Oh-Oh! API Reports That US Crude Oil Inventories Rose A Whopping 6.513 Million Bbls -- November 14, 207

Earlier today I had this "headline": Tea Leaves Suggest US Crude Oil Inventories Are Rising -- November 14, 2017 -- The Market And Energy Page, T+297. I suggested that when I saw WTI drop more than 2% in price.

Here are the API numbers: US crude oil inventories were forecast to fall 2.2 million bbls; in fact, according to API data released late this afternoon, US crude oil inventories ROSE 6.513 million bbls.

I use EIA data, not API data, to calculate the time it will take to "re-balance" (supply/demand).  I have been tracking this data to "re-balance" for 28 weeks. In that time, we have never had a number greater than 6 million bbls in build. See EIA data here.

Worse, the swing (forecast of minus 2.2 to plus 6.513) equals a net 8.713 million bbls -- in other words, according to the API, there are 8.713 million bbls of crude oil MORE than what was forecast.

If this data holds up in the EIA data, it is clear that the Red Queen has not fallen off her treadmill.

Earlier today, the talking heads said the 2% drop in the price of WTI was the news that Chinese demand for crude oil might be dropping. Nope: the 2% drop in the price of WTI was due to the "rumors" of what the API was going to report.

Venezuela Oil Production Lowest In 28 Years; Venezuela Exports To US Almost Half What The Bakken Produces -- November 14, 2017

A reader sent me a link to an article reporting that Venezuelan crude oil production has dropped to a 28-year low. It will be interesting to watch Venezuelan crude oil exports to the US over the next few months.

This is a look at Venezuelan crude oil exports to the US, in thousands of bbls per month. In the most recent month in which data was provide, Venezuela exported less than 20 million bbls of heavy oil to the US.

North Dakota is producing over 30 million bbls of light oil on a monthly basis. It looks like the last time Venezuela shipped 30 million bbls of oil to the US in any given month was December, 2012. The last year that Venezuela consisted exported that amount of oil to the US was in 2011. The Bakken was hitting its stride in 2010. The "glory years" for Venezuelan oil production appears to have been just before the Great Recession.

Venezuela says it is producing slightly less than 2 million bopd. North Dakota is producing slightly more than 1 million bopd.

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Notes To The Granddaughters

Our family (wife and two daughters) lived in Germany for a total of about eight years (three different assignments) while I was in the US Air Force.

Among a gazillion memories we have of Germany is "scherenschnitte."

From wiki:

Scherenschnitte, which means "scissor cuts" in German, is the art of paper cutting design. The artwork often has rotational symmetry within the design, and common forms include silhouettes, valentines, and love letters. The art tradition was founded in Switzerland and Germany in the 16th century and was brought to Colonial America in the 18th century by Dutch immigrants who settled primarily in Pennsylvania.

I had not thought of scherenschnitte in a long time but while reading Mindy Johnson's history of the "ink and paint" women of Walt Disney studios, I came across the following on page 60:

One of the earliest women to make a major mark in animation was German-born Charlotte "Lotte" Reiniger, who created the first of her silhouette animations as titles for Paul Wegener's 1916 feature film Rubezahls Hochzeit (Rumpelstiltskin's Wedding).

This form of shadow animation stemmed from the long-established folk tradition of silhouette cutting, or scherenschnitte, an art form primarily demonstrated by women artists in the early 1900s.

Tea Leaves Suggest US Crude Oil Inventories Are Rising -- November 14, 2017 -- The Market And Energy Page, T+297

WTI dropped over 2% this morning. Now, trading below $56.

API: weekly US crude oil inventory data out today at 3:30 p.m. Central Time. I use EIA data which comes out on Thursdays; API and EIA data are often quite different.

Keystone XL: for those who still care, Nebraska regulators will announce their decision next week. I have no less than 1,033 stand-alone posts tagged with "Keystone." One of the earliest posts tagged with "Keystone" was dated September 14, 2010, in which the question was asked: will we see 1 million bopd crude oil production in North Dakota by 2020? LOL. I think we hit that milestone in 2014. And unfettered, we would be well past 2 million bopd by now. But I digress. It's been more than seven years since we first started debating the Keystone XL. I've flip-flopped on the issue more than once; with more data, my feelings about the KXL change. Right now, I no longer care. Canadians should care. [Update: November 20, 2017: Nebraska regulators approve 3 - 2 the "concept" that TransCanada can build the Keystone XL pipeline through their state .. but not where the company had planned. Back to square one. Even if TransCanada agrees to the new route, what's not to say that the Nebraska state supreme court won't step in and stop the whole thing? All this "excitement" that the pipeline has been approved is grossly misplaced.]

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Photo Journalism

The Bismarck Tribune has a photo essay on drilling near the national park in southwestern North Dakota (archived in case the link breaks). Three comments:

• look how absolutely "clean" those pads are
• look how incredibly close the oil rigs (and all drilling activity, for that matter) come to the incredibly beautiful and highly traveled Maah Daah Hey Trail (slide #6 or thereabouts) 
• in the last slide, folks from New York can see a photo of a "North Dakota landowner" -- must be a rare breed -- and the encroaching oil activity on the national park

My biggest concern: once these photographs of the natural beauty of North Dakota goes viral, the state will be inundated with out-of-state tourists and assorted other riff-raff looking to experience a time warp:

Riff-Raff and Magenta show Brad and Janet how to do the Time Warp Rocky Horror Picture Show
The last thing North Dakota needs is another replay of the DAPL protest.

Random Update Of Oasis Hanover Federal Well Coming Off Confidential List Today -- November 14, 2017

This well came off confidential list today:

• 26975, 856, Oasis, Hanover Federal 5300 44-11 2B, Willow Creek, 50 stages; 10 million lbs; t517; cum 103K 9/17;

The graphic:

Existing wells in the graphic above:

• 28309, SI/NC, Oasis, Hanover Federal 5300 42-11 9T, Willow Creek, no production data,
• 28308, SI/NC, Oasis, Hanover Federal 5300 42-11 8B, Willow Creek, no production data,
• 28307, SI/NC, Oasis, Hanover Federal 5300 42-11 7T, Willow Creek, no production data,
• 30392, 2,112, Oasis, Hanover Federal 5300 13-14 7T, Willow Creek, t5/17; cum 61K 9/17;
• 20387, 1,445, Oasis, Hanover Federal 5300 13-14H Willow Creek, t5/17; cum 358K 9/17; see production profile below.

See production data for #20387, FracFocus [API 33-105-02133] with no data for a re-frack:
Monthly Production Data:

Pool	Date	Days	BBLS Oil	Runs	BBLS Water	MCF Prod	MCF Sold	Vent/Flare
BAKKEN	9-2017	30	12811	12766	12944	14618	8514	6104
BAKKEN	8-2017	31	11901	11901	17860	14214	11526	2555
BAKKEN	7-2017	31	9930	9916	21836	11324	10669	522
BAKKEN	6-2017	25	8867	8937	19166	21904	21771	0
BAKKEN	5-2017	31	16372	16473	30893	27997	24161	3671
BAKKEN	4-2017	18	8049	7863	24952	13408	0	13120
BAKKEN	3-2017	0	0	0	0	0	0	0
BAKKEN	2-2017	0	0	0	0	0	0	0
BAKKEN	1-2017	17	632	1783	1069	1667	1497	0
BAKKEN	12-2016	26	2264	1402	1197	2449	2189	0
BAKKEN	11-2016	30	2142	2305	1539	3666	3366	0
BAKKEN	10-2016	31	1891	1946	1483	3605	3605	0
BAKKEN	9-2016	30	2245	2059	1131	3721	3421	0

Initial production for this well:

BAKKEN	5-2012	29	9432	9361	5673	9177	8774	0
BAKKEN	4-2012	30	9738	8679	5868	9553	9163	0
BAKKEN	3-2012	25	6974	6585	3901	4441	4116	0
BAKKEN	2-2012	26	15078	15483	7455	9540	9540	0
BAKKEN	1-2012	27	14935	15032	8011	5920	5920	0
BAKKEN	12-2011	31	21134	21035	16917	7456	7456	0
BAKKEN	11-2011	20	6843	7228	8728	4864	4864	0
BAKKEN	10-2011	31	21233	20312	17670	13329	11658	1671

Distillate Stocks Low As Heating Season Arrives -- November 14, 2017

Director's Cut scheduled to be released this afternoon. Link here.

Talking their book: OPEC points to larger 2018 oil supply deficit as market tightens. Reuters.  

Reality: oil falls for a third day, knocked by rising US output. Bloomberg.

Cove Point update: FERC okays Cove Point LNG test cargoes. 

Boom!: China's natural gas demand to triple by 2040 -- IEA.

Hunch, 2040 headline: NY Governor Andrew Cuomo, IV, signs bill extending the ban on fracking in NY state. Pennsylvania reports another huge budget surplus on sales of natural gas.

Official: Venezuela in default. We should start seeing more stories on Russia, China buying Venezuela assets.

China oil imports to reach 15.5 million bopd in 2040-- IEA.

Oil will still remain the backbone of China's transport fuel demand till 2030, growing by 3.3% per year on average, but its share will fall to just above three-quarters, from nearly 90% today, the IEA said. The remaining 25% of transport fuels will be biofuels, natural gas and electricity.

The IEA said that China would become the world's largest oil consumer by the early 2030s, overtaking the US, and touch 15.5 million b/d in 2040. But the slowdown means that India will become the largest source of global oil demand growth from around 2025.

Returning home: President Trump negotiates return of UCLA hoodlums. No link; story everywhere. Original story here.

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Back to the Bakken

Wells coming off confidential list today --

• 33535, SI/NC, MRO, Arkin 44-12TFH, Bailey, no production data,
• 31851, 1,196, Whiting, 3J Trust 34-8-2P, Bell, Three Forks, 45 stages 6.4 million lbs, t5/17; cum 98K 9/17;
• 26975, 856, Oasis, Hanover Federal 5300 44-11 2B, Willow Creek, 50 stages; 10 million lbs; t517; cum 103K 9/17;

Active rigs:

$56.44→	11/14/2017	11/14/2016	11/14/2015	11/14/2014	11/14/2013
Active Rigs	54	38	64	186	185

RBN Energy: where did our distillate go? Stocks low as heating oil season arrives. Anyone following the weekly EIA petroleum report have probably asked the same question. Great post today by RBN Energy.

U.S. inventories of distillate — especially ultra-low-sulfur diesel (ULSD) and heating oil — are at their lowest pre-winter level in three years after falling during the summer months for the first time since inventory records started being measured in 1982.

Rising diesel exports are one culprit; another is the shutdown of a number of Gulf Coast refineries during and immediately after Hurricane Harvey.

The good news is that distillate prices have been increasing, as have the margins for refining crude oil into distillate — both encouraging refineries to ramp up their diesel/heating oil production. Today, we look at recent developments in the distillate market and what they may mean for diesel and heating oil prices this winter.

ISO New England link here. Currently at $65/Mwh and surging.

Cold front to hit Texas this weekend.

Coin show in Grapevine, TX, this weekend, also.