WTI Surges; A Federal Permitorium Renewed Under Biden -- Tuesday, March 1, 2022

Watching oil move tonight, just has to be more interesting than the speech:

• WTI: up 5.01%; up $5.18; trading at 108.68.
• Brent: up 5.23%; up $5.49; trading at 110.46.

The next thing to watch: the USD and Canadian dollar. At the link, toggle through one week, one month, one year, and two years. The one-year vs two-year is particularly interesting. Others are noticing it, but some of the "facts" are, in fact, not fact. A previous post on the USD and CAD.

Continues to Surge

I'm listening to Rod Stewart in the background, and in a few minutes I will have dinner, about 9:00 p.m. CT. I assume President Biden is delivering the SOTU address, but I haven't turned on television; in fact, with Hulu I don't even know if I could find the televised event. I will watch reruns of Perry Mason while having dinner.

But I was curious: what is oil doing? OMG -- oh, my goodness -- look at this:

• WTI: up 4.34%; up $4.49; last trade after hours: $107.90.
• Brent: up 4.48%; up $4.70; last trade after hours: $109.67.

Advance Copy

SOTU: "green energy bill" will be sold as anti-inflationary and put $500 back in every American pocket every year. There's no way I'm watching the SOTU address. I will be reading Shakespeare. Later: as I mentioned to a reader -- thinking about the SOTU address, I was reminded of the first few lines of a great song:

If I listened long enough to you
I'd find a way to believe that it's all true
Knowing that you lied
Straight-faced while I cried
Still I look to find a reason to believe

No Quartery Federal Lease Sale In North Dakota

From The Bismarck Tribune:

A federal oil lease sale in North Dakota expected to occur during the first quarter of this year will not take place, and the state's lawsuit over the matter looks to be heating up again. 

The federal government has missed the mid-February deadline to publish a notice to hold a lease sale this quarter, the U.S. Justice Department said in a court filing last week in North Dakota's federal leasing suit. 

The holdup has to do with a recent court ruling in Louisiana that blocked the government from using calculations it had made of the social costs of greenhouse gases. 

Those calculations are part of its environmental analysis in federal lease sales. 

The federal Bureau of Land Management had planned a lease sale this quarter with 29 parcels of federal minerals up for grabs in North Dakota and Montana. 

Oil companies seeking to develop federal minerals need to secure a lease and, subsequently, a permit to drill. 

President Joe Biden halted federal leasing upon taking office last year, launching a review of the federal program to examine potential reforms. North Dakota and a number of other oil- and gas-rich states filed lawsuits to try to force leasing to continue. A ruling stemming from one of those suits last summer ordered the government to resume lease sales nationwide.

Pleas for more drilling: Meanwhile, the president is asking US producers to drill more.  

XOM: to sever ties with Russia.

The Apple Page

 News and rumors:

• Apple Lightning Port: will we see a "portless" iPhone? Only way to charge an iPhone, with wireless charging? The EU may force Apple's hand.  
• A really inexpensive iPhone? We should know next week if Apple will drop the price of the current iPhone SE to $199 while introducing a new iPhone SE priced at $399.  
• A two-fer: Apple will halt all sale from online store in Russia. Link here. A "two-fer" is when a company does one thing but benefits for at least two reasons. In this case, Apple couldn't afford the sanctions on Russia to continue online sales; and, Apple will now have more chips available for products for other countries. Win-win for everyone. 

**********************************
Everything Else

Calcasieu: first LNG cargo departs from Venture Global's Louisiana LNG export terminal. 

Nord Stream 2 operators: have filed for bankruptcy. Wow, if true, that did not take long. 

Chariots on fire: the cargo ship with 4,000 cars -- VWs, Porsche, Lamborghini -- some/many/most EVs -- has sunk in the Atlantic Ocean off the Azores.

Oil today: I may have missed the high; things were moving quite quickly.

Canadian truckers convoy: newly leaked footage of the Ottawa police chief laying out his strategy to crush the truckers' protest. See if you can spot Pete Buttigieg. 

ISO NE: electricity prices in Massachusetts rose 239% over last January and 150% over December. The New England grid had to burn oil, as well as dung and wood, to make power. This all happened pre-Ukraine. Link here. 

"Misdiagnosis": with Jimmy Carter we had the "cardigan" speech. With Biden, it looks like "misdiagnosis" will be the meme. From Irina Slav: 

"The Keystone Pipeline was not processing oil through the system. That does not solve any problems. That's a misdiagnosis or maybe a misdiagnosis of what needs to happen," Psaki also said."I would also note that on oil leases, what this actually justifies in President Biden's view is the fact that we need to reduce our dependence on foreign oil, on oil in general ... and we need to look at other ways of having energy in our country and others."

Say what? Does that any of that make any sense? "The Keystone Pipeline was not processing oil through the system." Really? Again, the speech-writing team has had months to write a statement to explain why Biden killed the Keystone XL. 

CVX: raises buybacks and says exposure to Russia is limited. By the way, with "buybacks," that's a two-fer for publicly traded corporations. See above.

CVX: flagging further upside in the Permian today. Doesn't look like there's any change to its one million boepd plan, but now suggests productions grows to 1.2 to 1.5 million boepd in three years. Wow. Investment pace: $4 billion / year. Link here. Link here.

Ten-year treasury: yield dropped almost 13 basis points. Was that supposed to happen? At the close, the 10Y treasury yielded 1.711%, down 0.127. Link here.

After the close:

• WTI: up 11%; up $10.26; trading at $105.98.
• Brent: up  9%; up $9.07; trading at $107.04.

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Back to the Bakken

Active rigs:

$105.98	3/1/2022	03/01/2021	03/01/2020	03/01/2019	03/01/2018
Active Rigs	32	15	52	67	59

No new permits. Absolutely nothing from today's daily activity report.

Idle Rambling -- March 1, 2022

Wow, I'm in a great mood. This is for the archives. If you came here for the Bakken, look at the sidebar at the right or scroll down, but ignore this post. I don't plan to talk much about the Bakken.

But, wow, I'm in a great mood.

My wife was an Army brat. Her dad was often way from home, including two one-year tours in Vietnam, as a senior NCO. 

I was in the USAF for thirty years. My wife went from being an Army brat to being a USAF wife, with six years in between living the good life in west Los Angeles and UCLA.

May was used to being home without her father, and after she got married, the two of us were used to being separated for weeks at a time. She became very independent as most military spouses do.

I'm not saying it's great to be geographically separated as husband and wife, but in the big scheme of things, at least for us, it was incredibly rewarding -- although I'm not sure that's the best word I could use. 

Whatever.

May just headed up to Portland, Oregon, to spend a week with the twins, celebrate their two-year birthday.

Me? I'm home alone and loving every minute. We now have summer weather. It will be close to 80° today and will certainly hit 80° by the end of the week. My only responsibility is a bit of driving, picking up Olivia from high school after soccer and picking up Sophia from TutorTime at end of day. 

In the meantime, I'm free as a bird as they say. 

I just biked up to the local grocer that has excellent sushi. I am enjoying that with a new scotch for me, Kilbrin. 

I had never had it before. I had planned on buying a new bottle of Jameson but the store was sold out. But they had a huge sale on Kilbrin: about 67% of the cost of Jameson. It was a no-brainer. An opportunity to try a new scotch (for me) at 67% of the price I would have paid for Jameson. Wow, was I pleasantly surprised. Much, much milder than Jameson. I assume that's why some folks prefer Jameson over Kilbrin. I prefer Kilbrin over Jameson.

In the background, I asked "Alexa" to play Crystal Gayle. That's one of my favorite playlists. No ads, and the music never quits. [Two hours later, Alexa is still playing Crystal Gayle.]

Break, break.

When you think of "breadbaskets" around the world, there are only three: the US, Australia, and Ukraine. That's it. And I'm not even sure of Australia. See wiki entry. And, now, for the short term, at least, Ukraine is a non-player.

That leaves the US. 

I'm not exactly sure why investors are pulling money out of the US stock market. Not me. I bought some US equities today and I will be buying a boatload in March, one of four best months, for me, for dividends, and huge buying opportunity. Best dividend months for me: March, June, September, and December. 

Door to the balcony is open: perfect weather, and no wind. Did I mention that Alexa's Crystal Gayle's playlist is playing in the background?

I'm in my Shakespeare phase again. I finally have a new way of following "that" story. It will keep me occupied for weeks. 

I don't know if folks are following oil very closely but the White House daily briefing the other day was amazing. The "misdiagnosis" briefing. It will rank right up their with the “cardigan” speech. Wow. the White House press secretary was trying to thread a needle that had no eye. LOL. 

Misdiagnosis. Read closely her justification for "killing the Keystone XL." Again, this was not an "off-the-cuff" answer. The answer was prepared well in advance. I will post here the "misdiagnosis" answer regarding the "Keystone XL" pipeline if / when I find the time, and if I remain interested.

Wow, I'm glad "a Biden" is president and not "a Trump." 

I hear President Biden is now asking US producers to produce more oil. LOL. I don't think he understands the problem. There is not a shortage of oil. Wow, what a doofus. But in his defense, he was not asking. It was his staff asking. 

So, tonight, will we hear a "Ronald Reagan, it's morning in America" speech or will we hear a "Jimmy Carter, get out your cardigan" speech? If he's honest with himself it will be the latter. I'm in the mood for a "Ronald Reagan" speech. Regardless, I won't be watching or listening. I will depend on my readers to let me know how the speech went.

As for me? Time for some Duolingo Spanish. 

 

Oil: WTI At $101.10 -- March 1, 2022

Updates

Later, 11:13 a.m. CT: that "US truck convoy" headed to Washington, DC? 

I have not followed the story; I do not know the status, but wow, talk about ill-timed? Exactly what are they protesting? High oil prices? As if a truck convoy to DC will have any effect? Inflation? Ditto. Covid mandates? Covid? It's over. The mandates are done.

Later, 11:08 a.m. CT: holy mackerel -- if we had only known that killing Keystone XL, the Mountain Valley, the Trans Mountain; vacating leases; banning fracking; slow-rolling the leasing process -- if we had only known this would have all led to higher oil prices if there was some major geopolitical event that might affect strategic energy security -- if we had only known -- look at this. This was not on my bingo card today:

• Oil:
• WTI: up $10.50/bbl; trading at $106.22.
• Brent: up $9.20 / bbl; trading at $107.17; it also had been trading slightly higher.
• the Brent-WTI spread continues to narrow
• the surge in prices came after countries agreed to release 60 million bbls of oil from their strategic reserves over the next 30 days;
• we've discussed this before; the computer algorithms interpret a release of SPR oil differently that "humans" do. And that's the problem.
• maybe I will watch the SOTU address tonight. Nope. Just kidding.
  

Later, 9:29 a.m. CT:

• Oil:
• WTI: up almost $7/bbl; trading at $102.63
• Brent: up $6.80 / bbl; trading at $104.77
  

• Equity market:
  

• HES: up 1.50 cents; trading at $102.50; hit a 52-week high;
• EOG: up $1.36; trading at $116; trading at 52-week high;
• CVX: up 3.26%; up $4.64; trading at $148; trading at 52-week high.
  

Original Post

Oil:

• WTI: up almost 6%; up $5.38; trading at $101.10
• Brent: up almost 6$; up $5.91; trading at $103.38
• spread: narrowing, back to $2.28

Equity market:

• HES: up 86 cents; trading at $102; hit a 52-week high;
• EOG: up $2.06; trading at $117; trading at 52-week high;
• CVX: up 3.85%; up $5.55; trading at $150; trading at 52-week high.

Winners and losers: one week into the Ukraine invasion, another blogger provided a list of winners and losers. I added a few of my own winners and losers. 

I suggested that one winner was cryptocurrency. And now this story from Yahoo!Finance: bitcoin demand explodes as Russian ruble collapses to less than one cent. 

There are obviously several story lines here but can you imagine! The ruble collapses to less than one US penny. See chart here.

**************************
The Book Page

How the beat generation created the uniform for disaffect youth, Sophie Wilson, March 1, 2022.

Link here.

The essay begins:

William Burroughs once said that On the Road “sold a trillion Levi’s.” The iconic denim brand is just one of the fashion companies to benefit from the disaffected, worn-out look popularized by the Beat Generation. The group of writers—including Burroughs, Jack Kerouac, Allen Ginsberg and Gregory Corso—were staunch anti-capitalists who railed against American materialism, but that didn’t stop them from setting the tone for style in the 20th century.

Blue jeans, white t-shirts, workwear jackets and battered canvas holdalls were practical essentials for a life on the road, and they soon came to define the uniform for a generation of post-war youth disenchanted with traditional values. Along with counterculture icons like James Dean and Bob Dylan, the Beat writers spearheaded a look that became associated with alienation and rebellion. The movement—a reaction to mid-century, mainstream American society, which valued conformity and consumerism above individuality and freedom of expression—expressed their anti-establishment values through the way they dressed.

In the 1940s and 50s, casual wear was certainly more acceptable than it had been in the past, but men in America were still generally expected to wear suits at work and most social events. In contrast, the Beats’ sartorial vocabulary was rooted in dressed-down functionality. Many of the Beat writers were very poor—Kerouac grew up in a working-class immigrant family in the mill town of Lowell, Massachusetts—so this functional style was often born from necessity rather than it being a conscious fashion choice. Their wardrobes also featured purposeful nods to bookish academia and the modern jazz artists who sound-tracked the movement, such as Charlie Parker, Dizzy Gillespie, and Thelonious Monk. The thrown-together style they championed continues to echo through college hallways today.

The women of the Beat Generation are often undercredited, but writers like Diane di Prima, Joyce Johnson, and Hettie Jones also pioneered the counterculture wardrobe. Their look was the antithesis to Christian Dior’s New Look, which reintroduced opulence and ultra-femininity to womenswear in the post-war period. Cinched waists and full skirts reigned supreme, setting the tone for women’s fashion throughout the 1950s. But, for Beat women, black jeans, capri pants, and pencil skirts, paired with silk shirts and oversized sweaters, defied the popular hourglass fashions of the 1940s and 50s.

Clearing Out The In-Box From Items Arriving Overnight -- March 1, 2022

TGT: holy mackerel -- up 14%, pre-market; up $27  share; now trading at $227, up from $200.

Back to the future:

• Germany going full monty, back to fossil fuel, including coal, and nuclear energy;
• most interesting: pulling out the Trump suggestion from several years ago to build two new LNG terminals
• link to Tsvetana Paraskova

Texas winterization: paid off. All that twitter talk that Texas didn't get the message from severe winter of 2021 was all talk. Link here. Or direct to Hart Energy. 

Energy and new factories:

• Meta to build its newest data center in Idaho, attributing its decision to renewable energy (new construction);
• link here or direct to ArgusMedia;
• at 8 cents/kWh, Idaha has about the least expensive electricity in the US (average retail; commercial is less expensive, I assume)
• only states less expensive: Louisiana and Oklahoma
• INTC: to build new chip factory in Germany, which I don't understand at all: unions; high energy costs; regulations;

Lucid: slashed its production target by up to 40%; shares tumble;

• Lucid: 52-week high, $58; now trading at $26
• Rivian: 52-week high, $180; now trading at $64
• F: 52-week high, $26; now trading at $17
• TSLA: 52-week high, $1,244; now trading at $876

WTI: $100.21 -- March 1, 2022

Misdiagnosis: if one reads between the lines, one can see "panic" setting in, as WTI goes over $100 this morning and images we're going to start seeing coming out of Ukraine today. President Biden to give State of the Union Address tonight. His aides now asking: "Tell us again why we didn't do the address in January?" Link here.

8:00 a.m. CT:

• oil
• WTI: up 5%; up $4.74; trading at $100.46
• Brent: p 5%; up $5.17; trading at $103.14

First group "financial / economic" indicators:

• 10-Year Treasury: link here. Yield down five basis points; yield at 1.792%.
  
• DXY: link here. Up 0.36%; trading at $97.07.
  
• Silver: link here. Up another 1.4%; now at $24.705.
  
• Gold: link here. Up a bit, up 0.23%; tradng at $1,913.31.
  
• CBOE volatility index: link here. Explained at Investopedia. 32.19. Trending up.
  

********************************
Back to the Bakken

Royalties: North Dakota state officials will not challenge a new law regarding oil and gas royaltiees; ends their pursuit of $69 million the state had sought for energy development prior to August, 2013;
link here or direct to The Bismarck Tribune.

This will end the state's challenge to the constitutionality of a new North Dakota law that prohibits the state from collecting unpaid royalties for oil and gas production that occurred before Aug. 1, 2013.

At issue are deductions oil and gas companies removed from royalties to account for transportation and processing costs. The Land Board has for several years sought to collect those deductions following a favorable Supreme Court ruling in 2019 in a case involving oil producer Newfield Exploration Co. The case has implications for numerous state oil and gas leases with other companies.

To put this in perspective, the most recent deposits to North Dakota's Legacy Fund are running about $60 million / month. The state was looking for a "one-month windfall." From my perspective: sometimes it pays to be a "good neighbor" and move on.

Active rigs:

$100.21	3/1/2022	03/01/2021	03/01/2020	03/01/2019	03/01/2018
Active Rigs	32	15	52	67	59

Tuesday, March 1, 2022: 1 for the month, 109 for the quarter, 109 for the year

• 38122, conf, CLR, Dennis FIU 3-8HSL1, Big Gulch, no production data,

RBN Energy: unseen costs of energy transition: minerals, metals, and construction materials. 

Among the many challenges facing the energy transition, one is particularly ominous: a lot of stuff will need to be produced, fabricated, and constructed to replace the hydrocarbon-based energy network that runs the world today. 

We’re talking wind turbines, solar arrays, energy storage batteries, electric vehicles, and all of the other infrastructure and components that will be needed to make the energy transition happen. Not only will all this stuff require a lot of concrete and steel, it also will demand huge quantities of specialty metals and minerals such as lithium, copper, chromium, neodymium, etc. It’s a fact that a decarbonized energy network is much more material intensive — that is, it takes a lot more total investment in minerals, metals, and construction materials to produce the same energy as comes from hydrocarbons. 

Further complicating things, the increased material needs will be front-end loaded. In today’s RBN blog, we discuss the materials-related challenges facing the energy transition.