More And More Stories Of Increased Snow This Year; Bakken Will Participate -- December 20, 2017

From The Williston Herald:

• starting last night, snow starting to fall, accumulating
• 6 - 8 inches possible for Christmas
• I remember most of my Christmases in Williston having well less than five inches of snow

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

Honda

The other day, I mentioned how happy I was with my Honda Civic, now several years old. Today, this from auto123.com, Honda Civic Type R is Auto123.com's 2018 Sport Compact Car of the Year. And, on top of that, there is the Civic Si. Something for everyone at all price points.

 **********************************

How Big Is Amazon?

CNBC reported that the #2 US logistics distributor has 21 fulfillment centers, second only to Amazon. As usual, the reporter did not put that "21" into perspective. Does Amazon have 22 fulfillment centers? 35? 105?

So, I was curious. Look at these two data points. Remember that the #2 logistics distributor in the US [Radial] has 21 fulfillment centers. Now Amazon:

• Amazon added 26 new fulfillment centers in the US in 2017
• a year ago, January, 2017, Amazon announced new fulfillment centers in Colorado, Maryland, Florida, and Texas
• so how many fulfillment centers does Amazon have in the US? Are you sitting down? As of January, 2017, 214 facilities across the US

**********************************
Re-Balancing 

EIA announces a drawdown of 6.5 million bbls. US crude oil inventories now stand at 436.5 million bbls. Re-balancing is now down to 30 weeks. By the way, the drawdown was much greater than expected. Analysts expected a drawdown of  3.8 million bbls.

Week	Date	Drawdown	Storage	Weeks to RB
Week 0	Apr 26, 2017		529.0	180
Week 1	May 3, 2017	0.9	528.0	198
Week 2	May 10, 2017	6	522.0	50
Week 3	May 17, 2017	1.8	520.2	59
Week 4	May 24, 2017	4.4	515.8	51
Week 5	May 31, 2017	6.4	509.9	41
Week 6	June 7, 2017	-3.3	513.2	60
Week 7	June 14, 2017	1.7	511.5	57
Week 8	June 21, 2017	2.5	509.0	62
Week 9	June 28, 2017	-0.2	509.2	71
Week 10	July 6, 2017	6.3	502.9	58
Week 11	July 12, 2017	7.6	495.3	47
Week 12	July 19, 2017	4.7	490.6	43
Week 13	July 26, 2017	7.2	483.4	38
Week 14	August 2, 2017	1.5	481.9	46
Week 15	August 9, 2017	6.5	475.4	35
Week 16	August 16, 2017	8.9	466.5	30
Week 17	August 23, 2017	3.3	463.2	29
Week 18	August 30, 2017	5.4	457.8	27
Week 19	September 7, 2017	-4.6	462.4	32
Week 20	September 13, 2017	-5.9	468.2	39
Week 21	September 20, 2017	-4.6	472.8	46
Week 22	September 27, 2017	1.8	471.0	46
Week 23	October 4, 2017	6.0	465.0	41
Week 24	October 12, 2017	2.8	462.2	40
Week 25	October 18, 2017	5.7	456.5	37
Week 26	October 25, 2017	-0.9	457.3	39
Week 27	November 1, 2017	2.4	454.9	38
Week 28	November 8, 2017	-2.2	457.1	42
Week 29	November 15, 2017	1.9	459.0	43
Week 30	November 22, 2017	1.9	457.1	42
Week 31	November 29, 2017	3.4	453.7	41
Week 32	December 6, 2017	5.6	448.1	37
Week 33	December 13, 2017	5.1	443.0	36
Week 34	December 20, 2017	6.5	436.5	30

Active Rigs Up; WTI Up -- T+333; December 20, 2017; Could We See $58-WTI By The End Of The Year?

Updates

Later, 3:47 p.m. CT: there it is -- WTI closed above $58 today; closed at about $58.05. Whoo-hoo.

Later, 11:44 a.m. CT: earlier this morning when WTI was about $57.77 I asked whether we would see $58-WTI by the end of the year. At the moment, "we" are three pennies from $58-WTI. Just saying.

Original Post

2018 US Crude Oil Production

Global Demand

****************************************************** 
NOG 

4Q17 Update

• raising fourth quarter production guidance; now expecting average daily production to increase by 4% to 6% over third quarter 2017, compared to prior guidance indicating flat sequential production at the mid-point
• now expect to add approximately 5 to 6 net wells to production during the fourth quarter resulting in 2017 net well additions of approximately 15 to 16 net wells
• fourth quarter oil differential expected to improve by $1.50 per barrel versus the mid-point of prior guidance; now expecting a ( $5.00 ) per barrel of oil differential for the quarter
• wells in process have increased by 6.6 net wells during 2017, from 13.4 net wells as of December 31, 2016 to 20 net wells as of November 30, 2017

Preliminary 2018 Production and CAPEX

• the Board has approved a preliminary 2018 capital budget of up to $176 million , which contemplates 20 to 22 net wells added to production during 2018
• based on this preliminary budget, 2018 annual production is expected to increase by 10% to 14% when compared to 2017
• the Board is also targeting a 10% to 15% reduction in general and administrative expenses when compared to 2017 levels 

**********************************************
Saudi Arabia

2018 budget announced, links everywhere including Forbes. Data points:

• highest budget ever; $261 billion vs $250 billion in 2017
• to balance budget in only six years
• only six European countries have larger budgets than Saudi Arabia (does not include Russia)
• suffered recession in 2017; GDP dropped 5%
• had planned to accelerate smaller subsidies but have now extended them; e.g., gasoline subsidies; see Bloomberg link;
• has never collected personal income taxes; will now implement new fees and taxes, most notably a value-added tax
• the budget does not provide the price of oil the country used when establishing the budget, but outside analysts suggest $50 - $55 will cover the budget

Will freeze more bank accounts. Link at Bloomberg. 

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

Active rigs:

$57.77↑	12/20/2017	12/20/2016	12/20/2015	12/20/2014	12/20/2013
Active Rigs	54	41	64	182	192

RBN Energy: Alberta gas producers, prices dogged by oversupply, transportation constraints.

The Market And Energy Page, Part 2, T+332 -- December 19, 2017; 7,000 DUCs In The Permian; Another Large US Crude Oil Inventory Draw

For the archives and to look back on this a year from now. Nothing new here; it's been talked about for quite some time. From 24/7 Wall Street, data points:

• between January, 2017 (Trump takes office) and January, 2018 (first year of his presidency): US crude oil production from major shale regions forecast to rise by 1.2 million bopd, to 6.4 million bopd
• next month (January, 2018): the total is expected to rise by almost 100,000 bopd
• December, this month: total production should be 6.314 million bopd, an increase of 220,000 bopd compared to estimated November, 2017, production
• DUCs in the Permian: 7,354! Incredible. Compare to about 1,000 in the Bakken

US crude oil inventories, weekly API report, link here, data points:

• another huge draw: down 5.22 million bbls
• forecast: 3.20 million bbls
• previous draw: 7.382 million bbls
• we'll see the EIA data tomorrow at which time I will post re-balancing data

Drop in inventory, from Bloomberg:

Crude rose in after-hours trading because an oil-industry assessment was said to show a larger-than-expected contraction in U.S. crude stockpiles.

Futures extended gains from the settlement in New York after the American Petroleum Institute was said to have reported domestic oil inventories slid by 5.2 million barrels last week. That exceeded the 3.15 million-barrel decline forecast in a Bloomberg survey. If the drop is confirmed by the government on Wednesday, it will aggravate tightening supply conditions stemming from the shutdown of a key North Sea pipeline.

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

Petro-Chemical Plants -- Random Note

At another post, a reader sent this comment:

Inter Pipeline just announced a $3.5 billion propane cracker in Alberta. Wouldn't be surprised if the Ethane pipeline from Tioga is converted to propane, and a ND methane cracker is built.

Link to one source for this story: https://inspectioneering.com/news/2017-12-18/7205/inter-pipeline-to-build-canadas-first-integrated-propane-dehydro

Another link here. 

Active Rigs Trending Up; Four New Enerplus Permits -- December 19, 2017

Active rigs:

$57.49↑	12/19/2017	12/19/2016	12/19/2015	12/19/2014	12/19/2013
Active Rigs	54	41	64	182	188

Four new permits:

• Operator: Enerplus
• Field: Mandaree (Dunn)
• Comments:

Nine permits renewed:

• Oasis (4): four Lewis Federal permits in McKenzie County
• Newfield (2): two Orvis State permits in McKenzie County
• Slawson (2): a Bazooka Federal permit and a Slasher Federal permit, both in Mountrail County
• WPX: a Joseph Eagle permit in Dunn County

Eleven permits canceled:

• EOG (7): seven Hawkeye permits in McKenzie County
• Oasis (3): three Crane Federal permits in Williams County
• Hunt Oil: a Scorio permit in Williams County

GDP Forecast For 4Q17 Unchanged: 3.3% -- December 19, 2017

GDP Now: Latest forecast: 3.3 percent — December 19, 2017

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2017 is 3.3 percent on December 19, unchanged from December 14.

The forecast of fourth-quarter real GDP growth fell to 3.1 percent after Friday's industrial production and capacity utilization release from the Federal Reserve Board of Governors but rebounded back to 3.3 percent after this morning's new residential construction release from the U.S Census Bureau.

The forecast of fourth-quarter real residential investment growth increased from 4.8 percent to 8.2 percent after the construction release.

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

The Apple Page

This is pretty interesting. I had planned to buy a pair of Apple AirPods this week as a gift for someone who has "all" the Apple gadgets. Now CNBC is reporting that Apple "has run out of AirPods."

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

Poll

We'll close out this poll since the vote is today (?). In this poll we asked what would be "approved" first:

• the Keystone XL pipeline: 20%
• the Trump-GOP tax plan: 46%
• neither will be approved: 34%

Technically the Keystone XL was "approved" by Nebraska regulator a few weeks ago, but the regulators were quite disingenuous. They voted "yes," but required a new route which would require the entire process (at least for Nebraska) to start over. Whether one feels the Keystone XL was approved or not is in the eye of the beholder.

Whether the Trump-GOP tax plan is approved or not? We should know by the end of the week, perhaps as early as today.

Later, December 19, 2017: Nebraska won't allow request by TransCanada to keep original route. So where does that leave us? Back to square one. This pipeline won't be completed in my investing lifetime. From The Wall Street Journal:

The Keystone XL pipeline could face more delays after Nebraska regulators denied a request by TransCanada Corp. to refile its application for the project.

The Nebraska Public Service Commission said Tuesday that TransCanada couldn’t amend its application to formally request an alternative route for the pipeline through the state.

TransCanada had filed the paperwork to gird against future legal challenges. Opponents of the long-delayed project immediately claimed the commission’s decision as a victory.