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,

Holy WTI, Batman! We Have The Answer -- Why Oil Spiked This Morning -- July 18, 2022

I'll post it later. See if you can spot it. Hint: it was posted at 9:00 a.m. CST, July 18, 2022 -- this morning just moments ago. Later: The answer. Link: https://oilprice.com/Energy/Crude-Oil/Saudi-Arabia-Reveals-Oil-Production-Capacity-Limits.html. Also, here: https://www.blogger.com/blog/post/edit/1149283829854298377/8889467518711893700.

But as long as we are here, I said a few days ago investors will soon experience a "Goldilocks" moment.

That special dividend paid by COP over the weekend completely caught me off-guard. I had it in my "stack" but had completely forgotten about it. 

Link here. Note date-time 8:00 a.m., July 18, 2022.

• ConocoPhillips is expected to post earnings of $3.90 per share for the current quarter, representing a year-over-year change of +207.1%. Over the last 30 days, the Zacks Consensus Estimate has changed -2.7%.
• The consensus earnings estimate of $14.55 for the current fiscal year indicates a year-over-year change of +142.1%. This estimate has changed -1.3% over the last 30 days.
• For the next fiscal year, the consensus earnings estimate of $12.91 indicates a change of -11.2% from what ConocoPhillips is expected to report a year ago. Over the past month, the estimate has changed -3.3%.

GOOG: 20 - 1 split completed. Trading around $100 now. 

QCOM: bigger dividend. Link here. Old news. It may be old news but it was a huge increase, from 68 cents to 75 cents x 4 = $3.00 vs $2.72 previously, yielding over two percent.

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, QUALCOMM's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share is forecast to rise by 10.1% over the next year. If the dividend continues on this path, the payout ratio could be 28% by next year, which we think can be pretty sustainable going forward.

QCOM whiz. Link here. Article will be archived. Share with your daughters. 

Pelosi: all that anger directed at Pelosi investing $8 million in Nvidia. Quick: who (what company) will be the biggest benefactor of the "chip bill" winding its way through the US House? Answer later. It might surprise you.

For Investors Only -- This Is Not An Investment Site -- July 18, 2022

Energy:
from last month, the top energy stocks to buy -- Louis Navellier, in reverse order, and current position:

• Tenaris. $1.83 million
• CVX: $1.96 million
• TTE: $2.86 million
• BP: $3 million
• Antero Resources: $3.23 million
• PSX: $4.74 million
• DVN: $5.81 million
• MRO: $5.96 million
• EOG: $8.56 million
• COP: $12.39 million; at $80 = 155,000 shares = $110,000 in special dividend over the weekend.

Without question,  prefer this portfolio to the BRK portfolio. 

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.

All my posts are done quickly: there will be content and typographical errors. If anything on any of my posts is important to you, go to the source. If/when I find typographical / content errors, I will correct them.

Holy WTI, Batman! I Hope You Filled The Batmobile Last Week -- Gasoline Prices To Soar -- July 18, 2022

I don't know what just happened, but WTI spiked almost 5%; up almost $5; trading above $102.

Perhaps it was this: don't expect Saudi to save the day. -- Center for Strategic & International Studies. Link here. 

Or maybe it was this old clip -- note MAGA in the background. What woulda / coulda / shoulda been:

Biden is playing checkers. Putin and Prince MBS are playing 3D-chess.

Or perhaps this, completely missed by The Washington Post and The New York Times:

The Washington Post had an entire piece on the "fist bump." They didn't get it either -- a fist bump is more intimate than a handshake these days. Much more intimate.

Covid: This Was So Incredibly Predictable -- When Politicians Practice Public Health -- July 18, 2022

Link here.

Australia, link here. Quick: when did Australia "open up" to international travel. Three guesses and the first two are free:

New Zealand, link here. Same question.

Samsung Slips Further Behind TSMC In Chipmaking Race -- FT -- July 18, 2022

Link here. 

The data points from this article behind a paywall.

• Samsung announced it would become the world's top chipmaking foundry
• three years after that announcement, top rival TSM C has captured a larger market share, prompting Samsung to replace several executives
• June 30, 2022: Samsung said it had started to mass produce 3-nm chips, the first company to achieve that feat -- it appeared the conglomerate had moved a step ahead in the advanced chip race
• but the announcement stopped short of telling the full story
• who are the clients for the 3-nm chip? Samsung won't say
• indications are that the 3-nm production will be small in scale
  
• customers are likely to be cryptominers in China
• Samsung problems:
• started mass producing 5-nm chips in 2Q20 but was unable to raise the yield rate
• was not able to provide stable supplies of smartphone chips to Qualcomm, its largest client
• Qualcomm expanded its outsourcing volume from TSMC last autumn (2021)
• Samsung lost orders
• TSMC started mass producing 5-nm chips about the same time Samsung started producing 5-nm chips
• TSMC became the sole contract manufacturer for Apple's CPUs
• Apple has very quick turnaround times due to high sales
• other than TSMC, no other operator is able to deliver on that front
• 5-nm:
• TSMC has greatly expanded it lead
• 1Q22: TSMC captured 53.6 percent of the foundry market
• Samsung: a distant second at 16.3 percent 
• 3-nm:
• TSMC is preparing to mass produce 3-nm chips by the end of 2022
• the company is setting up production sites in Hsinchu and Taiman, both on Taiwan
• Intel has temporarily stepped back from the race but will eventually re-engage
• smart phones:
• Samsung is a competitor with Apple
• Apple can't trust contracting for chips from Samsung
• TSMC does not compete with Apple; TSMC does not make cell phones, but Samsung does
  

Start Spreading The News -- WTI Trending Back To $100 -- July 18, 2022

Earnings: start this week with the banks

• BAC: mixed, but okay
• GS: blows away the forecasts; bond trading; still rules Wall Street;
  

Semis:

• TSM vs Samsung, link pending

Dividends paid Friday;

• SRE: regular
• COP: special

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Back to the Bakken

Far Side: new stuff.

WTI: $102.20.

Natural gas: $7.407

Active rigs: 43 or thereabouts.

Tuesday, July 19, 2022: 15 for the month, 15 for the quarter, 354 for the year

• None.

Monday, July 18, 2022: 15 for the month, 15 for the quarter, 354 for the year

• 38673, conf, CLR, Bang 8-4H,

Sunday, July 17, 2022: 14 for the month, 14 for the quarter, 353 for the year

• 37146, conf, Hess, BL-Olson-155-96-0310H-2,

RBN Energy: what will it take to make the energy transition happen, part 4.

When you boil it down, there are only two energy-related responses to Russia’s war on Ukraine. First, there’s a big push to find sources of crude oil, refined products, natural gas and NGLs to replace Russian supplies as quickly as possible. Second, governments on both sides of the Atlantic are scrambling to reaffirm and even expand commitments to lower-carbon energy sources to delink from Russian hydrocarbons as well as meet energy transition goals. Both raise the same question: How fast can the world bring online any new sources of energy on the scale needed? Policymakers would like to believe the answer can be found through the stroke of a legislative pen invoking aspirational language. No one doubts the power of that pen to create incentives or impediments. But the answer to that question is dictated by the realities of the physical world. In today’s RBN blog, we discuss the options for accelerating the availability of the minerals, metals and other materials needed to build the required machinery for the energy transition.

As we said in Part 1, all the favored energy-transition technologies — solar, wind and batteries — require a lot more stuff to be mined, refined, fabricated and constructed to replace the same amount of energy provided by the hydrocarbon-based energy infrastructures that power the world today. In many cases, we’re talking about an unprecedented 3x to 70x increase over today’s use of not only a wide array of metals such as copper, nickel, aluminum, lithium and neodymium, but also a 10x jump in the use of basic materials such as steel, glass and concrete.