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Thursday, June 2, 2022

Whiting With Two New Permits And Papa Gets A Haircut -- June 2, 2022

Refining margins: trending toward >$60 / bbl, WTI 3-2-1.

OPEC+: today was an upward (albeit minimal) quota adjustment; not a production adjustment. Huge difference.

"Go-broke" dates for Social Security, Medicare: delayed due to a stronger-than-expected economic recovery. Good news for all ages, from millennials to seniors. 

The annual Social Security and Medicare trustees report released Thursday says Social Security's trust fund will be unable to pay full benefits in 2035, instead of last year's estimate of 2034. The year before that it estimated an exhaustion date of 2035.

The projected depletion date for Medicare's trust fund for inpatient hospital care moved back two years to 2028 from last year's forecast of 2026.

Pretty much says it all, link here:

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Back to the Bakken

WTI; $117.50

Active rigs: 40 or thereabouts.

Two new permits, #38991 - #38992, inclusive:

  • Operator: Whiting
  • Field: Sanish (Mountrail)
  • Comments:
    • Whiting has permits for two Bigfoot wells to be sited in SENE 26-153-92, 
      • one at 1376 FNL and 359 FEL, and onee 1346 FNL and 359 FEL;

One well was released from CONF status:

  • 38578, n/d, Slawson, Rainmaker Federal 8-25-36TFH, Big Bend, Mountrail.

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Time For A Haircut

My last haircut from a professional was just before the lock down in March, 2020. I got my last professional haircut in late February or very, very early March, 2020.

Sophia started cutting my hair in 2020 when she was six years old. She continues to cut it. She will turn eight years old this summer.

Today's "clip" -- pun intended:

Why I Love To Blog -- Reason #45 -- It Helps Me Keep Things In Perspective -- June 2, 2022

COP's Willow Project. 

Link here.

To put that in perspective:

  • the Bakken will easily produce one million bbls of crude oil per day for three decades
  • it currently produces in excess of one million bopd
  • the Bakken will produce upwards of 400 million bbls each year
  • compare with the article below:
  • less than 200,000 bopd
  • a total output of 590 million bbls by 2050
  • the Bakken will do in excess of 600 million bbls every two years.

Disclaimer: I am inappropriately exuberant about the Bakken. I often make simple arithmetic errors. I often misread things. If this is important to you, go to the source.

Let's see:
  • $8 billion / 590 million bbls = $14 / bbl
  • does one think it's cheaper to drill, gather, and transport oil from Alaska than it is from North Dakota?

Social Media After Release Of Today's EIA Weekly Petroleum Report -- June 2, 2022

Following the release of the weekly EIA petroleum report, tweets (most with no links):

  • if OPEC+ can only increase by 649,000 bopd -- remember, Russia will be down at least two million bbls per day -- expect a higher floor for prices;
  • US crude inventories fell by 10.489 million bbls last week
    • commercial: - 5.068 million
    • SPR: 5.421 million bbls released
  • domestic production: 11.9 million bpd
  • Cushing: +0.2 million -- that slight increase probably kept WTI from rising more quickly after the report
  • still very bullish (link here)
  • EIA charts here (link here).
  • implied oil demand for US is well behind that of 2019, same time period, 19.5 million bopd vs 21.5 million bopd
  • SPR release is preventing $150-oil
  • exports of 10.377 million bbls crude was the third highest level ever 
  • total US gasoline inventories are at their lowest May level since 2014.

As a reminder, re-posting:

WTI:

  • prior to report being released, WTI back up to $115 after falling to $112 overnight;
  • moments after the report was released: WTI back to $114.60 
  • about fifteen minutes after the report released: back to $115.50.
  • thirty minutes after release of the report: $116.10 -- back where we were two days ago.
  • looks like we're in a $110 to $120 trading range.

OPEC+:

  • agrees to precisely a 648,000 bopd production hike in July, 2022.
  • I know they spent hours deciding whether it should be 649,000, or even 650,000 but the latter, 650,000 would have seem contrived

The report: the week ending May 27, 2022, so this would have been just before Memorial Day and the opening of driving season in the US.

Link here.

  • US crude oil in storage decreased by a pretty significant 5.1 million bbls considering the SPR release.
  • US crude oil in storage now stands at 414.7 million bbls, 15% below the five-year average, and about double that required by law.
  • US crude oil imports averaged 6.2 million bbls per day last week; down by 268,000 bbls per day; over the past four weeks, crude oil imports have averaged about 6.4 million b/d, 7.3% more than the same four-week period last year
  • US refiners are operating at 92.6% of their operable capacity, down very, very slightly from last last week (93%)
  • US distillate inventories decreased by 0.5 million bbls; inventories stand 24% below their five-year average
  • Jet fuel supplied was up 19% compared with same four-week period last year

Gasoline demand will be reported later.

Copper Prices Soaring -- June 2, 2022

This has not been fact-checked. Link here.

Josh Young: "Whoa. There might be an ongoing metals inventory scandal in China. This cuold be why copper prices are soaring and could be big news fro commodities in general."

This comes on top of news that China is re-opening.

Looking at the price of copper, this story seems a bit bogus or premature.

Weekly EIA Petroleum Report -- June 2, 2022

Updates

June 3, 2022: see comments --

The four-week average of our total exports of crude oil and petroleum products was at an all time high of 9,826,000 barrels per day last week, eclipsing the record of 9,750,000 barrels per day set 5 weeks ago..

We’ve been hitting interim highs on each in recent weeks; ie, last week our crude exports were at a 26 month high, this week our gasoline exports were at a 3 1/2 year high…this metric aggregates all those exports:

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=wttexus2&f=4
.

On OPEC; in July 2021, they agreed to increase their production by 400,000 barrels per day in August, and again by that amount in each of the following months, and also to boost reference production levels for the UAE, the Saudis, Iraq and Kuwait beginning in April 2022; that brought April's quota up to 432,000 barrels per day. 
The current agreement is to pack three monthly increases into two months, hence 648,000 bpd for July and August.

Original Post

WTI:

  • prior to report being released, WTI back up to $115 after falling to $112 overnight;
  • moments after the report was released: WTI back to $114.60 
  • about fifteen minutes after the report released: back to $115.50.
  • forty-five minutes after the report was released: just shy of $117.00.
  • looks like we're in a $110 to $120 trading range.

OPEC+:

  • agrees to precisely a 648,000 bopd production hike in July, 2022.
  • I know they spent hours deciding whether it should be 649,000, or even 650,000 but the latter, 650,000 would have seem contrived
  • at a minimum, two million bbls of Russian oil will come off the market by the end of the year; the 648,000 bopd quota increase is 200,000 bopd -- vs that two million bbls of Russian oil 
  • from Julianne Geiger yesterday, before the meeting;
    • according to Amena Bakr, the proposal for a 648,000 bpd increase was discussed as being an overall increase for the OPEC+ group, to be divided among its members equally. In reality, however, there are numerous OPEC+ members that cannot meet their current quotas and are highly unlikely to meet a new, even higher quota.
    • Such an increase would, however, afford Saudi Arabia, the UAE, and Iraq—all of which are thought to have excess spare oil production capacity—the ability to increase production.
    • an increase of 200,000 bpd divided among these Big Three results in about a production increase of 70,000 bopd for each -- are you kidding me -- and everyone was holding their breath, waiting for the outcome of this meeting. What am I missing?

The report: the week ending May 27, 2022, so this would have been just before Memorial Day and the opening of driving season in the US.

Link here.

  • US crude oil in storage decreased by a pretty significant 5.1 million bbls considering the SPR release.
  • US crude oil in storage now stands at 414.7 million bbls, 15% below the five-year average, and about double that required by law.
  • US crude oil imports averaged 6.2 million bbls per day last week; down by 268,000 bbls per day; over the past four weeks, crude oil imports have averaged about 6.4 million b/d, 7.3% more than the same four-week period last year
  • US refiners are operating at 92.6% of their operable capacity, down very, very slightly from last last week (93%)
  • US distillate inventories decreased by 0.5 million bbls; inventories stand 24% below their five-year average
  • Jet fuel supplied was up 19% compared with same four-week period last year

Gasoline demand will be reported later.

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Other Energy News

Airlines: United Airlines CEO says there is no hint of slowdown in consumer demand. Link here. Google subject for more.

Permian: coming on the back of the Permian story yesterday, here is more -- if you believe the frack data vendors (satellite-based), there is a wall of production coming in late 2H22 out of the Permian. Link here

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ESG

Greenwashing: Deutsche Bank -- Trump's bank -- unit CEO resigns over "greenwashing" raid. Why does this not surprise me? Link here.

ESG outflows: ESG equity funds see record outflows in May. Link to Rigzone. I assume Jim Cramer is all over this one. LOl. 

This year’s weak performance by US stocks has forced many investors to recalibrate their portfolios. And they’re fleeing do-good strategies.

After more than three years of inflows, investors are now pulling cash out of US equity exchange-traded funds with higher environmental, social and governance standards. May saw $2 billion of outflows from ESG equity funds, according to data from Bloomberg Intelligence -- the biggest monthly cash pullback ever.

“There’s no way to know for certain why the outflows were so extreme,” said Bloomberg Intelligence analyst James Seyffart, who noted that the funds had started from a high-asset base after years of inflows. “But also ESG ETFs may be finding that people care a lot more about them in bull markets.”

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Cars

Cars: Stellantis cuts output at two North American plants due to semiconductor shortage. Still? Link to Argue Media. SUVs in Toluca, Mexico, and minivans in Windsor, Ontario, are affected; will be idled for one week. 

Cars: same link --

AutoForecast Solutions this week increased the number of automotive builds expected to be lost in this year by 15,000 vehicles to 135,000. 
Another 400,000 are at risk of not being built, with more than 200,000 listed as recoverable, according to the forecaster's weekly update. 
The reductions follow an early May reduction in AutoForecast Solution's North American production forecast to 14.82mn units, down by 330,000 units from its March outlook. 

Cars: I was so wrong on this. I honestly thought the semiconductor chip shortage would have been resolved by now. I was so sure that there would have been a wall of car production by the end of summer. I was really, really wrong. Sort of like Janet Yellen and "transitory" inflation.

Minor Notes, Here, There, And Everywhere -- June 2, 2022

Smart phones: global smartphone shipments to decline 3.5% in 2022, but Apple to be least impacted. Link here

Nashville: the city faces exceptional inflation hit from all sides. Link to The WSJ

Impeached: the South Dakota attorney general. The car crash was in 2020?

Hope Springs Eternal -- ND Data Center -- June 2, 2022

Updates

Lateer, 12:51 p.m. CT: almost simultaneously with the ND cryptocurrency center noted below, the Biden administration is looking at regulations to bring down the "carbon cost" of cryptomining.

Original Post

Re-posting from yesterday:

Hilarious: link here.

From Fargo, ND, link here:

  • Bitzero
  • HQ site: North Dakota; specific site not yet selected / announced
  • company announcement alongside ND governor;  MHA Tribal Chair Mark Fox; and, "famed investor" Kevin O'Leary in Fargo
  • HQ site will employ 15 to 20 people
  • Bitzero will also partner with MHA Nation to use hydroelectric power from the Garrison dam for a data center which will in turn help heat a greenhouse the tribe is building.
  • I can't make this stuff up.

Beating A Dead Horse, But Let's See How This Works -- June 2, 2022

Going through my checklist, I see ISO-NY has Long Island already at $100 / MWh, and it's only 8:30 in the morning. Strange.

I immediately go to ISO-NE and even stranger. Demand is mediocre, under 13K MW.

But electricity in ISO-NE is already yellow, sixth decile, over $120 across the region. What's up?

It's all about wind. This morning there is none.

Renewable energy which often provides upwards of 15% of the fuel mix is providing only 7%. And of the renewables, wind is only providing 1%. Wow. Almost half of the renewable fuel mix is "garbage." Literally "garbage" but they call is "refuse."

By the way, I assume electricity from garbage is achieved by burning it? Wood is also being burned, providing a quarter of the renewable energy mix.

It appears one-third of NE's nuclear energy is still off-line. I could be wrong on that. 



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UK Wind

We see the same thing in the UK. Link here.

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Brutal

Link here

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In Dreams

I wish I could write. I seldom dream but last night I had two of the most interesting dreams I have ever had. One was so real, I thought it was real, if that makes sense. But one of the folks in the dream had died years ago, so couldn't be. The second dream was so amazing, even I have no idea from where it could have come. I may need to visit a fortune teller / palm reader / dream analyzer today to see about my summer travel plans. LOL. 

Somehow it's possible the dreams are related to the book I'm currently reading.