The Million Dollar Way (The Bakken Oil Blog)

Wednesday, February 1, 2023

Tell Me Again Why Price Of Gasoline Continues To Rise In Texas -- February 1, 2023

Tell me again why the price of gasoline is trending up in Texas?

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Crude Oil In Storage -- Weekly EIA Report

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Gasoline Demand

Gasoline demand: link here.

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US Crude Oil -- Days Supply

US crude oil, commercial, days of supply -- 30.5: link here.

The number of days of commercial US crude oil: 30.5 days. That's down from 30.8 days last week.

That's still more than four weeks of commercial US crude oil in storage at a time when three weeks is more than sufficient: a) this is not driving season; b) this is not hurricane season; c) gasoline demand is way, way down from historical norms (yes, I know, somewhat of a tautological argument). I need to see days of supply trending toward 24 days before I start to get bullish about increased activity in the oil fields.

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Proved Reserves

Link here.

JPow, The Fed, And Final Comments -- February 1, 2023

Laser-Focused on Dividends

I couldn't possibly be happier.

About a year ago, I actually put together a real investment plan and an element of that investment plan included a focus on dividends.

My annual dividends have increased 24% year/year.

Lots of taxes but lots of cash flow.

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Parting Shots

Three things: GDPNow, "disinflation," and, JPow's disposition today.

JPow today: seemed really, really comfortable today. One had the feeling that whether things work out or don't work out, we at least have one adult in Washington.

Disinflation: link here.

Although they may sound the same, deflation should not be confused with disinflation.

Deflation is a decrease in general price levels throughout an economy, while disinflation is what happens when price inflation slows down temporarily.

Deflation, which is the opposite of inflation, is mainly caused by shifts in supply and demand.

Disinflation, on the other hand, shows the rate of change of inflation over time. The inflation rate is declining over time, but it remains positive.

Deflation: bad. Disinflation: good.

GDPNow: link here.

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Earlier Post

Re-posting. Posted earlier today:

Most folks did not hear JPow using this word, but he used it more than once.
Fed rate:
up twice more this year unless things get appreciably worse;
25 bp today and 25 bp twice more this year
Americans have gotten use to current Fed rate
current Fed rate is the new floor for the foreseeable future
which means: that another 75 bp increase by end of year is a non-event
so many opportunities to be hawkish -- and never took the bait
25 bp in March and then pause and / or one more 25 bp before summer
Jobs:
finally seeing some clearing of the "fog" regarding jobs
all good news
analysts spent too much time on jobs
JPow seemed much less concerned about jobs
Covid-19:
it's over; get over it
JPow:
seems comfortable
no longer angry
The only worry:
GOP delays raising the debt ceiling
the debt ceiling will be raised but the concern is if the government defaults for even one hour -- the message that would send
Dow:
down as much as 300 points before JPow spoke
now, Dow is up almost 100 points
technology stocks leading
NASDAQ positive more than 2%
investors seem "more with it" than the analysts
ignore the analysts; watch the market
US dollar "sinking" -- in the current environment -- good to see

Thursday Earnings — Happy Days Are Here Again — Well, At Least For The Moment — The Word For The Day: Disinflation -- February 1, 2023

Dalio: trust JPow.

Phil: six more weeks of winter.

Productivity number: one of the best ever!! Employee costs come in lower than expected. Dow turns green, but now red.

Fed rate: risk of rate going higher than 5% goes way down. Fed rate may go up another 25 to 50 bp but that’s simply a rounding error (“their” words, not mine). Dow red again but S&P green.

“Disinflation”: https://newsletters.yahoo.net/H/2/v60000018611c915e4b02a07f4bbcfbb48/9271800a-e8a3-4386-9d71-53b9ef5ea876/HTML.

ECB; increases rate by 50 basis points, and sounds like “much” more yet to come” on top of high energy prices; EU markets all up today.

NYC is importing huge amounts of gasoline: fears summer shortage! Link: https://twitter.com/BrianGitt/status/1621134531913998337.

Global oil demand going forward, huge: https://twitter.com/Rigzone/status/1621131422172856323.

Global natural gas demand: no sign of slowing. Link: https://twitter.com/SStapczynski/status/1621091781269164032.

US diesel: production could surge — https://www.eia.gov/todayinenergy/detail.php?id=55399&utm_source=Twitter&utm_medium=EIAsocial&utm_id=FirstUpdate.

Selected companies:

Eli Lilly (LLY): before market open; $1.78; $1.94 vs $1.83; huge beat on EPS; $2.00, but misses on top line (sort of); great guidance; type II diabetes drug “through the roof”; obesity drug also unprecedented results; easy to find volunteers for more studies required by FDA.
COP: before market open; $2.18; $2.86 vs $2.72; misses by 19 cents; declares regular dividend of 51 cents; variable, 60 cents.
CAH: before market open; $1.14; $1.21 vs $1.13; actual, $1.32: revenue also beat (Zacks);
GOOGL: after market close; $1.18; $1.14 vs $1.14;
AMZN: after market close: 17 cents; 19 cents vs 15 cents;
AAPL: after market close: $1.94; $1.96 vs $1.93;
SBUX: after market close, 77 cents; 81 cents vs 77 cents;
QCOM: after market close, $2.35; $2.42 vs $2.35.
HSY: $1.77; time not supplied; $1.82 vs $1.78;
F: 62 cents; time not supplied; 57 cents vs 60 cents;

META: up $29 in pre-market trading. Thursday morning; day after JPow’s remarks.

COP / APLNG

link here;

after picking up an additional 10% interest in APLNG last February, COP is likely to see a $600-plus million distribution from the asset in Q4.
that will be a bright-spot in a quarter where, sequentially, oil and gas prices were lower. However, COP's full-year FY22 earnings are likely to come in ~$14/share.
perhaps more interesting is what COP decides to do with its variable dividend - which, last quarter, was $0.70/share. My estimate is for a variable dividend declaration of $0.56/share.

APLNG:

from wiki:

Australia Pacific LNG, Queensland, Australia Australia Pacific LNG (APLNG) is an incorporated company owned by Origin Energy, US giant ConocoPhillips and China's Sinopec.
The project consists of development of Australia Pacific LNG's gas fields in the Surat and Bowen Basins, construction of a 530 km gas transmission pipeline from the gas fields to an LNG facility on Curtis Island and construction of an LNG facility on Curtis Island.
On 26 October 2017, gas producer and exporter APLNG entered into a sales agreement with Origin Energy, to supply 41 petajoules of gas under a 14-month contract starting 1 November 2017. The contract brings the company's total commitment to 186 PJ for 2018, representing almost 30% of Australian east coast domestic gas market demand.

This Is Absolutely Crazy -- I Never Realized It Was This "Bad" -- February 1, 2023

Link here.

Workers in the U.S. are spending more time in the office again, with occupancy rates surpassing 50% for the first time since the start of the Covid-19 pandemic.

Average office use last week was 50.4% of early 2020 levels in 10 major U.S. cities.

It is the first time office occupancy has topped 50 since March 2020, when Covid-19 forced most workplaces to temporarily shut down.

All 10 of the major cities it tracks surpassed 40% for the first time.

Workers are still staying home ahead of the weekend, however. Offices are emptiest on Friday and they are the most crowded on Tuesdays. In New York, for example, occupancy rates dropped to 26.5% on Friday from 59.8% on Tuesday.

Truly amazing.

I'm getting less and less concerned about the "southern surge" every day.