The "R" Word: From Minyanville, Some Interesting Stories -- Crude Oil on the Cusp

Updates

Later, 11:40 a.m.: I posted the original post a couple of hours ago; note the reference to a possible recession in the US -- mentioned by me, not others. Now I see this story: factory orders suffer largest drop in three years. It's already agreed that the housing industry won't turn around for years. Throw in the EU recession. And the unemployment numbers in the US. I don't think I was being premature in my use of the "R" word.

New orders for U.S. factory goods in March recorded their biggest decline in three years as demand for transportation equipment and a range of other goods slumped, government data showed on Wednesday.

The Commerce Department said orders for manufactured goods dropped 1.5 percent after a revised 1.1 percent rise in February.

Economists had forecast orders falling 1.6 percent after a previously reported 1.3 percent increase in February.

But the report is "complex" -- go to the link; it's hard to sort out all the data points. It's not clear cut.

Original Post

Crude oil on the cusp, from yesterday:

Tuesday’s open had already firmed up to fresh highs at the 105.25 buy signal. ISM’s surprise triggered a surge that eventually tested 106.40. Now a second consecutive higher close would confirm 112.00 in-play.

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Unemployment:

There are some signs that the cleanest shirt in the European basket, Germany, is faltering. The biggest economy in Europe had its first drop in factory output this year in April, with PMI falling to a 33-month low of 46.2. German unemployment also unexpectedly rose by 19,000 last month.

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Minyanville didn't report it, but are we going to start seeing stories on CNBC of the possibility of the US headed toward another recession? Talking heads on CNBC did start using the word "stagnation" throughout the day yesterday. (We lost cable after 3:00 p.m. yesterday and still don't have it so I won't be following CNBC for awhile.)

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Why is Delta buying a refinery, really? That link will take you to another link, or you can go directly to the story at SeekingAlpha.com.  The summary at Minyanville (the first link) is shorter and to the point.

Delta Airlines' agreement to buy a ConocoPhilips refinery in Pennsylvania is all about Southwest Air.

Delta's ongoing battle with Southwest is about costs. Delta's hub-and-spoke system is inherently less efficient than Southwest's network of short flights that just go back-and-forth. But because Southwest has now been around for a generation and accepted unions, while Delta has always pushed back against workers, it may actually have an advantage in labor costs.

The deal is for a refinery near Philadelphia, plus pipelines and other assets that reach its New York hubs. There are $30 million in government incentives on the deal, and Delta has already made deals with BP and Phillips for sourcing oil and selling products other than jet fuel.

Delta figures it can handle 80% of its U.S. jet fuel needs through the deal, saving up to $300 million/year. Put those savings onto its bottom line and profits rise 15%.

There's much more at the second link.

Absolutely Nothing To Do With The Bakken -- Some Odds and Ends That Caught My Eye

The president a friend of the NRA? Microsoft XBox banned from Germany?

The president a friend of the NRA? Am I missing something here? Is this the most counter-intuitive story of the day? Front-page story in WSJ almost preempted the president's surprise visit to "the Stan." The president wants to increase US high-powered firearms exports.

U.S. homeland-security and law-enforcement agencies have objected to Obama administration proposals to relax export restrictions on high-powered firearms, threatening a centerpiece of the president's trade and national-security agenda.

The agencies, in internal memos viewed by The Wall Street Journal, warn the changes could help arm drug cartels and terrorists and make it harder for the U.S. to crack down on gun-trafficking.

The arms proposal is part of a broader overhaul of U.S. export rules sought by Mr. Obama, with the goal of helping domestic manufacturers compete in global markets, as well as improving U.S. national security by focusing controls on higher-risk items and enhancing the capabilities of allies. 

Who wudda thought? All I can say is that he must be looking for political contributions from gun advocates. Probably won't happen.

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Phillips 66 will double fuel exports over the next two years -- no link, print edition of the WSJ, p. B9. PSX currently exports 100,000 bbls/day; should hit 200,000/day by 2014. PSX is now the number 2 independent US refiner behind Valero. 25% of PSX's refining capacity is in central US where Bakken is selling at a premium to Brent and WTI.

From the story: "Last year (2011) was the first year since 1949 that the US exported more gasoline, diesel and other fuels than it imported, at about 439,000 bbls per day (USEIA). By 2015, an additional 450,000 bbls per day of refined fuels could be exported -- research firm. US law prohibits the export of crude oil (with exceptions).

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Comcast earnings surge 30% -- on ads from the Super Bowl, more broadband.

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New RIM Blackberry phone with NO keyboard! Was it just a year ago that analysts said folks would not switch from Blackberry because they liked the tactile keyboard. This, too, surprised me. Apple's iPad keyboard is less preferable to the laptop keyboards, at least for me.

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And challenges for Microsoft:

A court in Mannheim ruled on Wednesday that Microsoft infringed Motorola Mobility's patents and ordered Microsoft to remove its popular Xbox 360 gaming consoles and Windows 7 operating system software from the German market.
However, Microsoft said that the ruling did not mean that its products would be taken off retailers' shelves because a U.S. district court in Seattle has granted Microsoft a preliminary injunction against Motorola to prevent the phone maker from enforcing any German court order.

Who has jurisdiction? I guess if Germany was defeated in WWII, the US district court in Seattle trumps a court in Mannheim, Germany. I certainly don't understand it.

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High oil prices driving margins for crude and natural gas producers -- Reuters; well, duh. Don't bother going to the link -- that's all there was, that simply headline.

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Pickens has a problem with Koch Industries:

Koch Industries, Inc., is an American multinational conglomerate corporation based in Wichita, Kansas, United States, with subsidiaries involved in manufacturing, trading and investments. Koch also owns Invista, Georgia-Pacific, Flint Hills Resources, Koch Pipeline, Koch Fertilizer, Koch Minerals and Matador Cattle Company. Koch companies are involved in core industries such as the manufacturing, refining and distribution of petroleum, chemicals, energy, fiber, intermediates and polymers, minerals, fertilizers, pulp and paper, chemical technology equipment, ranching, finance, commodities trading, as well as other ventures and investments. The firm employs 50,000 people in the United States and another 20,000 in 59 other countries.

In 2011, Forbes called it the second largest privately held company in the United States (after Cargill) with an annual revenue of about $98 billion, down from the largest in 2006. If Koch Industries were a public company in 2007, it would rank about 16 in the Fortune 500.

Any Thoughts How This Might Affect Brent?

It looks like China will compete with Europe for oil and natural gas from Russia.

Growing demand from China is expected to be one of the defining features of the energy market in coming years, as the country looks to continue its rapid expansion.....China has begun to increase its dealing with .... Russia....

While Russia is one of the world's largest energy exporters, including massive amounts of both oil and natural gas, much of its industry is focused westward where it trades with countries in Europe, and south toward central Asia.

China has begun to bridge the divide with the first natural gas pipeline between the eastern region of Siberia and China coming online earlier this year.

Thank goodness China did not have to contend with faux environmentalists and an aquifer.

 It looks like Russian and China just want to get things done.

Wow! Not Again! -- Job Watch

Remember: the magic number is 200,000

"...data showed U.S. private employers added far fewer jobs than expected in April."

Link here. 

A private survey [the same one that reports every week] shows U.S. businesses sharply reduced hiring in April, a troubling sign two days before the government reports on monthly job growth. Payroll provider ADP says that businesses added 119,000 jobs last month, far lower than a revised total of 201,000 jobs in March.

Meanwhile, unemployment in EU hits record high. 

Unemployment across the 17-member eurozone rose by 169,000 in March, official figures showed Wednesday, taking the rate up to 10.9 percent in March — its highest level since the euro was launched in 1999.

The rate was up from 10.8 percent in February and 9.9 percent a year ago, and reflects the downturn in the eurozone economy as governments pursue tough austerity measures to deal with their debts — nearly half the countries in the eurozone, including Spain and the Netherlands, are now officially in recession. 

And all this time I thought the global economy was recovery.

RBN Energy: Convering Natural Gas Pipelines To Carry Crude

Updates

May 3, 2012: Part II, same topic. 

Original Post

Link here.

On Monday, Energy Transfer kept the deals coming with the $5.3 billion acquisition of Sunoco.  This deal certainly launches ETP into the really big leagues, and makes it one of the most diversified players around.  And if you read the fine print, they plan to get more diversified by converting gas lines into crude oil lines.  The poster child is good ole Texoma pipeline, which was a crude pipe for years before it was converted sometime in the 80s to move natural gas.  ETP CEO Kelcy Warren says he has his eye on a few other gas pipeline candidates for conversion.  And don’t forget.  Up in the Guernsey, WY area Kinder Morgan is converting 500 miles of the Kinder Morgan Interstate Gas Pipeline system into the Pony Express Crude oil pipeline.

Much more at the link.