Locator: 46317INV.
Friday, December 15, 2023
EIA Crude Oil Adjustment Accounting -- In One Week The EIA "Lost" 20 Million Bbbls And No One Seems To Care -- December 15, 2023
Locator: 46315INSANITY.
There's single-entry bookkeeping, double-entry bookkeeping, and then there's EIA bookkeeping which raises the art of bookkeeping to a whole new level.
How bad is their accounting? See comments:
We went from 1,287,000 bpd unaccounted for oil supply for the week ending November 24, 2023, to 1,417,000 bpd unaccounted for demand for the week ending December 1, 2023
In other words, 18,928,000 barrels disappeared from the oil balance sheet in a week's time.
A reader brought this issue to my attention at least two years ago, thank you very much. Truly a very, very strange story. Of course, this is going on in the Biden administration. The SecEnergy is Jennifer Granholm and folks know how I feel about her. See this post and re-printed down below, below the fold.
The primary data source on U.S. energy markets has struggled this year [suggesting that all previous years have been perfect) to depict weekly changes in the country's oil supply and demand, leaving some investors conflicted on how to parse information about the world's top oil producer and consumer.
For decades the market had brushed over a so-called "adjustment" in the EIA's weekly inventory report due to its relatively negligible size. But that has changed in the past year as the agency consistently posted outsized adjustments, also known as "unaccounted for barrels," sowing confusion among market participants despite changes to improve the quality of the data.
The adjustment number is a figure the EIA reports each week that serves as a balancing item when the administration's supply and demand data do not align. Adjustments are normal within the data, which, given the report's quick weekly turnaround, have to account for some margin of error.
However, market participants have consistently complained this year about larger adjustment figures. The EIA posted an adjustment number of minus 1.42 million barrels per day (bpd) in the week to December 1, 2023, the largest negative adjustment on record. In the week to December 8, 2023, the adjustment was minus 1.05 million bpd, the third largest negative adjustment on record.
Earlier this year, the EIA studied larger adjustment numbers, as the average annual adjustment in 2022 was the biggest in records dating back to 1973. The assessment found two root factors: crude oil blending accounting that overestimated domestic consumption, and under-reported oil output, the EIA said in March.
As a result, the EIA said it would change its surveys to get more accurate crude output data, and also change its accounting methods for crude oil blending.
The EIA relies on surveys from market participants to capture weekly data. But no dataset is perfect, especially weekly datasets pulled from estimates and sample surveys. The EIA encourages data users to treat the weekly data as a snapshot of trends and compare it to more vetted monthly data.
And the article continues with more non-useful information.
And the adjustments continue.
And they don't matter.
The biggest determinants of the price of oil has nothing to do with adjustments to oil in storage or even the actual oil supply. The biggest determinants of the price of oil: a) comments coming out of Saudi Arabia; b) manipulation of data coming out of OPEC; c) the strength / weakness of the dollar; d) the perceived strength / weakness of the US economy; e) comments made by the Fed that telegraph the likelihood of a recession; and, f) comments by Steve Liesman.
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The Dumbest Politician Award
The Dan Quale Award
This is really nasty and I shouldn't be doing this.
About six months ago, SecEnergy said something so dumb, CNBC actually
deleted the original video, re-wrote the story, and deleted any
reference to her quote. I was going to post that but I missed it --- CNBC had already deleted it and re-posted a new video without the quote.
That was after a similarly dumb quote by Ms Granholm some months earlier.
Now this:
I may start a new series, to go along with the Darwin Awards and the Geico Rock Awards.
It
would be nominations for the dumbest "active" US politician. "Active":
currently holding some political office (elected or unelected) or
"running" for some political office (such as Chris Christie).
It
would be the Dan Quale award. Or the Quale award for short. Though
spelled differently than the bird, now that the "blue bird icon of
twitter" is available -- perhaps that could represent the award.
Algore would be ineligible because, to the best of my knowledge, he is not currently holding any political office.
My reply to the reader who sent me the graphic above:
Clearly the dumbest US politician: Granholm. And she's got a lot of competition, starting with Kamala Harris.
Coal -- December 15, 2023
Locator: 46314COAL.
Locator: 46314INSANITY.
Before we get to today's news, from the past, August 6, 2023, just a few months ago:
Now, back to today's news.
The "final statement" published by COP28, I assume, will be a fairly thick document, with lots of attachments and appendices.
I hope this is one off the appendices:
Global coal demand is set to rise by 1.4% this year and surpass a record-high level of 8.5 billion tons for the first time, the International Energy Agency (IEA) said on Friday.
While coal demand in the United States and the EU is set for a 20% record decline this year, coal use in emerging economies “remains very strong, increasing by 8% in India and by 5% in China in 2023 due to rising demand for electricity and weak hydropower output,” the IEA said in its Coal 2023 annual report today.
The US and the EU are not the problems here. Now that wind and solar energy is / are now the answer to all our global energy problems, the question is why India and China continue to add coal to their energy mix, rather than cutting coal use to the same extent that the US and the EU have.
Had India, China, and the rest of the emerging markets cut their coal demand by 20%, we would not have even needed COP28.
By the way, "global coal demand is set to rise by 1.4%." Are you kidding me? A gazillion tons of coal use worldwide in a dozen emerging nations and the IEA bureaucrats can forecast coal use to this preciseness. LOL. The EIA can't even accurately account for oil supplies in the US from week to week. Yes, this is a fact. Doesn't even need fact checking but I will provide a link later.
Meanwhile, it appears New England will pivot from natural gas (clean) to coal and heating oil and crude oil and diesel (dirty) if it really gets cold this year and next.
All I can think of is Albert Einstein's definition of insanity.
Week 50: December 11, 2023 -- December 17, 2023
Locator: 46313TOPSTORY.
Pending. In case I get busy during the holiday season, putting up the template now.
Top story:
- both Ford and GM throw in the EV towel;
- decision announced during COP28 [John Kerry’s annual global warming fete, this year held in oil-rich Dubai]
- conference turned out to be opportunity for oil companies to huddle
Top international non-energy story:
- Israeli military: kills three hostages; mis-identifies as enemy combatants
- on the battlefield, thinks look bleak for Ukraine: Zeleskyy’s Biden visit appears to be unsuccessful
- diplomatically: a huge tune of events — discussion turns to admission into EU; if that occurs, it changes everything; NATO discussion next? Nope, a bridge too far.
- China’s economy grows the fastest in two years.
Top international energy story:
- COP28: "member states will transition away from fossil fuel"
- IEA: oil demand growth will be less than originally forecast by IEA but demand will still grow by a million bopd
Top national non-energy story:
- market rally: epic; historic
- the Fed telegraphs end of rate hikes; telegraphs as many as three rate cuts in 2024
- California: record budget deficit — $68 billion.
Top national energy story:
- WTI: back to $71
Focus on fracking: link here.
Top North Dakota non-energy story:
- governor drops out of US presidential race
Top North Dakota energy story:
- all eyes on state, US Army Corps, and DAPL; reaching closure?
Geoff Simon's quick connects: link here.
Bakken economy:
- active rigs number about 35
- XTO has rig in the Bakken for first time in years;
- WPX eyes a new 10-well pad;
Week 51: December 18, 2023 -- December 24, 2023
Locator: 46312TOPSTORY.
Top, top story: resurgence of shale; OPEC has lost its mojo; Angola exits OPEC
Top story: Warren Buffett's BRK has a most awful 2023.
Top international non-energy story:
- Ukraine becomes the forgotten war;
- Israel expands ground operations in Gaz
- now that COP28 has ended, back to business as usual -- India, China coal demand surges
- The Netherlands maxes out electric grid
- EV companies had an awful December
- Elon Musk can't make enough batteries for Cybertruck ramp
Top national non-energy story:
- US economy and equity markets on fire
- Bull market alive and well -- BofA
- MMF assets surge -- again
- all that inflation? Transitory.
- no surprise: top online shopping destination -- Amazon; and no one else is even close;
- Kid Rock's Bud Light boycott is over; effect of the boycott on BUD negligible
- no shame, plagiarist; Harvard president Claudine Gay -- it's not over until it's over
- LA Dodgers sign another $350 million contract
Top national energy story:
- COP announced FID for Willlow Project, North Slope, Alaska
- Final auto manufacturer holdouts commit to EV charging connections
- Tesla Cybertruck clearly not an off-road vehicle
Focus on fracking: link here.
- US oil production at a record high: US gasoline exports at a 12 month high; DUC well backlog falls to 4.7 months.
- Fudge factor: based on that reported & estimated data, the crude oil figures provided by the EIA for the week ending December 15th appear to indicate that our total working supply of oil from net imports, from transfers, and from oilfield production was 385,000 barrels per day less than what what was added to storage plus what our oil refineries reported they used during the week.
- to account for that difference between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a [ +385,000] barrel per day figure onto line 16 of the weekly U.S. Petroleum Balance Sheet in order to make the reported data for the supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there was an error in the week’s oil supply & demand figures that we have just transcribed....
- moreover, since 1,046,000 barrels of oil demand per day could not be unaccounted for in last week’s data, that means there was a 1,431,000 barrel per day difference between this week's oil balance sheet error and the EIA's crude oil balance sheet error from a week ago, and hence the changes to supply and demand from that week to this one that are indicated by this week's report are off by that much, and therefore useless...
Top North Dakota non-energy story:
Top North Dakota energy story:
Geoff Simon's quick connects: link here.
Bakken economy:
- DUC inventory at/ near all-time low
Update On Rudy Giuliani Trial -- Two New Permits -- Four Permits Renewed -- December 15, 2023
Locator: 46311B.
Breaking: Rolling Stone -- link here -- no sympathy in this corner --
Unimportant, but for the archives. Closes out the week:
What a great country. Unlikely faux environmentalists will slow this down.
Meanwhile, in the Dallas-Ft Worth area a huge expansion at DFW an a new airport north of the city:
Wiki:
Expansion: from my perspective, and I'm very biased, the DFW airport -- considering it's the second busiest / biggest airport in the world -- is an incredibly efficient and pleasant airport.
It also has light rail -- which will please faux environmentalists -- connecting the airport, Dallas and Ft Worth.
The airport has always had plans for six terminals, cleverly called Terminals A - F. But Terminal F was never built ... until now.
Construction on a brand new Terminal F began this past summer (2023). My hunch: terminal F will be bigger than 99% of all publicly accessible airports in the US. In the US there are 5,170 airports open to the general public and 503 of them serve commercial flights. Fact check.
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Back to the Bakken
Active rigs: 34.
WTI: $71.43.
Two new permits, #40399- #40400, inclusive:
- Operators: Hess, MRO
- Fields: Sorkness (Mountrail), Reunion Bay (Mountrail)
- Comments:
- Hess has a permit for an EN-Starla-157-93-0904H-4 well,
- to be sited SESW 9-157-93, 580 FSL an 2126 FWL;
- MRO has a permit for a Donkin USA well;
- to be sited SESW 33-152-93, 317 FSL and 1794 FWL
Four permits renewed:
- Grayson Mill (3): three A Tufto permits, Cow Creek, Williams County;
- Oasis, a Barron permit, Black Slough, Burke County;
One producing well (a DUC) was reported to be completed:
- 39361, 2,147, MRO, Skip 31-29H,
- well of interest: #16611, IA/428, MRO, Carlson 21-29H, halo effect; just recorded 500K bbls crude oil cumulative; t10/07; cum 500K 10/22;
As The EV World Turns -- The Latest Episode Of GM's Cruise -- December 15, 2023
Locator: 46310EVS.
The GM EV story following the Shawn Fain strike is tracked here.
The latest episode. GM's homage to the Ford Edsel.
The Chart Page -- ASML -- December 15, 2023
Locator: 46309TECH.
ASML, BRK, S&P 500.
One year ago and two years ago we all had the same information.
Headlines II — December 15, 2023
Locator: 46308INV.
GM: layoffs. GM bracing for tough times. Link here. See also this stand-alone post.
Personal investing: in early 2024, I started adding new money into the first bucket, see below — “dividend-paying-large-cap.”
Background: UNP is a long-time favorite. With the improving economy, UNP should do well. I can’t increase the overall number of tickers — 20. If I were to buy UNP, the only option for me was / is to replace CAT with UNP.
Decision: Today was "time" to add new money into the large cap bucket. I already have a lot of "legacy" UNP in my portfolio. UNP would go in the large cap bucket for new money. Unfortunately, UNP is not currently in the investing bucket for large cap. I would have to remove something if I wanted to add to my UNP position. I considered replacing CAT with UNP.
Looking at the charts:
- UNP with a P/E of 23 is a bit more expensive than CAT with a P/E of 18; 28% to be exact;
- both pay a dividend of around 2%.
This was the tipping point. While sorting this out there was a trucking story on CNBC. The trucking companies are likely to have a challenging 2024. Some / many will go out of business. Why? The supply chain has begun to normalize and not as much trucking is needed. JPow said as much. [Never mind incredibly expensive diesel and incredibly draconian California regulations.]
I would assume that the challenges facing the trucking industry will also affect the rails.
I kept the buckets as they were and added more CAT.
$Re-looking at the charts, CAT seems to be "moving" a bit better than UNP right now. Both are long-term investments so it really doesn't matter but ...
Personal investing: bought ORCL today.
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.
Again, all my posts are done quickly. There will be typographical and content errors in all my posts. If any of my posts are important to you, go to the source.
CNBC talking heads: some talking heads are really, really angry with JPow’s surprise comments. You can guess who really, really loss money in this end-of-year rally — who were betting on a hard landing, a recession.
Triple witching day; all it means — three trading events occur on one day; occurs four times a year— simply more likelihood of significant volatility. [For the archives: the market closed at another record high.]
The car market said in filings with state regulators that it will lay off almost 1,000 workers at its Lake Orion facility and more than 300 at the Lansing Grand River assembly plant.
The news comes a day after its Cruise robotaxi business said it would trim its workforce and that executives from the unit were leaving.
The layoffs suggest GM is bracing for tougher times ahead. Economic growth is set to slow, the excitement around electric vehicles is cooling, and the company just got through a protracted labor dispute earlier this year. Some Wall Street analysts see GM as a better buy than rival Ford because of its higher margins. GM stock is up 29% over the past month after it rose 6.7% on Thursday. It was up 0.6% in Friday’s premarket. Ford F was up 0.8%, as was EV maker Tesla TSLA.
Rivian: partners with ATT.
Huge development. RIVN up 1.65% in pre-market trading. RIVN was up in after-hours trading yesterday. I still don’t understand why big brokerages don’t move to 24-hour trading. Must be a regulatory rule.
UNP CEO: buying UNP shares.
UNP is up 14% this past year. P/E at 23; seems high for a railroad. AAPL not much higher. UNP is trading near its 42-week high. Pays a paltry 2%. At end of November, UNP declared 4Q23 dividend of $1.30, record date December 8th. Unchanged now for seven quarters. Payable last trading day in 2023.
Cramer live now:
- hedge funds getting crushed — wow, I just posted that earlier this week!
- yesterday: worse day in history for shorts; repeat — worst day in history
- for every $1 in Home Depot in 1981 —> worth $1,000 today, per Faber — needs to be fact-checked;
- Costco: experiencing huge deflation — repeat, deflation — in cost of goods
- wait until McDonalds starts reporting reduced prices in cost of goods — will offset costs in services
- industrial production up 0.2% in December, vs a negative 0.6% in November, the worst monthly number in two years (have to double-check; not sure about the exact numbers but the “direction” is correct — positive in December, negative in November)
- Dow: on that news, Dow is down 16 points; had been. As much as 100 points in the green earlier this morning; later, Dow hits a new high but not by much.
Headlines — December 15, 2023
Locator: 46307B.
Did JPow wait too long? Empire State manufacturing index down a whopping 14% versus an estimated increase. A decline in any manufacturing index makes some folks think “recession.”
WTI: $72.15
COP28: time to phase out natural gas. Final statement. Meanwhile, coal? Demand will hit all-time high in 2023 — current year. I assume the same in 2024.
Inflation: two components — go back to this post — goods and services. Now, see Peter Zeihan today. Consider his prediction in light of AI.
I've got some good news and some bad news on inflation in the US...one has to do with COVID, and the other is about the labor market. Which do you want first?
Let's start with the good news. The US is finally emerging from its COVID mask of changing consumer behavior and crazy supply chain dynamics. That means we've settled into more stable consumption patterns, and supply chains have finally caught up...so headline inflation is decreasing.
Yay! Now, onto the bad news. We're entering a (two-decade-long) period of labor shortages. As baby boomers retire, the Zoomers won't be able to keep up with labor demands. And that shortage is only going to get worse until the mid-2030s. While it's nice to finally see COVID in the rearview mirror, we're coming up on something much stickier that will plague our inflation rates for a while.
Southern surge: jobs these folks are taking won’t be affected by AI to extent others may be.Think about that in regard to Peter Zeihan’s comments today.
Missed the rally: 85% of individually-held stocks are owned by millionaires. Most missed the 2023 run because they were weighted heavily in cash. Study: CNBC. See “my favorite chart.”
Work force participation disconnect: “return-to-work” mandates disconnected with role of stay-at-home moms with children.
RMDs: fifteen days left. Trading days? Eleven days including today. Twenty percent of folks haven’t taken their RMDs. It will start next week. How does that impact the rally? Link here. Those folks that waited are going to do very well.
RMD reminder: This year is unusual in that there isn’t a big cohort of 70-somethings taking their RMDs for the first time. The starting age had been 72 until the Secure 2.0 Act passed at the end of 2022 bumped it up to 73, effective this year. People turning 73 this year were subject to the requirement last year at age 72, while people turning 72 this year got a reprieve until 2024. All things being equal this will extend the bull market through 2024.
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Back to the Bakken
WTI: $72.15
Sunday, December 17, 2023: 21 for the month; 170 for the quarter, 740 for the year
39696, conf, WPX, North John Elk 28-27HIL,
Saturday, December 16, 2023: 20 for the month; 169 for the quarter, 739 for the year
None.
Friday, December 15, 2023: 20 for the month; 169 for the quarter, 739 for the year
39291, conf, Hess, GO-TONG Trust A-17-96-2032H-3,
RBN Energy: how will EPA’s methane rule impact the certified/differentiated gas market?
The Biden administration’s recent announcement at the COP28 climate change conference in Dubai that it has issued a final rule on reducing methane emissions from the oil and gas industry raises an important question: If the feds will be requiring every producer to phase out flaring, install new equipment, and meet new, aggressive standards for emissions monitoring and leak detection and repair, will there still be a need for entities like MiQ and Project Canary to score or assess the lower-emissions natural gas produced by a significant subset of enviro-conscious E&Ps?
In today’s RBN blog, we discuss the potential impacts of the new EPA rule on gas certification/differentiation and the development of a market for low-methane gas. This blog series’ aim is to examine the certified/differentiated gas movement, which has been driven to a large degree by growing interest among gas producers, shippers and buyers alike in gas that is produced, processed and transported with minimal emissions of methane along the way.
In Part 1, we discussed the outsized climate impact of methane emissions — a greenhouse gas (GHG) with more than 80 times the atmospheric heat-trapping effect of carbon dioxide (CO2) over the short term (five to 20 years) — and the push by an increasing number of E&Ps to reduce their methane emissions and get credit from the market for those achievements. Part 2 focused on the push by gas producers to have their gas certified as a “low-emissions” hydrocarbon and differentiated (i.e., scored or assessed) based on the percentage of methane that escapes into the atmosphere during the production process, with higher marks being given to gas with a lower methane intensity (MI). We also discussed the two primary alternatives for gas producers seeking to certify or differentiate their gas (MiQ and Project Canary) and noted that as much as one-third of the natural gas being produced in the U.S. each day is certified/differentiated by one of them.
Headlines -- December 14, 2023
Locator: 46306CHINA.
Last observation: before heading to bed -- midnight, December 14, 2023 ... my favorite color at Christmas -- green:
Bakken: a reader noted that after years (?) of "no activity" in the Bakken, XTO now has an active rig in the state. A huge "thank you" to the reader who alerted me to that observation.
China: all that talk about the cratering Chinese economy -- oh, give me a break. Link here.
Smucker: I mentioned Smucker on the blog on December 5, 2023, but unfortunately, I forgot to provide the link and I don't recall what Smucker was doing that caught my attention.
I don't have a position in SJM and doubt that I ever will but that doesn't mean Smucker is not worth. Explore it on your own; I don't have time to post much on it tonight
What happened tonight that brought me to JMSmucker. It was Café Bustelo. I saw this in my daughter's kitchen. My son-in-law bought it -- probably at Walmart -- some months ago when coffee was hard to come by due to Covid-related supply chain issues. It is now my wife's favorite coffee when she visits the twins in Portlan, Oregon.
So, what's with Café Bustelo. It turns out Café Bustelo is a JMSmucker brand. From the JMSmucker coffee brand site:
From Motley Fool, September, 2023.
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Restaurants
Updates
December 15, 2023: completely unexpected --
Original Post
The tea leaves suggest we're going to see a lot of regional fast-food and sit-down restaurants start to fail over the next couple of years. Anecdotal, based on what I'm seeing in our north Texas neighborhood, a suburb of Ft Worth / Dallas.
I think this guy is wrong on the specifics but not the generalities. Link here. He assumes there will be a recession / hard landing.
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In-N-Out
One that won't fail: In-NOut.
Link here. First In-N-Out the state of Idaho recently opened. Outrageous video.
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EIA Accounting
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Trans Mountain Pipeline Delay
I'm not going to waste time looking for a link -- the link is easy to find -- but it's possible that the pipeline -- scheduled after years of delays to be operational in the next month or so, may now be delayed another two years and another billion dollars or more in overrun costs due to regulators -- bureaucrats who think they understand drilling better than the operators. As long as I don't have a dog in the fight, I don't care. Here's a link: I had to look up something.
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Hope Springs Eternal
Pending:
- OXY: CrownRock
- CVX: Hess
- XOM: PXD
Headline: "Consolidation Push Could Turn US Oil Industry Into Handful Of Giants."
Not if the FTC can help it.
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The Area Under The Curve
I still need to talk about "the area under the curve," but I don't have the energy or interest to do it tonight.
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The Fourth Industrial Revolution
I don't have the energy or interest to write about 4IR either, but here's one article about which to think with regard to 4IR.
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GM EVs
OMG. Ready to spend more time with her family?
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