Atmospheric CO2 -- May, 2017

Source here.

Essentially no change month-over-month.

Insignificant change year-over-year.

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For AGW Deniers

I post these monthly "atmospheric CO2" updates because I'm truly curious to see how this plays out over the next three decades.

I'm pretty convinced that no one can predict that the earth's average global temperature will be 2 degrees warmer one hundred years from now.

This is pretty timely:why you should be skeptical of global warming alarmists. From lifezette:

When it comes to the global warming debate, both alarmists and critics agree on one thing: The earth has warmed by roughly 0.8 degrees Celsius over the past 150 years. It’s the cause of this warming, however, that remains in dispute. And while the public is constantly bombarded with messages about the evils of carbon dioxide emissions, there are actually compelling reasons to believe that contemporary global warming has been driven by rising solar output, not carbon dioxide.

"Holy Nightmare, Batman, What Do We Do Now?" -- Saudi Cash Reserves -- As Of April, 2017

Most recent data (April, 2017):

It appears the March to April (2017) decrease was greater than the February to March (2017) decrease. One would expect that all things being equal, it will only get worse for Saudi Arabia with summer approaching. Remember: Saudi says they are talking about total production cuts (not just export cuts, but total production cuts) and going into the summer months, Saudi Arabia exports less oil (thus less revenue) because they need their own oil to run their air conditioners. Yes, they use oil to make electricity. 

Source: https://tradingeconomics.com/saudi-arabia/foreign-exchange-reserves.

For past posts on Saudi's cash situation, click on the "Saudi_Cash" tag.

"Holy, nightmare, Batman! What do we do now?"

US Crude Oil Inventories "Unexpectedly" Increase -- June 7, 2107

WTI drawdown: forecast: a 4-million bbl drawdown; actual: a 3.3 million build. Wow. From CNBC. Weekly reports are here (dynamic link). I can hardly wait to see the John Kemp graphs over at Twitter.

• crude oil inventories: up 3.3 million bbls; now stand at 513.2 million bbls; at this rate (since it's an increase in build, and not a drawdown) the amount of US crude oil inventories will never decrease -- LOL -- see graph below
• gasoline inventories: increased by 3.3 million bbls
• refinery inputs: 17.2 million bopd; down 283,000 bopd
• crude oil imports: 8.3 million bopd; up by 356,000 bopd
• crude oil imports: over the past four weeks, up almost 10% above the same four-week period last year

WTI drops below $46. Now at $46.44. Next support, $45. If breaks through $45, watch for $42 WTI.

It looks like WTI is dragging down the overall market. WTI now at $46.16 (9:43 a.m. Central Time).

Then look at this:

Maybe I'm mis-reading something, but on a day that WTI drops to $46/bbl, the above graph does not look particularly reassuring for oil bulls.

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Weeks to Re-Balance

Prior to the Saudi Surge, the US had 350 million bbls of crude oil in inventory (not including SPR) and 21 days of supply. Folks are talking about re-balancing to the historical 5-year average, which, of course, makes no sense, since the 5-year average was greatly "inflated" by the two-year Saudi surge (2014 - 2016). Granted, US demand is increasing; US is exporting crude oil; and US refineries are exporting refined products, so perhaps one can argue the "350-million" basis is a bit low, but at most, I would assume, 360. So, I'm leaving it at "350" for now.

Just for the fun of it, I was tracking, based on the weekly drawdown how long it would take to "re-balance" -- back to 350 million bbls in US crude oil inventory (see graph below). The numbers don't quite work in some cases, but the raw data is from the EIA. Drawdown (column 3 in millions of bbls is shown as a positive number; any increase in inventory is shown as a negative -- that may be confusing and I may change that in the future).

For example, last week, based on a drawdown of 6.4 million bbls / week, it would have taken about 25 weeks to re-balance. Using an average up to that time of 3.9 million bbls/week over the five-week period, and an inventory of 509.9 million bbls, it would have taken 41 weeks to "re-balance" to 350 million bbls. Whew. 

To "re-balance":

• with today's increase, the average over six weeks of drawdown: 2.7 million bbls/week on average over the past six weeks
• with today's inventory number of 513.2 million bbls, it would take 60 weeks to "re-balance" to 350 million bbls.  (Update: methodology was wrong in some parts of this table; it has been updated and corrected at this post):

Week	Date	Drawdown	Storage	Weeks to RB
Week 0	Apr 26, 2017		529	180
Week 1	May 3, 2017	0.9	528	178
Week 2	May 10, 2017	6	522	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

Disclaimer: I make a lot of simple arithmetic errors. 

Miscellaneous Notes -- T+138 -- June 7, 2017

Presidential tracking poll shows Trump's approval rating exceeds Bill Clinton's at same point in presidency.

Paris Agreement? Good riddance says op-ed in LA Times. One of the best op-eds I've seen on this issue, and to see it in the LA Times speaks volumes.

We would be the ones making real efforts and incurring real costs, yet we would be the ones chastised for failing to deliver.

This dynamic is already playing out. Pundits are lauding China for achieving peak emissions far sooner than they pledged, without interrogating whether this says more about the country’s progress or its pledge. Meanwhile, EU leaders look down their noses at the United States, even as their emissions rise and U.S. emissions fall.

Why would the United States remain party to such an agreement? We shouldn’t have accepted its terms in the first place, and in an important sense, we didn’t. The U.S. Constitution requires the Senate to approve any treaty by a two-thirds supermajority, in part to prevent a president from making rash, politically motivated promises on the international stage that lack consensus support back home. Obama, knowing he did not have the Senate’s consent, chose to push ahead anyway. If reversing that mistake enrages some foreign diplomats, they have only themselves and their former negotiating partners in the Obama administration to blame.

Oil, what bulls need: Cramer notes -

"Now, the one thing that's in the oil bulls' favor, and Schlumberger has been telling people this, is that most new deep-water projects around the world have stopped" since 2015, Cramer said. "That's a chief reason why Schlumberger's earnings have been so, I'd say, sub-par versus, say, Halliburton, which gets much more of its business from servicing on-shore drilling." 

Insanity: Tesla is spending billions for one gigafactory. Now it says it will scale to 10 - 20 gigafactories.

Assuming Tesla can sell its cars, the full manufacturing capacity of those Gigafactories will come straight out of the market share of existing automotive companies. If they do not respond to the inevitable shift of consumers to electric vehicles in time, Tesla will have more time to eat up their market share.

That clearly includes the market share of BMW, Audi, Mercedes, and Lexus, among others. Tesla estimating that it will build 10 to 20 Gigafactories is a statement that Tesla believes it will have to build at least 10 Gigafactories at the current pace before other manufacturers catch up.

If they respond slower, which seems to be the case with every automotive manufacturer today with the exception of perhaps Chevrolet and its Bolt, Tesla would have an even larger head start in the transition to electric vehicles and would be able to build more factories before there were enough competition to saturate the market. 

Say what? The head of the US patent office has abruptly resigned.

Appalachia Natural Gas Production Outlook -- RBN Energy -- June 7, 2017

Oil. Weekly data today. Drawdown of US crude oil forecast to be 4 million bbls (good) but reined products build (bad). OPEC production creeping up; doubts increase that OPEC / non-OPEC can hold the line for 15 months. WTI below $48.

RBN Energy: Appalachia natural gas production outlook.

Active rigs:

$47.66	6/7/2017	06/07/2016	06/07/2015	06/07/2014	06/07/2013
Active Rigs	52	26	82	194	189

 US production:

OPEC stumped: global oil market trends, US production stump OPEC strategy. This is the lede but much more at the link:

Despite six months of lauded compliance with its own production quotas, OPEC’s effort to accelerate a global oil market rebalancing moves at a dawdling pace.

Global oil prices hover nearer the November 2016 price when the cuts were announced than a $60-plus per barrel target. Meanwhile, crude and product stocks among OECD (Organization for Economic Cooperation and Development) countries ended April roughly 56 million barrels higher than the December total. Annual non-OPEC output is expected to gain 1 million barrels per day (MMbpd) in 2017 and 1.5 MMbpd in 2018, according to Societe Generale (SG) estimates.

The United States is the key driver behind growing non-OPEC supply. In Texas, where the Permian Basin production rate is relentless, the Texas Petro Index (TPI) improved to 164.3 – its first year-over-year increase in 27 months – according to the Texas Alliance of Energy Producers in a June 5 statement.

 Mideast tiff? Saudi dispute with Qatar has 22-year history rooted in gas. Nice historical review of Iran - Qatar relationship.