now?

I think calling this "discipline" is a meme. If there was opportunity in running more rigs, you can be assured they would be running more rigs. 

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SPR

For me, any story about the SPR is simply beating a dead horse. The story no longer matters. 

But, this is a valid question: what happens after October, 2022? LOL.


And, no, the SPR will never be refilled to record levels.

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For Investors

There were two photos / stories in the past week that sealed the deal.

I started a position in DE and added to my CAT position. 

I'll come back to this later. 

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Apple

Lawsuit: Apple Pay. Visa wants Apple Pay to be free. LOL. Let's see how that works out. Right now, retailers are charged 3% on transactions; some retailers, because of that, raise the on credit card transactions (think ARCO) or don't take credit -- only cash. If Apple is force to offer their service for free, retailers can dump M/C and Visa and go with the free one.

Hiring: Apple will slow hiring and spending. That's fine. Maybe leverage to get Apple employees back in the office. 

AAPL slumps today: blamed on above stores, one or other or both. Another buying opportunity. 

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Back to the Bakken

WTI: this is simply amazing. Up over 5%; up over $5/bbl; trading at $102.60.

Natural gas: well over $7.00. Trading at $7.50. Wow.

Active rigs: 41 or thereabouts. 

Three new permits, #39097 - #39099, inclusive:

  • Operator: CLR
  • Field: West Capa (Williams)
  • Comments:
    • CLR has permits for three Woodrow wells in SESE 32-155-96; 
      • to be sited between 415 FSl and 430 FWL and between 1146 FEL and 1235 FEL.

Five permits renewed:

  • Oasis: four Domalakes permits in Burke County, and one Barron permit in Burke County.

One permit reinstated:

  • 37628, loc, Grayson Mill, State 36-1 7H,

Three producing wells (DUCs) reported as completed:

  • 36109, 0 (no typo, typical for BR), BR, Gladstone Gap 44-23TFH-ULW, Sand Creek, no productioin data,
  • 36110, 0 (no typo, typical for BR), BR, Gladstone Gap 34-23MBH-ULW, Sand Creek, first production, 5/22; t--; cum 15K 5/22;
  • 30259, 3,380, Hess, EN-Madisyn-LE-154-94-0705H-4, Alkali Creek, no production data,

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