Weekly EIA Petroleum Report -- US Crude Oil Inventories Are 9% Higher Than November, 2018 -- It's Sure Taking A Long Time To "Re-Balance" -- October 21, 2020

EIA, weekly petroleum: Link here. API build reported yesterday did not materialize in EIA report.

• weekly US crude oil inventories: decreased by 1.0 million bbls
  
• weekly US crude oil inventories now stand at 488.1
• weekly US crude oil inventories are about 10% above the ever-increasing five-year average
• refineries operated at 72.9% capacity;
• imports: down almost 14% from same four-week period last year
• imports averaged 5.1 million bpd, down 167,000 bpd the previous week
  
• propane/propylene inventories are about 11% above the five-year average
• jet fuel product supplied was down 46% compared with same four-week period last year
• gasoline demand will be reported later today

Re-balancing (US crude oil imports):

Week	Date of Report=	Change	Million Bbls Storage	Over/under 5-year average
Week 0	November 21, 2018	4.9	446.9
Week 1	November 28, 2018	3.6	450.5
Week 2	December 6, 2018	-7.3	443.2
Week 3	December 12, 2018	-1.2	442.0
Week 4	December 19, 2018	-0.5	441.5
Week 5	December 28, 2018	0.0	441.4
Week 84	July 15, 2020	-7.5	531.7	17%
Week 85	July 22, 2020	4.9	536.6	19%
Week 86	July 29, 2020	-10.6	526.0	17%
Week 87	August 5, 2020	-7.4	518.6	16%
Week 93	September 16, 2020	-4.4	496.0	14%
Week 94	September 23, 2020	-1.6	494.4	13%
Week 95	September 30, 2020	-2.0	492.4
Week 96	October 7, 2020	0.5	492.9	12%
Week 97	October 15, 2020	-3.8	489.1	11%
Week 98	October 21, 2020	-1.0	488.1	10%

Crude Oil imports:

Week (week-over-week)	Date of Report	Raw Data, millions of bbls	Change (millions of bbls)	Four-week period comparison
Week 0	March 11, 2029	6.4	0.174
Week 1	March 18, 2020	6.5	0.127
Week 2	March 25, 2020	6.1	-0.422
Week 13	June 10, 2020	6.4	0.000	-13.300%
Week 22	August 12, 2020	5.6	-0.389	-20.400%
Week 23	August 19, 2020	5.7	0.109	-21.700%
Week 24	August 26, 2020	5.9	0.185	-16.900%
Week 25	September 2, 2020	4.9	-1.000	-20.200%
Week 26	September 10, 2020	5.4	0.500	-17.900%
Week 27	September 16, 2020	5.0	-0.416	-20.100%
Week 28	September 23, 2020	5.2	0.160	-24.200%
Week 29	September 30, 2020	5.1	0.045	-21.600%
Week 30	October 7, 2020	5.7	0.600	-18.900%
Week 31	October 15, 2020	5.3	-0.447	-15.400%
Week 32	October 21, 2020	5.1	-0.167	-13.800%

 

Distillate fuel inventories:

Week	Date of Report	Change in Millions	Relative to 5-Yr Avg
Week 1	August 26, 2020	1.40	24.0%
Week 2	September 2, 2020	-1.70	23.0%
Week 3	September 10, 2020	-1.70	20.0%
Week 4	September 16, 2020	3.50	22.0%
Week 5	September 23, 2020	-3.40	21.0%
Week 6	September 30, 2020	-3.20	21.0%
Week 7	October 7, 2020	-1.00	23.0%
Week 8	October 15, 2020	-7.20	19.0%
Week 9	October 21, 2020	-3.80	19.0%

Jet fuel delivered:

Week	Date of Report	Change
Week 0	3/7/2020	-12.80%
Week 1	3/14/2020	-12.60%
Week 2	3/21/2020	-8.90%
Week 3	3/28/2020	-16.40%
Week 4	4/4/2020	-0.22%
Week 5	4/11/2020	-39.70%
Week 6	4/18/2020	-53.60%
Week 7	4/24/2020	-61.60%
Week 8	5/1/2020	-66.60%
Week 9	5/8/2020	-68.50%
Week 10	5/15/2020	-67.90%
Week 11	May 22, 2020	-66.60%
Week 20	July 29, 2020	-42.10%
Week 21	August 5, 2020	-40.90%
Week 22	August 12, 2020	-45.80%
Week 23	August 19, 2020	-47.60%
Week 24	August 26, 2020	-45.70%
Week 29	September 30, 2020	-46.10%
Week 30	October 7, 2020	-47.50%
Week 31	October 15, 2020	-41.80%
Week 32	October 21, 2020	-45.90%

Notes From All Over -- Part 2 -- Wheat Prices Near A Six-Year High -- October 21, 2020

This may be a bigger story but we will start here, with record wheat prices [the link takes you to a Yahoo!Finance article which is a reprint from the Bloomberg story; the latter has the graphs but is behind a paywall]:

From Russian farmers literally steamrolling seeds into parched fields to China’s rising demand, the reasons for wheat’s rally to a six-year high keep growing.

With farmers in the U.S. to Black Sea battling drought, the poor plantings start is raising worries that the market could further tighten. That’s happening at a time when importers are building reserves to safeguard supplies, prompting fund managers to turn more bullish. 

While global stockpiles are at a record high, inventories in major exporters are near a six-year low, partly because of strong imports. In Russia -- which is set to reclaim its ranking as the top shipper -- sales are accelerating on robust demand ahead of a planned export quota next year. That’s putting strain on the country’s railways and causing ships to wait longer for cargoes. 

China is set to buy the most wheat in a quarter century and has already booked large amounts from the U.S. and France. Demand is also emerging in unusual places like Pakistan, which is poised to become a net importer. Many nations want to bolster reserves to protect against any coronavirus-related supply disruptions.

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Fact Checking

Wow, Victor Davis Hanson had a long essay today. Victor Hanson reported all the stories in one essay that the Bismarck Tribune is avoiding like the plague. No Pulitzer Prize for you!

Notes From All Over -- October 21, 2020

First things first: NFL tracking with BLM. 

"Sunday Night Football" ratings "crash" 17% -- week six -- continues season long decline.

It is interesting. I have tried going back to watching NFL but after about five or six minutes I have to switch to something else, usually picking up around the house.

The games are incredibly boring, and invariably we get some banter about how these guys are giving back to "their" BLM communities. As if. They all live in McMansions in gated communities with 95% Caucasians.

And, of course, the virtue signaling with masks where the masked coaches are surrounded by 120 others who are unmasked. Link at https://www.breitbart.com/sports/2020/10/20/ratings-crash-17-week-6-sunday-night-football-continuing-season-long-decline/.

Record: Trump confirms more federal judges in his first term than any president in 40 years. Remember all those stories about how chaotic the White House was? Seems they got a lot more done than past presidents. The previous previous president recognized for his beer summit. Link at https://www.breitbart.com/politics/2020/10/20/trump-federal-judges/.

Off again, now on again: apparently that New Jersey tax on stock market trades is back on the table. 

Originally it was a quarter-cent for each trade; now it's down to a thousandth of a cent.
Let's see 0.25 / 0. 001 = 250x. That's a pretty huge change. Goes to show just how much money can be made with creative taxing. Who would ever have thought of taxing trades?

New Mexico will just love Biden's plan to place a moratorium on BLM and federal oil permits. Link here.

Pharmacy desert: Walgreens is shutting down in downtown San Francisco. Shoplifting put them out of business. 

Food inflation: there's a bigger story here, perhaps, but for now, the CNBC blurb on pork prices in China.

• The consumer price index rose 1.7% last month from a year ago, China’s National Bureau of Statistics said Thursday.
• Overall food prices remained elevated, up 7.9% in September from a year ago. Pork prices climbed 25.5%, but at a slower rate than increases of over 100% seen for much of the last 12 months.
• The producer price index fell 2.1% in September from a year ago, greater than the 1.8% decline forecast by a Reuters poll.
  

Banks could enter the lodging business. A third of US hotels could disappear -- report. But Siri will find them. From Yahoo!Finance:

A third of hotels in the U.S. could go under due to the coronavirus pandemic, according to a new study.

Some 33% of hotel owners expect to hand the keys back to their lender or enter a forced sale situation, according to a September 7 survey of 103 hotels by the Hospitality Asset Managers Association (HAMA).

Comment: if that happens, expect to see fees on everything: fees for towels; fees for clean pillowcases; fees for "complimentary" shampoo; fees for that "sanitized band" on toilet seats. One thing banks are good at: fees.

Parsley-Pioneer Tie-up: It's All In The Family — October 21, 2020

ICYMI, re-posting:

The Pioneer - Parsley tie-up: who caught this? It's a father-son deal. Amazing how "everyone" knows this but it's very rarely being reported. From Bloomberg yesterday, behind a paywall (we'll sort that out later). Here's the story, when times were good, from The WSJ back on August 5, 2016.

The shares have made [Bryan] Sheffield, a 38-year-old, third-generation oil man, one of the youngest billionaires in the energy business at a time when falling crude prices have bankrupted more than 85 North American energy producers, erased profits at oil giants and stung investors. [His grandfather, Parsley; and father, Scott, in the photo at The WSJ link.]

Parsley, with a stock-market value of about $6.4 billion, possesses the qualities investors have sought amid collapsing oil prices: It operates in West Texas’ prolific Permian Basin, has relatively little debt and aggressively hedges its output to lock in above-market prices.

More from the linked WSJ article:

Since oil prices began to tumble in 2014, Parsley and its competitors in the Permian, including Diamondback Energy Inc., Concho Resources Inc. and Pioneer Natural Resources Co. , which is run by Mr. Sheffield’s father, Scott Sheffield, have sold billions of dollars worth of their shares to make acquisitions and keep drilling. 

Investors are betting on them to not only survive the biggest oil bust in decades but to vie with the Organization of the Petroleum Exporting Countries for global market share.

Really? And I thought I was overly exuberant about the Bakken. LOL. 

Updates

From SeekingAlpha, October 20, 2020:

[Scott Sheffield] has agreed to purchase [his son's energy company] in an all-stock deal valued at about $4.5B. Adding debt to be assumed by Pioneer brings the value to $7.6B. The deal price works out to a 7.9% premium to Parsley's closing share price on October 19, 2020.

Parsley owners are to receive 0.1252 shares of Pioneer common stock for each share of Parsley they hold.

Annual synergies of $325M are seen, and the deal is expected to be accretive to cash flow per share, free cash flow per share, EPS, and corporate returns, beginning in year one.

The combined company will have about 930K net acres in the Permian basin, and a production base of 328K barrels of oil per day, and 558K barrels of oil equivalent per day.