From oilprice this evening, link here. I wouldn't have bothered with the first banner headline but I have a link at the sidebar at the right, near the top, which links to a question I had when this all started: whether the Bakken or the Permian would be hit harder.
First item:
The second item is very, very interesting. Note the oil price rally (banner below). At least for now the price rally continues. It's fascinating but meaningless. It's meaningless because it's not predictable; it doesn't make sense; and, there is no way one can model it.
What interests me is the relative prices: comparing the various crude oils.
But what really, really interests me is the "OPEC Basket." This is the third time in about five days that I've brought this up. I assumed it was a mistake. Oilprice very, very, very rarely makes a mistake on their banner oil prices but it does happen. But if this was an error, certainly after 24 hours, or 48 hours, or even 72 hours, this error would have been corrected. But it hasn't changed. I don't get it. I still think that even if it's an error, it reflects "reality," whatever "reality" is these days.
Second item:
I checked the official OPEC site, and they show "OPEC Basket" rising but still below WTI. The OPEC site lags a bit; the most recent date is May 14, 2020 (I'm writing this on May 17, 2020), and the OPEC Basket is $24.93.
I still think things are too quiet in the Mideast which I first mentioned May 7, 2020 -- that's ten days ago. Wow, time flies.
How is the president doing with regard to the pandemic? Link here. Most recent results from the Rasmussen daily presidential poll:
Once folks get their next $2,000 check -- thank you, Ms Pelosi -- his polling numbers should rise again. What a great country.
First major professional sport that "comes back" as the US begins to re-open during Wuhan flu outbreak. It is fitting that this "first" race is at Darlington, South Carolina. Pretty amazing.
It will be interesting to see the ratings. The only "live" sports prior to this was the national (?) "cornhole" championship which was held this past week. I can't make this stuff up.
[Later: Kevin Harvick wins. Nice job. Well deserved. It almost appears every race driver was on his best behavior. His 50th Monster Energy Series career win. Wow. Best news: Ryan Newman raced. He finished. And he finished in 15th place, a solid race. I assume his family is much relieved. He says he still has no memory of the Daytona crash.]
Next race: Wednesday, three nights from now, also at Darlington, a night race. What a great country. I guess the professional golfers are still afraid of the virus. LOL.
I agree with the "overall" sentiment but I think the top 1% will do very, very well coming out of the Wuhan flu lock down, and the top 10% -- not just the top 1% -- will do "largely" fine.
My hunch is that the gap between the top 10% and the middle class will widen.
Significantly.
I don't think the "middle class" will be smaller, unless they change the definitions. The middle class includes the lower middle class, the middle middle class, and the upper middle class. I think the middle class will stay about the same size but within the middle class things will shift to the left (left: less well off).
As usual, the investor class should do very, very well, compared to non-investors. In addition to everything else, and all things being equal, my hunch is that the Wuhan flu "lock down" affected the non-investor class a whole lot more than the investor class.
With regard to the "country being horrifically in debt," I
think one needs to compare the economic debacle with the Great
Depression, the global economy after World War, and the US and global
economy after WWII, before using the word "horrifically."
Paul Krugman is not concerned about the debt, nor are my sub-continent Indian neighbors.
Amazon is back! Folks might remember that Amazon had to prioritize shipments during the height of the Wuhan flu panic.
Books were very, very low priority; masks were very, very high priority.
Yesterday, I ordered a book for our older daughter in Portland, OR -- yesterday, May 16, 2020. Today, May 17, 2020, less than 24 hours later, I get an e-mail from our daughter that the book has been delivered and she is already reading it. LOL.
Wow. Even if Barnes and Noble had been open I could not have gotten the book to her faster. Not only that, mailing was free (yes, I know --- I pay for Amazon Prime -- so, it's really not free) and get this: cash back from the Amazon credit card has grown to such a huge amount I'm not paying for much at Amazon. This book: $0.00.
Speaking of "cash back" and loyalty cards: it's just amazing.
I order a fair amount of photograph enlargements from Walgreens. Walgreens always has coupons; sometimes one has to look for them on line but they are there. Generally, the coupons are 40% or 50% off. The prints I get back are spectacular. And then on top of that, I build up "cash" through the loyalty program. It's truly amazing. And, oh by the way, if I want to buy prints for a family member that lives elsewhere, I can have the photos printed at any Walgreens across the country and the family member can pick up photos at their nearby Walgreens.
RFG and crack spread: for help in understanding this, see comments below, including this:
RFG, reformulated gasoline. Lower vapor pressure for summer use by
limiting the amount of butane in summer gasoline vs. winter gasoline.
Plus special processing for low vapor gasoline with decent octane.
Crack
spread. Start with a gallon of crude oil. For example you paid $1.00 a
gallon. Refine it: gasoline, diesel, fuel oil, bunker fuel, jet fuel,
etc. You sell all of the products, and you get $1.20 a gallon after
selling all of the products. That gives you a crack spread of $0.20 a
gallon with a blend of all of the products. Assuming that jet fuel and
diesel are break even, making $$$ on gasoline.
Every time I see RFG, I think BFD, and every time I see "crack spread," I'm thinking some illicit drug. LOL. Seriously, the reader's explanation of "crack spread" was a huge help. Thank you.
Original Post
Perspective: it's all about one's perspective, isn't it? For example, much of the private land in North Dakota was handed down to current owners from original settlers three generations ago. Maybe four generations. Let's see: my grandfather -- my father -- me -- Sophia -- that's four generations. Sophia's counterpart in North Dakota who will inherit mineral rights isn't affected by current events at all except in the "derivative" sense. If Sophia's counterpart in North Dakota retains her mineral rights, she may be very, very happy that oil companies are taking this bruising now.
in Europe before the 19th century, wars were measured in terms of centuries (the Four Hundred Years' War, for example)
US Revolutionary War: 1775 - 1783
US Civil War: 1861 - 1865
WWI: 1914 - 1918
WWII: 1939 - 1945
The Korean War: 1950 - 1953, armistice, but no peace agreement -- so, 1950- 2020 ("frozen conflict")
Second Indochina War: 1955 - 1975
Afghanistan War: began in 2001; in 2014, the 13-year war had become the longest war fought by the US
Corona virus: may have been released in China as early as September, 2019; the US did not declare "war" until January 31, 2020 when international flights from China were banned: it's now been less than four months, and, there is already talk of an "armistice" (a gradual re-opening of the US; a peace treaty with the virus is likely never to be signed)
Winners and losers:
very, very difficult to make up for "lost time"
very difficult to make up for lost income
watching the evening news is thirty minutes one will never get back
Daily grocery store visit: I try to visit our neighborhood store once every day. During the "toilet paper crisis" I visited the store twice a day, not to buy anything, but to see how things were going. Sort of like a journalist might do. LOL. Whatever.
Now I go to the store once a day for three reasons:
to buy a fresh loaf of French bread which the oldest granddaughter likes for grilled cheese sandwiches and baguettes which the middle granddaughter and her dad like for snacking;
to buy three or four apples (two of the three granddaughters love them); Koru are their current favorites, but Fuji are an adequate substitute; never, never, never red delicious;
look for steak that has gone on sale (finding some incredible bargains)
At the same time, I am also going once a day to simply see how things are going. Right now, there are NO shortages of anything except French onion potato chip dip; three stores in our local area have been out of this item for five days now.
Observations today:
that perceived egg shortage reported by the WSJ a few weeks ago? Not here; coffins are overflowing with eggs, and a dozen large Grade A eggs are selling for $0.99;
paper goods aisle -- bathroom tissue and paper towels fill the shelves
a half gallon of premium ice cream selling for $7.99 last week is now back to $6.99/half gallon
About half of the customers are wearing face masks; few are actually following directions on the floor telling folks which way to walk down the aisles. It appears that masks great affect one's ability to see clearly and read the direction of 2-foot arrows painted on the floors. All employees are wearing masks and the shopping carts are spotless, and wiped down with disinfectant within seconds after being returned to the store.
In the local area, it almost appears that more people are wearing
their masks outdoors even if no other human being is in sight, whereas
in the very busy grocery store, about half are not wearing masks. And walking the wrong way down the aisles.
My favorite: drivers in POVs, driving with no passengers, wearing their masks.
Gasoline: most surprising -- how fast gasoline went from $1.09 to $1.55/gallon in our local area, when there is now an unprecedented 42-day supply of crude oil in this country. Why isn't the governor looking into this?
Koru apples:
Koru apples are a modern New Zealand variety of Malus domestica. They are an accidental cross between Fuji (Japanese) and Braeburn (Motueka, New Zealand), with characteristics of each. Koru is a brand name for the apple cultivar Plumac.
Word for the day: bawn.
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Water Over The Bridge
After almost steady rain for the past 24 hours, we had water over the bridge at Parr Park, Grapevine, TX.
There
are 117 of the industry’s largest crude carriers en route to ports in
the Asian country, where there have been increasing signs of a pickup in
oil demand following the outbreak of coronavirus. That’s the biggest
number of the vessels since at least the start of 2017, and quite
possibly ever. Assuming they have standard-sized cargoes on board, the
ships are likely delivering at least 230 million barrels of cargo.
The
surge in flows is just another piece of evidence underpinning the idea
that the country’s oil consumption is recovering at a time when many
other nations are still struggling to ease lockdown measures as they
combat Covid-19. China’s apparent oil demand surged by roughly 11% from
March into April, and the nation’s independent refineries are processing
at a record rates.
“Chinese purchases are done on geopolitical
grounds and pricing ground,” said Peter Sand, the chief analyst at
shipping trade group BIMCO. “The stars aligned for perfectly in 2nd half
of April.”
Many
of the shipments, due to arrive between now and mid-August, are likely
to have been purchased last month, when oil prices briefly plunged
toward zero because of a huge global overproduction of crude. U.S.
barrels traded at negative prices last month amid concern about a lack
of space to store supplies while, across the world, physical grades also
became steeply discounted.
China’s apparent oil demand rose to
11.81 million barrels a day in April, up from 10.63 million in March,
according to data compiled by Bloomberg. That means the vessels en route
will deliver almost 20 days of supply.
