Ukraine: For The Archives -- September 13, 2022

From The [London] Independent:

• Russian commanders, with their families, are fleeing the Crimean peninsula
• Moscow had "annexed" the Crimean peninsula in 2014;
• Russian nationals secretly trying to sell their homes on the peninsula
• tactical nuclear weapons in play?
• Ukraine claims its troops are within 30 miles of Russian border

API: 

• a build of 6.035 million bbls; forecast -- a draw of 200,000 bbls.
• does one get the feeling the analysts have no idea what's going on?
• wasn't this similar to last week: a forecast of a small build/draw and yet API reported a huge build;
• the EIA data that is reported a day after the API data is more commonly followed by folks like me; 

From the linked article:

• "leaving the SPR with just 434.1 million barrels"
• "with just" as opposed to what?  At a million bopd that would last 434 days;

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

WTI: $87.64. Pretty much unchanged since yesterday.

Natural gas: $$8.397. Slowly rising again.

Four new permits, #39234 - #39237, inclusive:

• Operator: Whiting
• Field: Sanish (Mountrail)
• Comments:
• Whiting has permits for four wells -- an S-Bar Laurel, an S-Bar Brandon, an S-Bar Joanna, and an S-Bar Devon permit in NE SE 1-153-93, 
• to be sited between  1575 FSL and 1665 FSL and 260 FEL;

One well was permitted fro recompletion:

• 510210, Phoenix Petroleum, Tangsrud 12-1, Hayland,

On A Horrendous Day For The Equity Market, WTI And Natural Gas "Maintaining" -- September 13, 2022

The Far Side: link here.

Active rigs: 44.

WTI: $87.32. On a really bad day for equities, WTI is down only 46 cents. Later, down only sixteen cents.

Natural gas: $8.297.

Wednesday, September 14, 2022: 23 for the month, 73 for the quarter, 412 for the year

• 37693, conf, BR, Lone Beaver 1-1-17TFH, North Fork, no production data,
• 29782, conf, Zavanna, Galloway 18-30 2H, Stockyard Creek, no production data,
  

Tuesday, September 13, 2022: 21 for the month, 71 for the quarter, 410 for the year

• 37694, loc/drl, BR, Lone Beaver 2-1-17TFH, North Fork, no production data,
  

RBN Energy: the process, quirks and idiosyncrasies of US natural gas pricing, part 3.

The U.S. natural gas market is one of the most transparent, liquid and efficient commodity markets in the world. Physical trading is anchored by hundreds of thousands of miles of gathering, transmission and distribution pipelines, and well over 100 distinct trading locations across North America. The dynamic physical market is matched by the equally vigorous CME/NYMEX Henry Hub natural gas futures market. Then, there are the forward basis markets — futures contracts for regional physical gas hubs. These pricing mechanisms play related but distinct roles in the U.S. gas market, based on when and how they are traded, their respective settlement or delivery periods, and how they are used by market participants. In today’s RBN blog, we continue a series on natural gas pricing mechanisms, this time with a focus on the futures and forwards markets.

Earlier, we took a trip in the way-back machine to see how these pricing systems — including the processes for price discovery and transparency — even came to be in the U.S. We recounted the shift of physical gas trading from a primitive market with long-term deals done only between producers and pipeline owners at regulated prices to a burgeoning spot market with no price controls and “open access” on pipelines for others besides pipeline owners. That era of decontrol and restructuring of the pipeline industry was followed by a period of minimal regulatory oversight in which independent publishers — price reporting agencies (PRAs) — took on the role of carrying out price discovery and dissemination. That is, until the Enron debacle in the early 2000s, which forced a hard look at manipulation issues that influenced published price indices and brought the Federal Energy Regulatory Commission (FERC) back into the fold.

Specifically, FERC put in place strict price-reporting and ethical guidelines for those companies that chose to report trades to PRAs. Additionally, market participants who buy or sell an annual minimum of 2.2 trillion British thermal units (TBtu) in the physical day-ahead or month-ahead market — i.e., the kind of transactions that either impact or are impacted by PRA indices — also were required to submit Form 552 each year, reporting all purchases and sales of gas by quantity and type of pricing mechanism. That resulted in the robust Form 552 dataset, including volumes for fixed-price deals (negotiated prices between counterparties) and index-price deals (transactions based on a PRA-published index) for next-day and next-month delivery.

PRAs and published price indices remain a mainstay in the role of transaction reporting and price discovery, and in recent decades, electronic trading platform Intercontinental Exchange (ICE) has also become ensconced in the gas market, providing a real-time mechanism for physical and financial transactions, which are then summarized in an end-of-day report and incorporated into the PRA price indices.

Then, we took a closer look at the pricing instruments for trading physical gas at the more than 100 distinct trading locations across North America. We focused on the three most common markets: (a) the daily physical spot market in which natural gas is bought and sold for delivery the next day, (b) the monthly spot market where gas is sold on monthly contracts for the upcoming month during a period called bidweek, and (c) long-term contracts where gas supply is contracted under seasonal, annual or multi-year deals.

Next, we turn our focus to the primary financial, forward-looking pricing instruments, starting with the terminology. Trading for the prompt month or more than one month into the future also occurs in the “forwards” or “futures” market. In the North American natural gas market, the term “futures” is usually reserved for the standardized CME/NYMEX contract at the Henry Hub in Louisiana, the benchmark location for the North American gas market, while the term “forwards” usually refers to over-the-counter (OTC) deals done for gas in the other price locations. (Technically, any price for a delivery date in the future is a forward.)

It's Tuesday The Thirteenth -- What's Kashkari Thinking? September 13, 2022

CPI: oh, oh. Slightly worse than expected.
80% chance: Fed raises "rate" 75 basis points next month.
20% chance: Fed raises "rate" 100 basis points next month.
April rate: 4.3% or thereabouts.
Futures: Dow down 500 points.

***************************
Before CPI Comes Out

Kashkari: "Jay, we're not seeing the pain."

Note: SRE almost never trades pre-market, so this is not unusual.

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. Full disclaimer at tabbed link.

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.

***********************
America 

For the archives.

Americans are in a foul mood. Consumer confidence is at recessionary levels, even though there’s no recession. Seventy percent of Americans think the nation is heading in the wrong direction, with only 23% saying it’s on the right track.

Okay, fine. Inflation is a pain. Politics are toxic. COVID may never end. But the United States is doing better than just about any other place in the world, at a time of war and other massive disruptions. If you don’t like it here, ask yourself, where are things better?

The US inflation rate is 8.5%, and probably on the way down. In Europe, it's 8.9% and probably on the way up. In the UK, inflation is 10.1%. Europe is either in a recession or about to enter one. In the United States, growth has slowed, but the job market remains remarkably strong and employers still can’t get enough workers.

Other areas:

• Ukraine
• China Covid lockdown: 313 million Chinese in lockdown -- almost as many as entire US population; China's Covid-19 stagnation: no end in sight
• Biden "killing" China with tech embargo
• Japan: still with Covid travel restrictions
• Canada: high inflation; recession risk, hyperactive central bank jacking up interest rates
• Scanndiianavia; cnsistently ranks as the world's happiest region but they also have to contend with the worst neighbor, Russia
• US Congress spending a lot of money no things some people want; yet the US tax burden is amnog the lowest in the wrold
• US economy has fully regained all the jobs lost during the Covid downturn
• US economic output is higher than pre-Covid levels
  
•  gasoline prices which hit $5.02 / gallon in June (2022), not at $3.72 (here in north Texas, $2.99)
  
• Americans with health insurance: 91%; seven points higher than ten years ago
• US poverty rate close to record lows

For now, let's ignore:

• southern surge
• debt
• disconnect between SCOTUS and much of the US
• lack of workers
  

Ukraine -- It's A Wrap -- September 13, 2022

Ukraine

• apparently the Ukrainians are struggling to deal with the mountains of equipment left behind by fleeing Russians; long thread;
  
• Russian soldiers "literally running" for their lives as chain of command collapses
• apparently Russia won't send more units to Ukraine;
• some say one can't send what one doesn't have;
  
• spillover effects;
  

Russia's cash reserves:

• cratering;

**********************************
From The New York Times

In full, not behind a paywall, over at The New York Times:

Good morning. It’s not just one region. Ukraine is making progress in multiple places.

A Ukrainian tank in the Kharkiv region yesterday.Kostiantyn Liberov/Associated Press

Reclaiming land

Could Ukraine actually win its war against Russia? Ukraine’s surprising recent breakthrough in the northeast has caused more military analysts to start asking that question.

Over the past week, Ukrainian troops have retaken almost 3,400 square miles of land, an area equal to about half the size of the New York metropolitan area. The gains include Izium, a city that Russia had been using as a rail hub to supply its forces elsewhere. Ukraine now controls nearly all of the province of Kharkiv.

Data as of Sept. 11. | Source: Institute for the Study of War

The Kharkiv operation surprised Russian military forces while they were focused on other regions and has given Ukraine its clearest victory since Russia’s retreat from around Kyiv. President Volodymyr Zelensky and his military advisers planned the attack partly so they could claim such a victory, as this Times story explains.

“The Ukrainian push is a big deal,” said Julian Barnes, one of the reporters who wrote that story. “They needed a dramatic win, and this is one.”

Ukraine’s advance has also undermined Vladimir Putin’s war propaganda, causing some criticism of the military, even from some pro-invasion Russians. More than 40 local elected officials across Russia signed a two-sentence petition demanding Putin resign, and a senior member of Parliament from Putin’s party said the retreat had done “very serious damage” to the operation.

The recent developments have cheered Ukraine’s supporters in Western Europe and the U.S., who have been anxiously trying to maintain public support for military aid. Steven Erlanger, who covers European diplomacy from Brussels, points out that European citizens are girding for a winter of high energy prices because of Putin’s restriction of gas sales. The recapturing of Kharkiv allows more Europeans to feel as if their support of Ukraine is a worthwhile cause rather than a lost one. “It’s a morale boost,” Steven said.

In recent months, I have tried to focus readers of this newsletter on three broad scenarios for the war’s outcome: one, a Russian victory that includes control over large parts of Ukraine; two, a stalemate in which Russia controls much of the Donbas region, in Ukraine’s east, but little else; or, three, a Ukrainian victory, in which Russia largely retreats, with the exception of some parts of Donbas.

(For anyone trying to read the map above, the Donbas region includes two provinces: Donetsk and Luhansk.)

Many analysts continue to believe that a stalemate remains the most likely outcome. But I told you in our most recent Ukraine update — last month — that the chances of a Ukrainian victory had risen. They have risen even further since then.

“The last few days have shown that the Ukrainians can craft effective plans based on intelligence, advice and high-tech American weaponry used in innovative ways,” Julian said. “And those plans, so far, have delivered real battlefield results.”

Ukraine’s strengths …

A High Mobility Artillery Rocket System, or HIMARS.Tony Overman/The Olympian, via Associated Press

A central question now is whether Ukraine can also make progress in two other regions where Russia is more entrenched: Donbas, in the east; and southern provinces in between Donbas and the Crimea peninsula (which Russia annexed in 2014). In recent weeks, Ukraine has also reclaimed about 200 square miles in the southern provinces.

A major reason for Ukrainian optimism is the continued support from the West, including weapons for Ukraine and sanctions on Russia. The progress in Kharkiv has depended on longer-range missiles that the U.S. and Britain were initially unwilling to provide but have supplied in recent months. U.S. officials also worked with Ukrainian military leaders to plan the assault on Kharkiv.

At the same time, the sanctions appear to be hurting both Russia’s domestic economy and its war efforts. Its factories are struggling to produce enough basic military supplies, while Russia is also having a hard time buying enough high-tech equipment on world markets. One sign that the military is running low on supplies: It has been trying to buy North Korean rockets and artillery shells, U.S. intelligence officials say.

… and Russia’s strengths

Still, recapturing territory in the south and the east is unlikely to be easy for Ukraine. Russia has concentrated more forces in those regions than it had in Kharkiv. Now that Ukraine holds Kharkiv, it also has longer supply lines to defend, John Blaxland, a military expert at the Australian National University, told The Times. The seizure of Izium and its railways may help Ukraine maintain its lengthened supply lines, other experts said.

Biden administration officials continue to express skepticism that Ukraine will be able to reclaim all of the land it held in February, just before the invasion. Russia continues to have vast resources at its disposal, even if the sanctions have created some constraints: Russia has been firing many more artillery rounds per day than the Ukrainians. If that advantage continues, dislodging Russia from territory it holds may be difficult.

Russia also has a history of forcing brutal losses on its own soldiers to win extended wars, and Putin has shown he is willing to commit atrocities (as he did in Syria and Chechnya) to exhaust an opponent. Some analysts — including Ross Douthat of Times Opinion and Anne Applebaum of The Atlantic — have argued that Western leaders should be planning for how they would respond to an escalation in Ukraine.

Ukraine also faces a disadvantage that its allies have imposed on it, my colleague Helene Cooper points out. The U.S. and the E.U. have told Ukrainian officials that they cannot use Western military equipment to strike inside Russia — out of a fear that such attacks might cause Putin to expand the war or use nuclear weapons. From a tactical standpoint, that restriction hurts Ukraine’s ability to win the war, because it means that Russia does not have to worry about defending its own territory.

Yet it’s a restriction that seems unlikely to change anytime soon.

By David Leonhardt

What We Will Be Talking About Tuesday, September 13, 2022

Three things we haven't heard much about in the past few weeks:

• recession
• the California bullet train
• tactical nukes

Here, hold my beer. 

ICYMI: name change.

• efforts to change the name, it appears The Los Angeles Times has taken the bull by the horns, referring to "monkeypox" as "MPX."
  

Congress investing:

• why in the world would anyone want to ban Congress people from investing in the stock market?
• I want my representatives "to have skin in the game"

NFL: Seattle Seahawks over the Denver Broncos

• 71-year-old Pete Carroll can sure jump high for a white man (can I say that?)
  
• visiting quarterback given warm welcome in Seattle
• I'll argue this was the best game of the first week
  

Permian:

• set to hit record production in October
• other plays will also increase or maintain

Market:

• CPI at 8:30 a.m. (?)
• if it comes in at 8% or lower, that means "no inflation month-over-month" (?); and,
  
• Cathy says used-car prices set to plunge
  
• heat map: market;
  

Emmys:

• Apple had another huge night;
  

iOS 16:

• now available for download
• apparently this is a big, big deal
• I got up early (2:03 a.m.) just to see how it was going

Ukraine

• apparently the Ukrainians are struggling to deal with the mountains of equipment left behind by fleeing Russians; long thread;
  
• Russian soldiers "literally running" for their lives as chain of command collapses
• apparently Russia won't send more units to Ukraine;
• some say one can't send what one doesn't have;
  
• spillover effects;
  

Russia's cash reserves:

• cratering;

Focus on dividend:

• CVX
• smashing it on LNG export;
  

California's EV infrastructure: yes, there is a webpage;

• DC fast chargers: average rebate; unit cost; total project cost per charger: link here.

University rankings, 2022 - 2023, US News And World Report --

• Vanderbilt moves up one spot; now #13
• beat out UCLA, UC-Berkeley, USC
• only the "Ivys" beat Vanderbilt (and Vanderbilt beats some of them)

Twitter's best thread ever -- for wordists: link here. Be forewarned, the thread at the link goes on forever. A sample:

SPR: plunges, but it Does. Not. Matter. Folks. Also, here.

• the new SPR: the Permian, the Eagle Ford, and the Bakken
• and if push comes to shove, the "powder-something"
• flashback: from 2011;
• spud to production
• 2011: 60 days
• 2022: 6 days
  

Insurance:

• Progressive beating Geico

Hurricane season: dead quiet out there.

• link here;
• google winds: nothing; hard to believe but even less noise in the Atlantic today than yesterday
• records for "quietness" being set daily
• if this keeps up, insurers are going to make a bundle
• quick: name a well-known insurer. Hint: lives in Omaha, NE
  

Trump: in golf shoes, in DC, arrived unannounced, on golf course, not golfing

• still no explanation

Two movies:

• "The Fabelmans" -- link here.
  
• "Elvis"

Lucille, 1971. Link here.