Not On My Radar Scope Today -- Haven't Seen Moves Like This In A Long, Long Time -- ChatGPT Not Helpful -- CNBC Isn't Discussing -- June 10, 2024

Locator: 48731OIL.

This is truly amazing.

Tickers: the oil tickers on the CNBC crawler are absolutely stunning.

• CVX: up $4.00; up 2.8%;
• PSX: up $3.50 up. 3%;
• XOM: up $2.60; up 2.4%;
• COP: up $3.40; up 4%;
• OXY: up $1.26; up 3%;
• HES: up $3.60; up 2.65;
• FANG: up $4.57; up 3.2%
• XLE (energy select sector SPDR Fund: up $1.60; up 2% today.
• and that's why I think there are better ways than investing in ETFs, but ....
  

The reason is obvious. Let's see if that becomes obvious over the next six weeks or so. Actually two reasons:

• China
• Iran

Is money moving from tech to oil? Not really, but perhaps to some extent. The story remains geo-political, specifically Ukraine-Russia, but even more so, US-Iran nuclear talks.

• NVDA: flat; flat;
  
• TSM: up $4.70; up 2.3%;
  
• AMD: up $1.60; up 1.3%;
  
• INTC: up 1.10; up 5.5%;
  
• AMZN: down 70 cents; down 0.3%;
  
• AAPL: up 41 cents; up 0.2%;:
  
• PLTR: down 55 cents; dow 0.4%;
  
• AVGO: up 48 cents; up 0.2%;
  
• QCOM: up $3.50; up 2.3%;
  

China EVs: a race to the bottom. CNBC.

• cutting prices to the bone means no margins; no profits

"Zero mileage used cars": jargon; google zero mileage used cars;

• registered but never drive -- CarNewsChina;
• A growing controversy has emerged in China’s automotive sector over so-called “zero-kilometre used cars”—vehicles that have been registered but never driven, now flooding the second-hand market. Industry voices like Great Wall Motor Chairman Wei Jianjun are speaking out, and this practice is drawing criticism for distorting sales data, misleading consumers and undermining long-term market stability.
• inflate sales numbers
• price war leads nowhere
• Chinese state media calls for crackdown on "zero-mileage used cars"; link to Reuters; 
• time to get out the popcorn

Mark Fields remains bullish on EVs.

AAPL: something different this time following the WWDC?

• the iPad: link here;
• Apple's (AAPL) iPad is getting some major enhancements that should make it a far more useful laptop replacement. 
• the improvements are part of the company's iPadOS 26, which Apple announced during its WWDC 2025 conference on Monday. They include upgraded multitasking capabilities that will allow people to use the iPad more like a Mac and less like an iPhone. 
• very, very interesting: many (most?) of the websites I visit seem optimized to mobile devices; 
• fail on my laptops/desktops; websites have optimized for mobile devices
• we're now seeing that in Apple's "response" to the iPad
  

Reminder:

• CNBC producer puts together general agenda two weeks prior to airing; needs time to schedule talking heads for interviews, background, etc
• one week before: starts to review agenda, scheduling one week out
• two days before: reviews footage; schedule of talking heads; puts out last minute fires (problems, disputes)
  
• day of airing: already two weeks behind; we're seeing that again today

Oil price jump today: CNBC -- if discussed at all, won't be discussed until tomorrow or two weeks from now. Interestingly, ChatGPT not particularly helpful ... at the moment.

What's going on over at x?

• first driverless Teslas are now appearing on the roads in Austin; see video at this link;
• this explains why Tesla is up over 10% today;
• a bigger story: unlike Waymos in Los Angeles, these Teslas are not being set on fire;
  
• recession odds fade;
• Duke Energy proposed 1.4-GW gas-fired plant in South Carolina -- 
• remember, AI is an energy story; AI runs on natural gas; nuclear will take time;
• "gold miners" are up 35% YTD
• Nvidia: after China? What's next? Britain.
• Shay: did small-cap summer just kick off? NVTS, ASTS, ACHR, EOSE, RDW.
  
• Bloomberg: White House says this story is false -- "Treasury Secretary Scott Bessent has emerged as a contender to be the next Chair of the Federal Reserve." Probably true.
• JPow's term is up May, 2026
• nothing on my feed -- nothing -- regarding ICE riots in LA
• META to pay $15 billion for 49% stake in ScaleAI; links everywhere; here's The Verge
• the start-up's CEO is 28 years old; revenge of the nerds

Apple and AI: what's going on? Tag: AAPL, OpenAI, ChatGPT, choices, options:

• tea leaves suggest huge difference of opinion at the top, in the C-suite; three options
  
• pay the dollars to OpenAI and partner with OpenAI, OR,
• buy an AI startup and have Apple-owned AI, OR,
• start from scratch -- or build on Siri -- and develop AppleAI in-house at great expense, and still come up a dollar short and a day late:

"A dollar short and a day late" is an American idiom meaning that someone has not only missed an opportunity due to tardiness but also because they lack sufficient resources or effort. It implies that their attempt to achieve something is inadequate and too little, too late

• Apple really has only one choice -- 
• ChatGPT now and on-device AI as goal --> develop, for security purposes for those folks who are concerned about being tracked. 
• Siri could remain the on-device AI option for Apple; best of both worlds.
  
• ChatGPT suggests four options:
• OpenAI, most likely, ChatGPT
• Google, Gemini -- as an alternative or complementary provider
• Apple, internal models, for privacy and on-device AI
• Anthropic: unconfirmed; less likely currently 

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Not On My Radar Scope Either, At Least For Today
But We're Still Waiting For The Judge To Respond

China's Coal Boom -- Daily Newsletter -- Bloomberg -- January 17, 2025

Locator: 44702COALCHINA.

Link here.

This is not a surprise to anyone following the global energy story. 

The figures run contrary to hopes that China may have begun to reduce emissions last year, more than half a decade ahead of its 2030 target, after massive additions of wind and solar power and a rebound in output of hydropower.

But all that extra clean energy wasn’t enough to cope with the expansion in electricity consumption, which was set to outpace overall economic growth for the fifth straight year in 2024 due to strong demand for computing, and as sectors from heating to transport electrify.

The trajectory of electricity demand will be key to determining whether fossil fuel generation begins its decline in 2025. At the same time, China is maintaining its world-leading pace of renewables deployment, and is spending more on power lines and energy storage equipment to ensure the clean energy isn’t wasted.

LOL, taking the same road that Germany took:

It’s increasingly possible that renewable sources can meet all of the country’s new electricity consumption this year, and pave the way for China’s power sector to achieve peak emissions in 2025, said Gao Yuhe, a Beijing-based analyst at Greenpeace East Asia.

But lying through their teeth. LOL.

Peter Zeihan -- China -- In His Book, 2022 -- November 1, 2023

Locator: 45888CHINA.

Themes -- 2023. 

From Bloomberg and Nikkei Asia yesterday.

Chips: US to embargo.

Link to Peter Zeihan.

From twitter today:

China, Coal, And EVs -- Aprill 11, 2023

Locator: 44362B.

UPDATES

Later, 12:02 p.m. CT: Social Security and  Medicare —

• Recommendations
• progressive for both SS and Medicare
• no contribution cap based on income
  
• upon retirement, benefits phase out based on income
• additional contributions mandated for entertainers, sports figures, and federal employees, but, again, progressive
• families with children below the age of six exempt from all contributions
• families with dependents in college partially exempt from contributions

ORIGINAL POST

FedEx: increases dividend. Completely unexpected. And FedEx increases their dividend during a recession. See GDPNow.

Link here.

 
This is really a cool story.

I don't think most folks have caught on to this.

As the western world moves away from coal, using natural gas as a transitional fuel, and investing heavily in solar and wind energy, China is clearly taking a different fork in the road: coal.

This is another article that notes that China is switching from gasoline-fueled ICEs to coal-fueled EVs.

Absolutely fascinating.

And Saudi Arabia can clearly see this. 

*************************
Today's Reading

Even by The New Yorker's standards, the article by Larissa MacFarquhar in the current issue of TNY is setting a new record (?) -- seventeen pages. The article is on "adoption" and it is fascinating. Reminds me again how fortunate so many of us are. 

Probably behind a paywall.

On another note, I'm still reading A Fever in the Heartland by Timothy Egan, c. 2023. This should be mandatory reading by all juniors in "red" schools. And all GOP congressmen "investigating" "January 6." Timothy Egan's book certainly puts "January 6" into historical perspective.

************************
Jon Rahm

For Jon Rahm, social security withheld on his $3-million winnings: $10,000. This works out to 0.3% [0.062*160,200)/$3.24 million].

0.03% for a multimillionaire.

6.2% for a $50K blue-collar worker.

The GOP continues to move farther and farther away from me.

A reader replies: 

His social security contribution as a percent on his his $8 million in 2023 anticipated winnings:

$20,000 in SS contributions.

$20,000 social security / $8,000,000 earned income = 0.25%.

Medicare is even a better deal. Not only is it unchanged from 2022, despite inflation, it's still a whopping 1.45% for individual matched by another 1.45% for employer.

0.029 x 160,200 = $4,646 / $8,000,000 = 0.00058 = 0.06%.

Compared to what he would be paying in Spain, Jon Rahm must think he died and gone to heaven.

Note: I often make simple arithmetic errors.

Again, as noted, the GOP continues to move away from me. 

MRO With Four New Permits In The Prolific Bailey Oil Field -- Dunn County -- September 21, 2021

China coal: record Chinese coal burning to drive surge in carbon emissions. Link here. China announced on June 11, 2021, it would no longer grant subsidies for new solar power stations, onshore wind projects. Link here. Xi is truly looking out for all his Chinese.

UK utility bills: could soar to $750 without government intervention; it looks like "price caps" would need to rise to over $2,000 to cover the full costs of buying surging natural gas prices. Link here. 

No war: first time in twenty years, the US is not at war. 

GE: the blue chip stock I missed this past year.

JPM: raises its dividend more than 10%; raises it from 90 cents to an even buck; link here.

Peak oil: more and more indications both OPEC and OPEC+ struggling to lift production.

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

COP: will remain active in the Bakken even after recent acquisitions in the Permian. 

COP: Conoco's Permian purchase will overtake all but XOM in lower 48 US output, and Alaska is not amounting to much any more.

• adding an estimated 200K boepd will put COP within striking distance of leader XOM which is expected to produce about 1 million boepd from the Lower 48 this year
• COP's most recent deal will propel it past CVX, EQT, OXY, and EOG
• in the Permian Basin, COP will vault from fourth place after its previous purchsse of Concho Resources to become the second largest producer, behind only Pioneer Natural Resources and passing Chevron and OXY
• after waiting patiently on M&A opportunities through the land-rush years of the shale boom, COP has been able to pick up prime Permian real estate at what looks to be attractive price points -- analyst

US oil: we are quickly seeing the realignment of oil companies in the US. In addition, quickly seeing realignment of US states producing oil and/or natural gas. California will soon opt out; Alaska may not be that far behind. The one to watch: Utah. Maybe Wyoming.

Active rigs* -- NDIC no longer reporting active rigs; the number is my best estimate:

$70.56	9/21/2021	09/21/2020	09/21/2019	09/21/2018	09/21/2017
Active Rigs	26*	11	58	66	57

No new permits:

Four new permits, #38571 - #38574, inclusive:

• Operator: MRO
• Field: Bailey (Dunn); the Bailey oil field is tracked here but it must be updated; however, it has been discussed many times on the blog; it's a great field for re-fracks;
  
• Comments:
• MRO has permits for four new wells in the prolific Bailey oil field: Ermina, Ithamar, Austin, and Beau; 
• the wells will be sited in lot 1 section 18-146-93;
•  they will be sited between 451 FNL and 507 FNL and 429 FWL and 535 FWL

Four permits renewed:

• NP Resources: four Trotter State permits in McKenzie County;

Note Regarding The Blog This Week -- March 29, 2021

I'm under huge time constraints this week, so there will be minimal blogging. 

A lot of interesting data points. Link to the article here.

China generated 53% of the world's total coal-fired power during 2020, the only G20 nation to see a major increase in its coal-fired generation. 

The Chinese Problem: Despite China's installation of 71.7 gigawatts (GW) of wind power and 48.2 GW of solar energy last year, coupled with the Chinese government's pledge to reduce its coal dependency, the country nonetheless saw its coal-fired generation increase by 77 terawatt-hours (TWh) from its 2015 level of (sic) 44%, according to a report from the London-based energy and climate research organization Ember.

Did Phil mean to say that China's coal-fired generation has increased by almost half since 2015? If so, wow.

Re-Posting -- Sweden -- January 18, 2020

Re-posting from January 29, 2011.

This is one of the best commentaries I have seen in quite some time on the issue of energy, price of oil, environmental concerns, and the economic situation in the United States.

Interestingly it comes out from a small regional newspaper in a non-energy state (Minnesota).

This is the link. I did not know that cheap oil made Sweden rich; I knew that was true for Norway, but not Sweden. That alone made me read the entire article. (Unfortunately, this is a regional newspaper, and the link will be broken in a few days; available only through subscription or charge.)

Unfortunately, I assume for most of the readers of this blog, this will be the preacher talking to the choir.

*********

Yes, the link is now broken; actually not quite true; the link will take you to the original site but it will cost you to access the story.

The abstract is listed here.

The Swedish author noted that in 1945, none of the four small farms in his small Swedish village used oil for anything. But between 1945 and 1970, Sweden increased its use of energy by a factor of five, or nearly seven (7) percent per year for 25 years. "That journey into the oil age transformed Sweden from a rather poor country into the third wealthiest country (per capita) in the world. Ninety percent of the energy increase came from oil. Cheap oil made Sweden rich."

The author then asks reader to consider China which has 21 percent of the world's global population. It consumes eight (8) percent of the global oil supply, and "thinks it is fair to claim 21 percent, or 18 million barrels per day." That was written back in 2006.

China consumed 8 million barrels/day in 2008 and international energy analysts expect China's consumption to more than double to 17 million barrels/day by 2030. It's hard to believe it will take that long.

*********************************************

Truly Blessed

From social media:

I keep saying to everyone how people that are 50, 60, 70 years old had the best music.... and the best cars of all time. We truly were blessed.

Noted at this music video: https://www.youtube.com/watch?v=Dn9bAvWS4RU.

Reality Sucks -- October 12, 2019

Quick: China accounts for what percent of global EV sales?

Answer: 60%.

What would happen -- or what would the tea leaves tell you -- if EV sales in China start to fall.

Operative word: "if."

Well, it's no longer "if."

From the instituteforenergyresearch:

Sales of electric vehicles in China are slowing; year-over-year, EV sales dropped 5% in July, 2019, and dropped 11% in August, 2019 -- and this is in a centrally-managed economy with goals to cut coal usage.

I was unaware of that. That's huge. It's huge that EV sales in China last year totaled 1.3 million vehicles, or 60% of the global market. But then this: not only did EV sales fall in China, but sales fell for the first time decades last year, declining 3 percent, before falling eleven percent (11%) in the first eight months of 2019. The analysts then blame:

• China's slowing economy;
• China's trade war with the US;
• reduction in government subsidies
• removal of sales restrictions on traditional cars.

Gee whiz, Sherlock, which of those four ... well, let me re-phrase the question. How would you rank those four factors? Not ass-backwards as the writer of this article. This is likely the real ranking of what is killing EV sales in China:

• removal of sales restrictions on traditional cars (yeah, the Chinese are like Americans: they like muscle cars; they can't find charging stations)
• reduction in government subsidies (same  phenomenon we've seen in every country, including Norway)
• China's trade with with the US
• China's slowing economy

Wow, the "real" list is exactly reverse order of that presented by experts.

The graphics at the linked article show how bad things really are for EV sales in China.

 I would post those graphics, but I'm not interested. Ready to move on. Maybe I'll post them later.
But I think the real question is this: in a centrally-managed country that could literally tell its people what cars to buy, why did China make this decision to:

• remove sales restrictions on traditional cars
• reduce government subsidies for EVs

Two words:

• coal
• cash 

Institute for Energy Research? At wiki.

China -- Soybeans -- 2019

From twitter today:

China -- How Well Off Is China's Middle Class? -- Considering That 60% Of The Chinese Appear To Live In Poverty -- August 7, 2019

This is an incredibly good interactive site. You might have to play around with the filters to navigate the site but once you figure it out, it's quite amazing.

Be sure to pay attention to the "key" for the above graphic:

My annotations regarding the key:

I always find it interesting how analysts "divide" / label the data. In this case, the range for the "low-income" demographic: from high ($10) to the low ($2), that's a 5x range.

The other divisions are not nearly as wide. On a scale like this, $10 is incredibly different than $2 and yet "that" is all grouped together. The "lower-middle-income" has the narrowest of range, only $10 to $20.

Although the "upper-middle-income" only has a 2.5x range ($20 to $50), that's a huge range. On a monthly basis that goes from $600/month to $1500/ month.

Of course, the biggest problem with this chart is the ">$50-income" range ("high-income"). $50months translates to $1500/month -- really -- is that where they end the graphic??

Why US Natural Gas Is Preferably Moving To Asia Rather Than Europe -- Oilprice Contributor -- July 27, 2019

Updates

Later, 7:57 p.m. CT: see first comment. Some of my observations may be incorrect (that's not news, LOL) and a reader has corrected them. Much appreciated. I would trust the reader's comments much more than I would trust my own. I will have to take another look. Much appreciated -- the reader taking time to write.

Original Post 

Link here.

Two takeaways:

• cheaper to move natural gas to Asia than Europe
• Asia's demand for energy (coal, natural gas) is insatiable

Another takeaway:

• China eager to replace coal with natural gas
• air pollution is the big reason (maybe the only reason)
• public relations (FWIW: atmospheric CO2)

Look at the opportunity for the US natural gas industry, short tons coal produced by five top producing countries:

 

********************************* 

The Book Page

Update on my books for the week.

I continue to enjoy The Vikings and the biography of Constantinople by Lars Brownworth, c. 2009.

The former is a much more scholarly book, a great reference book.

I've never understood how / why WWI broke out -- no matter how much I read on the lead-up to that war, I still don't understand it. Same with Constantinople. I've never understood it. Everything in that period: the break-up of Charlemagne's kingdom; the Holy Roman Empire; Constantinople; the Vikings; the Vandals; Justin (and the Justinian Codex), the evolution of the feudal system. All of it. Never understood it. I guess for most of my high school history teachers, Constantinople was a bridge too far.

But Brownworth does an incredible job covering one thousand years of history and a geographical expanse from Persia to Scotland to Spain to Carthage.

I've always wondered why the Vandals seemed to have disappeared from history of abruptly. Their origins and arrival in western Europe is just as mysterious. But after they arrived, they got a lot of historical press, their fifteen minutes of fame, and then abruptly disappeared.

From Brownworth, pages 87 - 89, the Romans under the Justinian leadership out of Constantinople, decided to take on the Vandals once and for all. Their African capital -- from where they controlled the Mediterranean -- was Carthage. To make a long story short -- no elephants this time -- the Romans (again, out of Constantinople) conquered Carthage, 533 A.D.

The victory shattered the Vandals so thoroughly that they virtually disappeared from history. [Their leader] Gelimer survived to flee into the mountaints and fight on, but by the time winter was over, he realized it was a lost cause and surrendered. [The Roman leader] Belisarius entered the bustling city  of Hippo in triumph and found there both Gelimer's vast treasury and the looted riches of Rome. Within a few months, Sardinia, Corsica, and Gibraltar had fallen, and this extraordinary victory was complete. The Vandal kingdom had been distinguished in little more than a year, and the watching world had been put on notice. The [Roman] empire was returning to claim its own.

Idle Rambling -- The Chinese Trade War -- August 15, 2018

Updates 

Later, 6:28 p.m. CDT: after writing the note below, it suddenly dawned on me. If relatively mild sanctions -- some of which have not even been implemented yet -- are supposedly hurting China this much, think what much stricter sanctions are doing to Iran: a much smaller nation, and a much less diverse economy. Something tells me the big story below has to do with the country not mentioned: Iran.

Original Post

I promised a reader I would get back to him regarding this article in yesterday's New York Times: Trump's trade war is rattling China's leaders.

For now, I'm going to assume folks can get to the article who want to see the article. If unable due to a paywall, the lede:

Trump’s tariffs and trade threats. But as it becomes clear that a protracted trade war with the United States may be unavoidable, there are growing signs of unease inside the Communist political establishment. 

In recent days, officials from the Commerce Ministry, the police and other agencies have summoned exporters to ask about plans to lay off workers or shift supply chains to other countries.

With stocks slumping and the currency dropping 9 percent against the dollar since mid-April, censors have been deleting a torrent of criticism online, some of it directed at President Xi Jinping’s leadership.

I found the article fascinating, and "right on target."

These are some random data points that pinged around in my little mind when I read the article.

• most recently, about four weeks ago (?), Scott Adams mentioned in passing but very clearly stated that China will blink / acquiesce / drop tariffs / come back to the bargaining table once we see one or two large banks in China fail -- Scott Adams didn't pick that out of thin air -- his source was impeccable, no doubt, only because it seemed to be such an odd prognostication
• despite the media trying to convince us otherwise, Trump is a very, very smart man -- he would not take serious action on any issue without really understanding the issue -- and unlike most presidents, he is not politically ideological -- he is laser-focused on American business
• Trump is a business man; he is an international businessman; he knows what's going on in China, Russia; his detractors are not business men, they do not know what is going on in China, Russia
• unlike most politicians: no "bridge is too far." He is willing to meet one-on-one with anyone, and willing to bargain
• several years ago, I commented that China's Achille's heel is its huge young, male population. A legacy of the one-child mandate, China has a huge, male population -- China needs to keep them employed; even a small country like Saudi Arabia knows they can't have a dispossessed young male population; this bullet, by the way, should be the #1 bullet in this list, but I put it here for a reason
• a lot of folks don't think a country can implode overnight; hellooooo -- take a look at Venezuela; Chinese leaders know that no country is "too big to fail"
• because China is autocratic / dictatorial, anti-Trumpers think China can outlast Trump; perhaps China can, but there are a lot of very, very rich, strong, influential business leaders and political leaders that are more worried about numero uno (themselves) than their leader -- a very, very rich banker whose bank fails ...
• and, finally, a lot of Chinese probably don't like the idea of a premier who is now "premier-for-life"

From the linked NY Times article:

If the trade war escalates — and Mr. Trump has shown no sign of backing down — some worry that the public’s faith in the economy could be shaken, exposing the nation to much more serious problems than a drop in exports. New economic data on Tuesday showed slower growth in investment and consumer spending, and there are fears that the financial crisis in Turkey could spread.

China’s leaders have argued that they can outlast Mr. Trump in a trade standoff. Their authoritarian system can stifle dissent and quickly redirect resources, and they expect Washington to be gridlocked and come under pressure from voters feeling the pain of trade disruptions.

But the Communist Party is vulnerable in its own way. It needs growth to justify its monopoly on power and is obsessed with preventing social instability. Mr. Xi’s strongman grip may be hindering effective policymaking, as officials fail to pass on bad news, defer decisions to him and rigidly carry out his orders, for better or worse.

Wouldn't it be ironic if North Korea turned out not to be the big story of the year, but rather talk of regime change in Beijing?

A bridge too far? From the linked article:

“All of this coming together suggests Xi’s grip on authority has been loosened,” said Willy Wo-lap Lam, a longtime observer of Chinese politics at the Chinese University of Hong Kong. “He’s unable to fill his function as the final arbiter who settles differences among his closest advisers.”

It is unlikely Mr. Xi’s position is in any jeopardy. But the trade dispute, along with a scandal over tainted vaccines and protests over failed investments, have already emboldened some critics of his sweeping centralization of power.

And Scott Adams' comment on banks?

The worst case for China, however, is that the trade war undermines economic confidence. The nation’s housing market teeters on a mountain of debt, and low-interest loans from state banks have built overcapacity in many industries. The worry is that prolonged trade tensions could cause money to rush out of China despite currency controls and prompt much bigger financial and economic troubles.

And so it goes.

Global Oil Supplies Down To 58 Days, Four Hours, And Forty-Eight Minutes -- IEA -- June 14, 2018

If folks are confused by all the statements coming out of Saudi Arabia, this may be the reason.  

Reuters wonders if OPEC is moving the goalpost for its oil market scoreline.

I have never really believed whatever OPEC says but lately the flip-flops have seemed even more outrageous. First, there's too much oil; then, there's not enough oil; then, there's enough oil now but there won't be enough oil next year; and now, not only is there not enough oil now, there won't be enough oil next year, and US shale oil won't be able to make up the difference.

Four months ago, there was this article from Reuters: surge in global oil supply may overtake demand in 2018 (IEA).

Today, crude oil demand in 2019 will grow another 1.4 million bopd after growing a similar 1.4 million bopd this year (2018).

So, we go back to the data.

First, it's nearly impossible to find OECD crude oil inventories. I think it's around 2 billion bbls. This was from oilprice.com, March, 2018:

At 2.865 billion barrels, OECD stocks were 206 million barrels lower than in January 2017, but 50 million barrels above the latest five-year average, OPEC said. 

But ycharts says the number is 4.4 billion bbls. Whatever.

Regardless, what it is, no one knows how much is really needed.

In the US, we have better data, but folks interpret it differently. At 435 million bbls in reserves, analysts suggest that's below the average median/mean/average for the past five years. And yet, it certainly appears that historically, the US has done just fine with 350 million bbls in reserves. [My benchmark remains: 350 million bbls in reserves.]

So, let's look at what I think is the best metric: the number of days of crude oil supply.

For the US, my benchmark is 21 days. Anything more than 21 days is a "glut." We haven't seen 21 days or less since 2014.

Recent data, from the EIA, US days of supply of crude oil excluding the SPR:

Now, OECD (global) data. From a Financial Times article:

The level of oil stocks in countries within the Organisation for Economic Co-operation and Development has been used as the benchmark of energy market tightness for years.

With an inventory level – measured as the number of days that stocks are able to meet demand – at about 55 days, the market has been seen as roughly balanced.

Anything below has indicated a tight market; anything above, a loose one. The International Energy Agency estimates OECD oil inventories at the end of January to be about 58.2 days of forward demand, suggesting that the oil market is comfortably well supplied. Prices, the theory goes, should be moving lower.

Then this:

But the measure is faulty on two fronts.

Firstly, OECD oil inventories were relevant when rich countries were at the centre of oil consumption by a big margin. But they no longer have such status.

According to the US Department of Energy, the OECD last year accounted for just 53 per cent of global demand, down almost 10 percentage points from 62 per cent a decade ago. Moreover, oil consumption from outside the OECD will surpass oil demand from within it by about 2019. [We've been talking about this for the past several days.]

And this incredibly unenlightened statement:

When Chinese inventories are added to those of the OECD, the measure of coverage of demand drops by a hefty four days, from 58.2 days to about 54 days, suggesting a tight market.

First of all, let's get rid of the "point two" tacked unto the 58 days of supply. Give me a break. Some analyst is able to tell us that OECD (global) oil supplies work out to 58 days and 4.8 hours or 58 days, four hours, and 48 minutes? LOL. 

But seriously, we have no idea how much oil is really sloshing around in tankers or in pipelines -- if it's difficult to come up with numbers for the US (the API and EIA weekly numbers are often quite different), think how incredibly inaccurate global data is.

Then this: look at the days of supply again, from the article --

... when Chinese inventories are added to those of the OECD, the measure of coverage of demand drops by a hefty four days, from 58.2 days to about 54 days, suggesting a tight market.

Remember, a "tight number" was defined as 55 days or below. So 56 days, the Financial Times would have called it a "loose market," but at 54 days, it's a "tight market."

Tell me, truthfully, do you see any difference between 58 days and 54 days of supply for the entire OECD plus China?

The last time I looked at this was February 19, 2018.

ycharts has data as recent as February, 2018: OECD Petroleum Stocks is at a current level of 4.407B, down from 4.429B last month and down from 4.656B one year ago. This is a change of -0.51% from last month and -5.36% from one year ago.

The EIA site might be the best site for such data. Take a look at the EIA graph going back to January, 2013. It certainly appears that the range has been very, very narrow, from 55 days at the very low to 65 days at the very high. Right now, we are pretty much near the lower end but projections for mid-2019 puts us smack-dab in the middle of the range, at about 60 days.

Bottom line: none of us -- analysts or arm-chair nattering nabobs of negativity -- have a clue.

Wow, Did Anyone See This Coming? Do Any Dots Connect To The Trump Tariffs? -- June 7, 2018 -- Words That Make Me Tingle When Seen In One Sentence: Solar, Slashed, Surprise

From oilprice.com:

Market researchers are in a rush to lower their solar capacity addition forecasts for this year after China surprised everyone by announcing it will not issue approvals for any new solar power installations this year and will also cut the feed-in tariff subsidy that has been a major driver of the solar business in the country that accounts for as much as 50 percent of capacity.

Reuters reports that companies including IHS Markit and Wood Mackenzie have already revised their solar additions forecasts for the year.

IHS analysts slashed their projections by between 5 and 10 GW of new additions, although in China alone, they saw a potential reduction in new solar capacity of up to 17 GW. Earlier this year, the firm had forecast Chinese solar capacity additions of 53 GW.

Wood Mackenzie, for its part, expects new Chinese solar capacity to be 20 GW lower than earlier forecast, which was 50 GW.

GMT Research also reduced its China new solar capacity additions forecast by as much as 40 percent to 28.8 GW, with one analyst saying, “When the industry talks about China, it’s always about how demand in the region exceeds expectations. That is not going to be the case anymore.”

This is not rocket science. I don't know if anyone saw this coming -- I did not -- but the timing is interesting.

China Sets Second-Highest Record For Crude Oil Imports; US Hits Record For Amount Of Oil Exported To China -- December 8, 2017

It might be my imagination but it certainly seems the fossil fuel energy story has moved faster in the past six months than expected.

Now we get this story -- big "thank you" to Don for alerting me to the story.

From CNBC:

• China crude oil imports for November: second-highest on record
• China crude oil imports from the US in November: highest amount on record
• driving the record for US crude exports to China: WTI discount to Brent -- currently about $6/bbl

Rule of thumb: a $7 spread (advantage to WTI) almost guarantees WTI will outsell Brent to Asia, all else being equal. If the spread is less, depends on a number of factors how much US crude oil China will import. The greater the spread over $7 the more likely that data point will be the single data point necessary for China to buy US oil.

Wow, Wow, Wow -- December 7, 2017

The headline:

The lede:

China is backpedaling on its massive push for the coal-to-gas switch after the move created gas shortages in the north that left people freezing in the cold snap.

The Chinese Ministry of Environmental Protection said on Monday in an urgent letter to 28 cities in the north that residents now could continue burning coal or firewood to keep themselves warm in the areas where the switch from coal to natural gas and electricity has not been completed, Caixin reports, despite the ban on coal.

“It is not wrong for Beijing to push the coal-to-gas switch, but the process was a bit too fast and outpaced the market’s capacity,” Xu Bo, a researcher with CNPC’s Research Institute of Economics and Technology, told Reuters.

So big has been the drive to switch from coal to gas, that China has been buying up liquefied natural gas (LNG) cargoes on the spot market, pushing spot prices higher than the prices of the oil-indexed LNG cargos in the long-term delivery contracts. Last week, Asia’s LNG spot prices jumped to the highest since January 2015 due to the Chinese demand and strong oil prices.

Related story.

If you listen to the interview below, it sounds like New England has the same problem as China and is solving it the same way: using diesel fuel as heating fuel during the winter.

Peak Oil? Yup. In Asia -- January 17, 2017

Quick: what do Malaysia and China have in common? It's been posted on the blog several times.

From CNBC:

Oil production in Asia-Pacific is declining at a rate not seen elsewhere in the world, with around half of losses coming from China alone, Wood Mackenzie has warned.

China, Indonesia, Malaysia and Thailand are among the biggest producers in Asia but the near halving of crude oil prices since 2014 has hit the industry and resulted in an annual average base decline rate of around 7 percent within existing oil fields, Rodger pointed out.

"Lower oil prices and the severe cuts to upstream capex (capital expenditure) to mature assets has increased decline rates," he explained in a new video published on Wood Mackenzie's site.

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Chicago Homicides

This could become a regular feature, sort of like the monthly atmospheric CO2 numbers.

Previously posted:

Downtown is getting safer! Chicago homicides already dropping significantly after Trump election. The 24 homicides over the year's first 15 days (a dynamic link) extrapolates to 584 Chicago homicides in 2017, compared with 797 in 2016. If that holds, that represents a decrease of 27% homicides in the Windy City, one year after the shocking Trump election. 

Today, January 17, 2017: Over the MLK weekend, ten homicides. Now, 26 homicides over 16 days extrapolates to 593 for the year.

Chinese Surging Oil Demand Saving OPEC's Butt -- The Telegraph -- April 16, 2016; Bill Nye: First We Need To Jail Climate Deniers

Note: my thoughts on the upcoming Doha meeting tomorrow at this link. 

This is really pretty cool. The other day I wrote:

Earlier today it was reported that OPEC forcast non-OPEC production falling faster than predicted, from 700,000 bopd to 730,000 bopd or about a 0.03 percent change. LOL.

As soon as I read that, I knew that the price of oil rests on the Chinese and the Indian economy. Right on cue, Bloomberg/Rigzone report: China’s crude imports climbed to a record in the first quarter as higher refining margin encouraged refiners to boost purchases.

A reader sent me this link from The Telegraph: soaring Chinese crude oil demand is saving OPEC's butt.

A dramatic build-up in China’s strategic petroleum reserve and surging demand for imported crude oil are likely to transform the global energy markets this year, regardless of any production freeze agreed by OPEC and Russia this weekend.

Chinese credit stimulus and a 20 percent rise in public spending has set off a fresh mini-cycle of growth that is already sucking in oil imports at a much faster pace than expected.

Barclays estimates that the country will import an average of 8 million barrels per day this year, a huge jump from 6.7 million bopdlast year. This is arguably enough to soak up a big chunk of the excess supply currently flooding global markets.

Standard Chartered said Chinese imports could reach 10 million bopd by the end on 2018, implying a supply crunch and a fresh spike in oil prices as the market is turned on its head.

Energy consultancy Wood Mackenzie says $400 billion in oil and gas projects have been shelved [worldwide] since the onset of the commodity slump. A great number of depleting fields will not be replaced.

Feifei Li, Barclay’s oil analyst, said China is in a rush to fill four new storage sites of its petroleum reserve coming available this year. “It is an urgent priority of the government to fill up the tanks while the price of oil is cheap,” he said.

Fresh storage is likely to average 250,000 bopd, five times the level last year. The pace will rise further in the second half of the year.

China is building vast underground rock caverns in the interior of the country as a top national security priority, fully aware of the way Japan was squeezed by the US fuel embargo in the late 1930s. It aims to boost reserves to 550 million barrels and ensure a 90-day buffer to resist an external supply shock.

China’s own output of oil has fallen by 200,000 bopd over the last year as PetroChina and Sinopec slash investment, while demand has continued to grow.

So much more at the article. Worth archiving.

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Bill Nye: We Need To Jail Climate Deniers

First we start with the weather men. Accuweather is reporting: Powerful April snowstorm to bury Colorado Rockies, High Plains this weekend.

A slow-moving, strengthening storm will cause snowfall to ramp up over a large part of the Rockies and to spread over part of the High Plains this weekend.

People in the region, including the Denver area, should be prepared for travel disruptions, power outages and property damage.

More Movement In The Global Oil And Gas Industry -- December 22, 2015

Yesterday it was announced that BP would buy all of Devon's assets in the San Juan Basin in New Mexico. Today is it being announced the COP is leaving Russia after 25 years. From Seeking Alpha:

• ConocoPhillips is exiting Russia after more than 25 years as foreign investors are hit by Russian political tensions and the tumble in oil prices, Financial Times reports
• COP confirms it sold its 50% stake in its Polar Lights JV with Rosneft, which also sold its stake in a deal that valued the business at $150M-$200M
• Polar Lights, registered in 1992, made COP the largest foreign investor in the Russian energy sector in the early 1990s, but the venture became ensnared in domestic Russian politics, and its tax bill increased sharply; COP first announced it would seek a buyer for its stake last year

Only one reason COP did this, but I will let the readers speculate.

Meanwhile, Gazprom Neft is tweeting: 

Russia to stand by flat crude oil output strategy; 'ready for battle', according to Gazprom Neft CEO.

More and more pressure on President Putin, which takes us to this next article sent in by a reader.

I think I've seen this article before, or another iteration of it, somewhere else, and, in fact, I may have posted it somewhere. From oiljobsnd:

It won’t be long now, until the U.S. Shale Oil Industry will bankrupt Saudi Arabia, and claim victory against OPEC. The war isn’t over yet, but America has already won, it’s just a waiting game now.

On Friday, December 18th 2015, President Barack Obama officially signed off on ending the 40 year ban on the export of crude oil. President Obama basically signed the death certificate of OPEC. By passing this new law, the US Shale Oil Industry will crush OPEC in the long-term.

For years now Saudi Arabia has been a major powerhouse in the oil and gas industry. When you think Saudi Arabia, you think of oil. Most people assume OPEC is the one calling the shots and setting the oil prices, it’s not, it’s Saudi Arabia and it’s been them this whole time. Why do you think the Bush Administration was in bed with them?

For the last few decades Saudi Arabia has printed money faster than they can pump oil, and they pump a tremendous amount of oil. When the markets swung up and down, it was due to the Saudi’s actions. Saudi Arabia has been the muscle in the oil industry for the longest time, until US operators cracked the shale oil code.

Much, much more at the link.

Wednesday, November 4, 2015 -- China Admits To Burning Way More Coal Than Originally Reported -- I'm Shocked, Shocked, I Say

Active rigs:

	11/4/2015	11/04/2014	11/04/2013	11/04/2012	11/04/2011
Active Rigs	69	190	180	188	196

RBN Energy: The EPA reports on hydraulic fracking.

EPA concluded:

“We did not find evidence that these mechanisms have led to widespread, systemic impacts on drinking water resources in the United States.  Of the potential mechanisms identified in this report we found specific instances where one or more mechanisms led to impacts on drinking water resources, including contamination of drinking water wells.  The number of identified cases, however, was small compared to the number of hydraulically fractured wells.”

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GOP takes Kentucky governorship. NYT, NPR in shock.

Most populous Connecticut city votes felon ex-mayor back into office. Had been in federal prison for seven years. Not reported by NYT, NPR. 

At least he didn't use a gun. Killing three people with a claw hammer; sentenced to death. Supreme Court agrees with killer; he could suffer a seizure during final punishment. No background check when claw hammer was purchased. NPR reported.

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Global Warming

China

The New York Times is reporting that China is burning a lot more coal than originally reported:

China, the world’s leading emitter of greenhouse gases from coal, has been burning up to 17 percent more coal a year than the government previously disclosed, according to newly released data. The finding could complicate the already difficult efforts to limit global warming.

Even for a country of China’s size, the scale of the correction is immense. The sharp upward revision in official figures means that China has released much more carbon dioxide — almost a billion more tons a year according to initial calculations — than previously estimated.

The increase alone is greater than the whole German economy emits annually from fossil fuels.

Officials from around the world will have to come to grips with the new figures when they gather in Paris this month to negotiate an international framework for curtailing greenhouse-gas pollution. The data also pose a challenge for scientists who are trying to reduce China’s smog, which often bathes whole regions in acrid, unhealthy haze.

Wow, this opens up so many more questions and observations.

1.  Despite this huge increase in CO2 emissions which have been under-reported for decades, there has been no evidence of global warming for 19 years.

2.  Despite this huge increase in CO2 emissions which have been under-reported for decades, there has been relatively little increase in atmospheric CO2 concentration. In fact, the most recent number (September, 2015) showed atmospheric CO2 concentration once again below 400, the level at which the world is about ready to come to an end as we know it.

3. How did the UN miss this huge discrepancy?

4. Why did the UN use China's data and not independently researched data which was out there?

5. Why is China releasing this information now? Yes, I know it came out in an updated Chinese economic report, but they could have massaged the data. It would not be the first time a country massages data. The US admitted to massaging labor data a couple of years ago (I forget exactly when that story came out).  ZeroHedge reports the same thing, and very, very recently.

And now the spin from The New York Times:

When President Xi Jinping proposed that China’s emissions stop growing by 2030, he did not say what level they would reach by then. The new numbers may mean that the peak will be higher, but they also raise hopes that emissions will crest many years sooner, Mr. Yang, the climate adviser, said.

“I think this implies that we’re closer to a peak, because there’s also been a falloff in coal consumption in the past couple of years,” he said.

I think it's quite obvious why China admitted to burning more coal than originally reported. In fact, one could argue that it would be in China's best interest to "high-ball" the number -- report as big a number as possible -- make it even bigger than it really is. By doing absolutely nothing, then in 10 years, they can report the "real" number and show they've made process. 

Unless I missed it, The New York Times does not explore the reasons why China is coming up with "more realistic" numbers now.