Graphics Worth A Thousand Words; About That OPEC Cut (Wink, Wink) -- October 2, 2017

Pardon The Interruption 

By the way, pardon the interruption, before you do anything else, look at the amount of crude oil the us imported from OPEC from February, 2017, to the most recent reporting period, July, 2017, on a monthly basis (and then get back to me regarding the OPEC cuts [wink, wink]).

Now, back to the original post.

For the archives: WTI is down over 2% today; trading at about $50.57.

I posted these two links over the weekend. I never got around to reading them; something tells me they are incredibly timely articles in light of all the data on this page.

• Saudis pay the price for OPEC leadership, Bloomberg. 
• Saudi Arabia is ceding oil market share to support prices and that's good for US oil plays, Forbes. 

And one more thing, CNBC is reporting that OPEC production for the month of September, 2017, increased by 50,000 bopd:

• trivial in the big scheme of things;
• but, going in the wrong direction; and,
• mostly due to continued increase in Iraqi production

The tea leaves are not hard to read.  

Original Post

This is simply remarkable.

It took a year but Saudi Arabian crude oil imports into the US have finally ... fallen off the chart. This is amazing -- there were reports in the mainstream media that this had occurred but I do not recall any stories suggesting it was this "bad" for the kingdom. I do not recall CNBC talking about this. With Saudi Arabian crude oil imports falling off the chart, the price of oil should be surging, shouldn't it? It's not. In early trading oil was down over 1.2% and WTI was trending toward $50 again.

So, the graphics, from this source, in thousands of bbls / DAY:

The graph:

Look at Saudi cash reserves as of July, 2017.

Now, look at the most recent data, just released:

Meanwhile, crude oil imported to the US from Iraq is surging. The graph below is in thousand bbs/month (the Saudi graph above is thousand bbls/day):

How do the various OPEC countries compare? This is bbls/month for the OPEC countries over the past few months:

Look at US monthly import, comparing Saudi Arabia, Iraq, and Venezuela. Over the six-month period shown:

• Venezuela: volatile, but basically the same
• Saudi Arabia: significant decrease
• Iraq: has more than doubled in the past six months

For Saudi Arabia vs Iraq: this is not trivial. 

The Political Page, T+255 -- October 2, 2017

Trump's "favorite" for the "next" "Fed" chairperson? According to CNBC, it is not Janet Yellen. Kevin Warsh has moved out in front. For me, this was a bit confusing, to say the least, on several levels.

Kevin Warsh, the favorite to be the next chairman of the U.S. Federal Reserve, apparently believes the central bank has become a servant to the stock market after years of loose monetary policy.

Uber-bear Albert Edwards, an economist at Societe Generale's strategy team, said Monday that after listening to Warsh speak at a banking conference last week, he would be his choice to lead the Fed. He also revealed Warsh felt the Fed had been captured by the "secular stagnation" ideas of former U.S. Treasury Secretary Larry Summers and had become persuaded by the idea that more monetary stimulus is needed.

If I'm interpreting that correctly, it is the "Fed" that has become persuaded by the idea that more monetary stimulus is needed, apparently something that "uber-bear Edwards and Warsh are against.

In addition, Warsh is seen as more hawkish than Janet Yellen, suggesting that rates would go higher faster under Warsh than under Yellen. The dollar would likely strengthen, all things being equal, something Trump does not want.

Clear as mud. As usual.

Some explainin' to do: tell me again why this is not treasonous?

The National Anthem: this probably could have been written differently -- from The Washington Post:

It’s a reversal of course, one that reflects the network’s decision to remain nimble as far as showing the anthem during this season of “Monday Night Football.” It had intended to return to its new, normal practice of not showing the anthem until at least 50 people were shot to death and more than 400 injured in the shooting in Las Vegas.

The pro-athlete disrespect for the flag and national anthem is looking more and more trivial every day. It seems a bit hypocritical that it takes a sniper to turn a concern into a killing field for a network to change course. Another NFL-free Monday night for me.

Running scared: CBS took no time to fire VEEP for tweeting "no sympathy" for Vegas victims. VEEP said victims were most likely Republicans. So much for free speech at CBS:

CBS has parted ways with one of the company’s top lawyers after she said she is “not even sympathetic” to victims of the Las Vegas shooting because “country music fans often are Republican,” when discussing the tragic mass shooting that occurred in Las Vegas late Sunday night. 

Her tweet:

“If they wouldn’t do anything when children were murdered I have no hope that Repugs [sic] will ever do the right thing,” Geftman-Gold wrote in a now-deleted message that was first reported and captured by The Daily Caller.

Geftman-Gold continued: “I’m actually not even sympathetic bc [sic] country music fans often are Republican gun toters [sic].”

I wonder if she kneels?

How low will the go? CNN also reports that the Vegas casualties were probably Trump supporters.

Democrat delays impeachment bill. With 500+ injured; and 50+ killed; and, some/many/most Trump supporters, the Democrat says this is not the right time to bring the impeachment bill to the floor of the House. Well, that's nice. I wonder how "Saturday Night Live" will handle this. I'm sure Tina Fey will figure it out.

Banned. I don't get it. How could the killer use the long gun that he used? It was banned in 1986. Fortunately he didn't have a silencer on that gun -- Hillary says the tragedy could have been much worse had he used a silencer on the automatic weapon. I am not making this up. 

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Camille Paglia on Hugh Hefner's Passing

Link here.

It's unfortunate the interviewer did not preface the interview with a bit of background. This little bit of personal history is critical for those trying to "understand" Hefner:

In 1949, Hefner married Northwestern University student Mildred ("Millie") Williams. They had two children: daughter Christie (b. 1952) and son David (b. 1955). 

Before the wedding, Mildred confessed that she had an affair while he was away in the army. He called the admission "the most devastating moment of my life." A 2006 E! True Hollywood Story profile of Hefner revealed that Mildred allowed him to have sex with other women, out of guilt for her own infidelity and in the hope that it would preserve their marriage. The two were divorced in 1959.

The Energy And Market Page, T+255 -- October 2, 2017

Later

GDP now: Latest forecast: 2.7 percent — October 2, 2017

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2017 is 2.7 percent on October 2, up from 2.3 percent on September 29.

The forecasts for third-quarter real consumer spending growth and third-quarter real private fixed investment growth increased from 1.8 percent and 0.3 percent, respectively, to 2.3 percent and 1.8 percent, respectively, after this morning's construction spending release from the U.S. Census Bureau and this morning's Manufacturing ISM Report On Business from the Institute for Supply Management (ISM).

The model's estimate of the dynamic factor for September—normalized to have mean 0 and standard deviation 1 and used to forecast the yet-to-be released monthly GDP source data—increased from 0.04 to 1.59 after the ISM report.

Early late afternoon trading: Dow 30 is up 120 points. There are now 212 issues traded on the NYSE that have reported new 52-week highs, including BRK-B: Phillips 66.

 Original Post

Dow 30, new 52-week highs in early morning trading: 104, including -- GM, D. R. Horton,

• new lows: 10

Records: all three major indices open at new highs today -- Dow 30; NASDAQ; and, S&P 500.

ISM: September, 2017. Hitting new records. An incredible report. The ISM hit a six-year record in August, 2017, and now it looks like an 11-year record with the September, 2017, report. When I find a link for today's report I will post it. Yes, here it is: US factory activity surges last month to highest since 2004 -- thirteen years. The Trump rally continues. Let's see, we're almost into Trump's first year, especially if one considers the optimism he drove began in early November, 2016. One year. From the linked article:

U.S. manufacturing activity shrugged off a series of hurricanes and rose to the highest level in 13 years last month.

The Institute for Supply Management said its manufacturing index rose to 60.8 from 58.8 in August, the highest reading since May 2004. Anything above 50 signals that manufacturers are growing, and the ISM survey shows they've been on a 13-month winning streak.

New orders, production, hiring and new export orders all grew faster in September.

Seventeen of 18 manufacturing industries reported growth, led by textile mills and machinery. Only one industry — furniture manufacturing — contracted last month.

GDP now. Most recent forecast will be reported later today. The previous and latest report was dated September 29, 2017: 2.3 percent: 

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2017 is 2.3 percent on September 29, up from 2.1 percent on September 27. Since the previous GDPNow update on Wednesday, the forecasts of the contributions of net exports and inventory investment to third-quarter GDP growth increased from -0.16 percentage points and 0.90 percentage points, respectively, to -0.01 percentage points and 1.13 percentage points, respectively. The forecasts of real consumer spending growth and real nonresidential equipment investment growth declined from 2.0 percent and 5.7 percent, respectively, to 1.8 percent and 4.0 percent, respectively.

Coal: a great report for coal. Coal demand is going to surge over the next few years. 

WTI Bulls Get Another Dose Of Reality; WTI Down Over 1% in Pre-Market Trading; Stronger Dollar -- October 2, 2017

Why I love to blog: with regard to the pre-market trading of WTI, see my comments yesterday. From Reuters via Yahoo!Finance:

Oil (Brent) fell more than $1 a barrel to below $56 on Monday as a rise in U.S. drilling and higher OPEC output put the brakes on a rally that helped prices to register their biggest third-quarter gain in 13 years.

U.S. energy companies added oil rigs for the first week in seven and Iraq announced its exports rose slightly in September while OPEC overall boosted output.

Brent crude, the global benchmark, was down $1.02 at $55.77 a barrel at 1310 GMT. It notched a third-quarter gain of about 20 percent, the biggest third-quarter increase since 2004 and traded as high as $59.49 last week.

"I think it's going to be a struggle to move above $60 Brent," said Olivier Jakob, oil analyst at Petromatrix.

U.S. crude was down $1.22 at $50.45. The U.S. benchmark posted its strongest quarterly gain since the second quarter of 2016.

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Active rigs:

$50.56↓	10/2/2017	10/02/2016	10/02/2015	10/02/2014	10/02/2013
Active Rigs	58	33	68	190	186

RBN Energy: Permian pipelines shuttling crude oil from gathering systems to takeaway pipes.

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Exxon: the company's big bet on Brazil oil could signal major "pre-salt" role -- Reuters via Reuters. Exxon paid almost $1 billion for one block, Brazil's highest-ever such bid. Almost a billion dollars and return won't be seen for decades?

Marking a return to Brazilian exploration after a five-year absence, Exxon took eight blocks in the coveted basin, one of Brazil's most productive, at an auction on Wednesday. Six were taken in partnership with state-run Petrobras.

The auction's record take included an Exxon bid of 2.24 billion reais ($704 million) for one block, Brazil's highest-ever such bid.

That showed how oil companies that can afford significant overheads are willing to shell out for and develop high quality reserves in far-flung locations, despite oil prices that have roughly halved since 2014.

Timing: oil's September surge propels bull market run on demand optimism -- this is a reposting of a Bloomberg article.  Timing? See my comments here. Data points:

• OPEC's production increased in September, 2017
• Mideast summer demand and US driving season coming to an end; demand optimism? echo chamber
• WTI pre-market trading: down over 2%; flirting again with $50 "floor" (?)
• WTI moves from $50 to $52 and US drillers add oil rigs for first week since mid-August, according to Baker Hughes

Re-Living The 2016 Presidential Campaign -- October 2, 2017

I've got more important stuff to do than re-live the 2016 Hillary - Trump campaign, but this is too good to pass up. After posting my note about the LA Times yesterday, a reader sent me this note: "whatever you say about the LA Times, remember, that publication was the ONLY major media outlet that predicted Trump's win." The reader provided this link at Bloomberg.

The reason I find this so refreshingly delicious is that the poll referenced, the USC-Los Angeles Times poll was the only poll I used during the campaign and posted it almost daily once I got started. Two links:

• October 6, 2016: why I chose this particular poll
• October 3, 2016: early poll showed Trump's lead, and not by just a small amount

Making this even more refreshingly delicious is this: I clearly recall one reader making a snarky remark about using this poll, suggesting that I was using this poll simply because it was the only one that showed Trump leading; the reader noted that all other polls showed Hillary winning (in fact, the ABC poll infamously showed that Hillary would win by 15 points and that poll was released a day or two before the election).

And finally, just throwing this in: USC is my alma mater. Have no idea if they won over the weekend. It was a football-free weekend for me; didn't want to see any kneeling.