AuthorTopic: Oil Price Crash: Who Cooda Node?  (Read 132074 times)

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 37245
    • View Profile
🛢️ Robots Take Over Oil Trade And OPEC Is Scared To Death
« Reply #810 on: April 15, 2019, 06:15:33 AM »
HFT Algos for the Oil Trade. What could possibly go wrong?  ::)

RE

https://oilprice.com/Energy/Energy-General/Robots-Take-Over-Oil-Trade-And-OPEC-Is-Scared-To-Death.html

Robots Take Over Oil Trade And OPEC Is Scared To Death
By Irina Slav - Apr 14, 2019, 6:00 PM CDT


Artificial intelligence has been making inroads into the oil and gas industry for a while now after the industry realized all the benefits it could reap from the deployment of these technologies. Now, it has begun changing oil and gas trading as well.

First of all, it bears noting the term artificial intelligence has developed into an umbrella term for a host of predictive and analytical technologies that are a far cry from the average layman’s idea of AI, that is, machines capable of independent thought. We are not there yet. Yet the technology has advanced sufficiently to begin transforming the oil and gas industry, including the trade of these commodities and products.

For now, the space of AI-enabled energy trading providers is relatively empty. One notable recent addition to it was OilX, an oiltech startup that provides traders with real-time oil analytics based on a combination of satellite tracking data and reports from various official organizations, including customs, JODI, and statistics agencies.

Thanks to AI, the OilX platform can process and offer traders a lot more comprehensive and hence more reliable oil fundamentals data in a fraction of the time traditional oil supply and demand analysis takes.

Speed and accuracy are what, according to OilX’s founders, makes the platform unique and these two features also highlight the top priorities of modern-day traders generally. Yet this is only a nascent market with a huge potential.

As OilX’s chief executive Florian Thaler told Oilprice, “Theoretically, AI-enabled solutions can be found everywhere in a trading organisation, from front to middle to back office in trading operations. Ranging from analytics, trade execution, risk management, HR. We believe that the change is coming from a series of small, highly focused and specialized solutions which – when put together – form a comprehensive solution.”

But AI is encroaching on traditional practices in price forecasting as well. This is hardly a surprise given one of the main advantages of algorithms over humans is in the superior predictive capabilities of the former.

"Price suggestion has clearly become a key factor [for AI] where for large trades and complex derivatives it used to take a while to price trades," a senior Citi executive told S&P Global Platts at an industry event last November. AI is already helping traders make better decisions based on price forecasts made by the algorithms, Sandeep Arora said.

And it goes beyond just price forecasts. Artificial intelligence is also being used to help humans learn how to better predict prices.

"We are not so much interested in predicting prices, we are interested in developing better theories that can help us make better predictions of prices," said the head of machine learning Marcos Lopex de Prado at the same event. In other words, machines are not replacing people, at least in the price forecast field, but potentially helping people become more accurate in their price predictions.

What’s in store for this nascent segment of the energy industry for the future? Probably bigger and better things as tends to happen with every technology that has proven its worth for an industry. Thanks to the advantages and benefits it offers, AI technology will likely spread to more commodity markets, Thaler said.

In that, the digital newcomers will continue to draw on the established expertise of the energy industry to come up with better trading decisions rather than trying to confront and overpower it.

“In terms of evolution,” said Thaler, “we see all commodity markets to move further up into the direction how we see gas and power markets trading today.”

By Irina Slav for Oilprice.com
Save As Many As You Can

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 37245
    • View Profile
🛢️ The Case For $100 Oil
« Reply #811 on: April 16, 2019, 12:00:02 AM »
AKA the Case for another economic crash.

RE

https://oilprice.com/Energy/Oil-Prices/The-Case-For-100-Oil.html

The Case For $100 Oil
By Nick Cunningham - Apr 15, 2019, 6:00 PM CDT


The odds of an oil price spike this year are much higher than the prevailing consensus in the market, according to a new report from Bank of America Merrill Lynch.

The oil market has been tightening rapidly this year, due to OPEC+ cuts taking supply off of the market, outages in Iran and Venezuela, and a slowdown in U.S. shale. But forthcoming regulations from the International Maritime Organization (IMO) could provide an additional jolt, particularly as global inventories decline against the backdrop of a tightening market.

“Now, with distillate inventories at the low end of the range, we see an analogy to 2007/08 when the world run out of diesel refining capacity,” Bank of America Merrill Lynch wrote in a note on April 12. “Back then, as Saudi Arabia lifted heavy crude production to meet rising global demand for distillates, diesel-to-bunker fuel spreads blew out and so did light-heavy crude spreads. A similar situation could develop over the coming months as ship owners temporarily up their distillate burn to transition out of high sulphur into ultra low sulpur bunker fuel due to the new IMO2020 rules.”

There are important differences between today and the price spike of 2008, Bank of America notes, including greater spare capacity in 2019, an additional 1.1 million barrels per day (mb/d) of refining capacity set to come online, and the expectation that U.S. shale could quickly add supply in the event of higher oil prices. “Still, unlike the gradual tightening in diesel markets of 2007/08, the world faces a major one-off jump in distillate demand,” Bank of America argues, referring to worldwide regulations on marine fuels set to take effect at the start of 2020.

The rules lower the limit of sulfur concentration in marine fuels from 3.5 percent to just 0.5 percent, which will force shipowners to switch away from heavy fuel oils. Instead, the alternatives include scrubbing technology and a greater use of low-sulfur fuels, including distillates.
Related: The Tipping Point In Trump’s Quest For Energy Dominance

Bank of America says that the regulations could push up distillate demand by 1.1 mb/d year-on-year, which comes on top of the 0.5 mb/d annual trend growth rate, and also on top of the cyclical high during winter. Higher distillate demand could push up crude oil prices as refiners race to turn crude into distillates. “About 60% of the average crude barrel can be turned into distillate with the right refining toolkit. But that figure drops below 50% for heavy oil, potentially curbing supply,” Bank of America wrote.
Oilprice.com
The most vital industry information will soon be
right at your fingertips

Join the world's largest community dedicated entirely to energy professionals and enthusiasts
Join Today

The bottom line is that there is a chance that oil prices rise much higher this year. “In our view, the risk of a Brent crude oil price spike is significantly higher than options markets suggest,” Bank of America warned.

There are plenty of factors that could head off a price spike, including higher U.S. shale production, an economic slowdown, a decision by OPEC+ to abandon the cuts, a decision by the U.S. to extend waivers on Iran sanctions, or a release of oil from the U.S. strategic petroleum reserve, just to name a few. “However, as shippers transition to IMO2020, a cyclical upturn led by trade combined with a cold winter could result in the largest ever surge in distillate demand. If we add a weaker dollar to the mix, we have all the ingredients for a spike in crude oil prices,” Bank of America said.
Related: Trump’s New Ambassador Scrambles To Salvage Relationship With Riyadh

The investment bank was skeptical that U.S. shale could fill the gap, at least in the short run. Capital discipline has already led to a slowdown, and the industry could need higher prices for longer-dated futures in order to really incentivize new drilling. In any event, it will also take time for the industry to respond, which means that “rising oil prices today will only begin to affect oil production in 4Q19 and 2020,” the bank noted. As such, while U.S. shale could add new supply and keep global oil prices in check, it may arrive a little late to avoid a price spike.

Bank of America said that the Brent options market only implies a 2 percent chance that Brent spikes to $100 per barrel. The bank says everyone might be underestimating these odds. The “massive surge in distillate demand” later this year could “potentially push oil prices above $100 per barrel,” the bank concluded.

By Nick Cunningham of Oilprice.com
Save As Many As You Can

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 37245
    • View Profile
https://seekingalpha.com/article/4254654-natural-gas-prices-fall-sharply-monday-forecast-models-flipped-warmer-weekend

Natural Gas Prices Fall Sharply Monday After Forecast Models Flipped Warmer Over The Weekend

Natural Gas Prices Fall Sharply Monday After Forecast Models Flipped Warmer Over The Weekend

Apr. 16, 2019 6:38 AM ET
|
4 comments
|
Includes: BOIL, DGAZ, GAZB, KOLD, UGAZ, UNG, UNL
Andrei Evbuoma
Commodities, energy, oil & gas, research analyst
Summary

Bears feast as natural gas saw broad, steep declines across the strip on Monday.

Natural gas front-month May contract breaks below $2.60 amid markedly warmer weather outlook mid-late April.

Cash markets also lowered on prospects for warmer weather and lighter demand.

Warmer outlook boosts injection season; triple-digit inventory builds expected in the weeks ahead to yield more aggressive storage deficit contraction.

Cheapened natural gas prices a buying opportunity for investors wanting to go long for this upcoming summer season.

Investment Thesis

Warmer weather outlook over the weekend made its mark on Monday as natural gas futures plunged more than 2.5% to break below $2.60. The recent slide has undoubtedly made price more attractive. It's an opportunity for investors to go long for this upcoming summer which is projected to be hot. Investors also need to continue to monitor LNG exports and natural gas production.

Monday's gap down driven by warmer weather outlook

From futures to the cash market to ETFs, the entire natural gas strip saw steep declines on Monday. The front-month May futures contract consolidated 7 cents (2.60%) to $2.59. The June contract fell 7.1 cents to $2.63. Figure 1 below is a chart showing the price trend of NYMEX's front-month May futures contract over the past 24 hours.

Source: Investing.com

Figure 2 is a chart showing the latest natural gas futures contract prices over the next 7 months. We remain in contango through August.

Source: Andrei Evbuoma

The United States Natural Gas ETF (NYSEARCA:UNG), which is the unleveraged 1x ETF that tracks the price of natural gas, finished Monday sharply lower down 2.36% to $22.80. Figure 3 below is a chart showing the price trend of UNG over the past month.

Source: Investing.com

The VelocityShares 3x Long Natural Gas ETN (NYSEARCA:UGAZ) and the ProShares Ultra Bloomberg Natural Gas ETF (NYSEARCA:BOIL) consolidated 6.96% and 4.30% to $26.48 and $19.35, respectively. Meanwhile, the VelocityShares 3x Inverse Natural Gas ETN (NYSEARCA:DGAZ) and the ProShares UltraShort Bloomberg Natural Gas ETF (NYSEARCA:KOLD) gapped up 7.05% and 4.42% to $116.21 and $23.62, respectively. Figure 4 below is a chart showing the price trend of DGAZ over the past month.

Source: Investing.com

Monday's market reaction was as a result of forecast models in the medium range trending warmer over the weekend. This comes after a week of tight range trading as investors continued to gauge the strength of mid-late April demand amid mixed forecast model signals, a reduction in production, an increase in LNG exports, and an overall cooler weather pattern.

Cash markets also experienced losses on Monday due to the warmer weather outlook and thus less demand. Losses were greatest across the western U.S. where the Rockies (Opal) and California (SoCal Border Avg.) had declines of $0.67 and $1.03, respectively. Losses, albeit lighter, also occurred east of the Mississippi River where Chicago and Henry Hub experienced declines of 6 cents and 8 cents, respectively.

Forecast models continue to indicate a warmer (bearish) pattern in the 10-16 day time frame with seasonal to unseasonably warm temperatures covering much of the country. Figure 5 below is a comparison between the 0z GFS, ECMWF, and CMC's 10-16 day temperature outlook.

Source: WeatherBell

Figure 6 below are forecast of the Arctic Oscillation (AO) and the North Atlantic Oscillation (NAO) teleconnections. Both are forecast to transition back into a neutral to positive mode over the next two weeks. This supports a warmer outlook for the nation.

Source: NOAA

Final Trading Thoughts

Monday’s sharp decline has brought prices to its lowest level since mid-February. Much of the prices downside risk has been applied after Monday’s reaction. While there is still potentially more room for prices to go down, I think that it's reached near a bottom. Under $2.60 now, prices have certainly become more attractive for investors looking forward to this summer. Should prices continue to decline towards $2.55 and/or to a greater degree $2.50, then it would make for an even greater opportunity for investors to start buying. In addition to weather updates, this week’s storage report, production (supply/demand) report, and LNG exports will also be important as these could potentially add or offset from the bearish sentiment. I'm keeping my price range of $2.50 to $2.80 for the front-month May contract. UNG should trade between $21.00 and $24.60.

Stay Tuned For More Updates!

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Save As Many As You Can

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 37245
    • View Profile
🛢️ The Undeniable Signs Of A Shale Slowdown
« Reply #813 on: April 19, 2019, 12:12:07 AM »
Must be the "unseasonably warm weather".  ::)

RE

https://oilprice.com/Energy/Energy-General/The-Undeniable-Signs-Of-A-Shale-Slowdown.html

The Undeniable Signs Of A Shale Slowdown

By Nick Cunningham - Apr 18, 2019, 6:00 PM CDT


The world’s largest oilfield services company said its earnings were hit in the first quarter because of a slowdown in shale drilling activity.

“First-quarter revenue of $7.9 billion declined 4% sequentially, reflecting the expected reduction in North America land activity and seasonally lower international activity in the Northern Hemisphere,” Schlumberger CEO Paal Kibsgaard said in a statement. Pricing for its services was “soft,” while fracking and other “drilling-related businesses” saw a dip in activity.

The company was unbowed, noting that the weakness in North America is offset by improving conditions globally. “From a macro perspective, we expect the oil market sentiments to steadily improve over the course of 2019,” as the OPEC+ cuts tighten up the market. Also, Kibsgaard said that the “weakening of the international production base” after “four years of underinvestment” will become “increasingly evident,” which should spark an uptick in spending.

The global E&P sector is “starting to normalize.” In fact, spending could rise by 7 to 8 percent this year around the world.

However, U.S. shale is in a different situation. After spending heavily for years, which successfully ramped up production to record heights, many shale companies are still not performing well financially. As a result, the U.S. shale industry is at somewhat of an inflection point. Kibsgaard said that the sector is “set for lower investments with a likely downward adjustment to the current production growth outlook.”

While the industry is looking up globally, the outlook for U.S. shale is rather downbeat. “[T]he higher cost of capital, lower borrowing capacity, and investors looking for increased returns suggest that future E&P investment levels will likely be dictated by free cash flow,” Kibsgaard said. “We therefore see E&P investments in North America land down 10% in 2019.”
Related: Sharp Drop In U.S. Rig Count Marks First Yearly Loss Since 2016

There are additional problems unique to shale drilling that Schlumberger’s chief executive believes will continue to haunt the industry. “In addition, rising technical challenges—from parent-child well interference, step-outs from core acreage, and limited growth in lateral length and proppant per stage—all point to more moderate growth in US shale oil production in the coming years,” Kibsgaard warned.

It’s not all bad news for Schlumberger and its clients. As Bloomberg notes, the number of fracking crews deployed in shale basins hit a record high in April, up 12 percent since January. Production is still rising, albeit at a slower pace than in the past. The EIA forecasts a jump in output of 80,000-bpd in May, down from some of the more impressive monthly increases last year, but a very significant increase nonetheless.

Some analysts weren’t impressed. “The EIA’s DPR contained some significant downward revisions to shale oil supply. Last month the EIA estimated that supply from the seven main shale regions had

increased by 282 thousand barrels per day (kb/d) from December to March,” Standard Chartered wrote in a report on April 16. “This month it has revised the December to March increase down to just 42kb/d. Total oil shale liquids supply was also revised down 213kb/d to 8.38mb/d in April, including downward revisions of 83kb/d for the Permian, 84kb/d for the Bakken and 20kb/d for Eagle Ford.”

Still, a handful of new pipelines in Texas are expected to come online later this year and next, which could spark another round of drilling.

Overall, though, even as U.S. shale basins continue to attract prodigious levels of investment, the blistering rate of growth seen in the past few years may be at an end. Halliburton, another oilfield services giant, has yet to report its earnings, but it said in March that it expects North American oil producers to spend 10 percent less this year.
Related: China’s Newest Oil Hotspot Is In America’s Backyard

Yet another challenge for Texas drillers is starting to crop up. The enormous volumes of light sweet oil in Texas is surpassing the region’s ability to handle it. The lack of pipeline capacity forced steep discounts in recent years, but now producers are having to discount their oil because refiners can’t handle such abundant supplies of light oil. Reuters reports that much of the oil coming out of the Permian has an API gravity in the 50s, lighter than the 40 to 44 degrees for WTI.

Because much of the Gulf Coast refining capacity is equipped to handle medium and heavy oil – blends that have become scarcer due to outages and declines in Mexico, Venezuela, Iran and constraints in Canada – they are having trouble processing so much light oil. Reuters says that some ultralight oil coming out of the Permian is facing discounts of $1 to $2 per barrel below heavier grades.

Discounts of a few dollars due to a quality mismatch with refining capacity won’t be the death knell for shale drillers by any means, but it adds to the growing list of challenges for an industry already facing significant questions about its financial viability.

By Nick Cunningham of Oilprice.com
Save As Many As You Can

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 37245
    • View Profile
🛢️ The Firm Floor Under Oil Prices
« Reply #814 on: April 20, 2019, 12:59:16 AM »
As firm as Quicksand.  ::)

RE

https://oilprice.com/Energy/Energy-General/The-Firm-Floor-Under-Oil-Prices.html

The Firm Floor Under Oil Prices


Save As Many As You Can

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 37245
    • View Profile
🛢️ Saudi, Russia Oil Cooperation “Here to Stay”
« Reply #815 on: April 20, 2019, 03:34:47 AM »
What choice do they have?  They both need to keep the price of oil propped up.

RE

https://oilprice.com/Latest-Energy-News/World-News/Saudi-Russia-Oil-Cooperation-Here-to-Stay.html

Saudi, Russia Oil Cooperation “Here to Stay”
By Julianne Geiger - Apr 19, 2019, 5:00 PM CDT Saudi Aramco Plant


Russia and Saudi Arabia’s cooperation is set to continue, Ibrahim al-Muhanna, Saudi energy advisor, said on Friday, in hopes of allaying the lingering fears that Russia is itching to get out from under the deal that has restricted its crude oil production.

Russia’s finance minister last weekend hinted that Russia may fight America for its share of the oil market by bailing on the OPEC deal—even doing so lowers the price of oil. The statement sparked fear in the oil market that the agreement forged with OPEC was drawing to a premature close.

Russia has yet to decrease production to the level that it agreed to for its deal with OPEC and other nonOPEC signatories to the deal. While Russia was upfront about its inability to instantly reduce production to its quota under the deal, it said it would reach those levels by end of March or early April.

Russia’s crude oil production in April stood at 11.24 million barrels per day, still slightly off its promised level of 11.191 million bpd.

Today’s words may give the market more confidence in the cartel and company’s stick-to-itiveness to do whatever it takes to balance the oil market.

“Cooperation will continue between Russia and Saudi Arabia. It is the core of OPEC+ cooperation,” al-Muhanna said today at the International Oil Summit in Paris.

While this cooperation continues, Russia and Saudi Arabia are often at odds over publicly spoken words regarding the balance in the oil market and when the deal will again be reviewed. The current production cut deal is for now scheduled to end in June, with the two finding themselves once again with differing opinions on whether the deal should go beyond June, and if so, for how long and at what volume.

The signatories to the deal are for now taking a wait and see approach, with many geopolitical variables that need to be considered, mostly notably possible supply disruptions in Libya, Iran, and Venezuela.

Al-Muhanna said on Friday that he expected the oil market to be “well balanced”.

By Julianne Geiger for Oilprice.com
Save As Many As You Can

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 37245
    • View Profile
🛢️ Why Are Natural Gas Prices Crashing?
« Reply #816 on: April 22, 2019, 12:53:18 AM »
Who cooda node?  ???  :icon_scratch:

RE

https://oilprice.com/Energy/Gas-Prices/Why-Are-Natural-Gas-Prices-Crashing.html

Why Are Natural Gas Prices Crashing?

Why Are Natural Gas Prices Crashing?

Shrugging off low levels of storage, natural gas prices have continued to plunge.

The U.S. entered this past winter with natural gas supplies at a 15-year low. Paltry levels of gas in storage, just ahead of the peak winter demand season, pushed prices up to the highest level in four years. A cold snap in November led to a jump of around 30 percent in a week, an increase so fast and so quick that it forced at least one trading firm out of business. By mid-November, prices had climbed as high as $4.80/MMBtu.

 

Worryingly, the rest of winter still lay ahead. Gas supplies in storage were at their lowest levels in a decade and a half, and demand had steadily increased year-after-year as gas-fired power plants replaced shuttered coal plants. The surge in LNG exports and petrochemicals also amounted to a new source of demand that didn’t exist in its current form only a few years ago. To top it off, there were several rounds of extreme cold that swept across the North American continent, forcing millions of people to crank up the heat.

Yet, despite that backdrop, prices shockingly fell back rather quickly. A few weeks after the November price spike, Henry Hub spot prices dropped below $4/MMBtu. By February, prices fell below $3/MMBtu and remained there, with the market eyeing the end of the winter demand season. Now, with temperatures rising, prices recently plunged as low as $2.50/MMBtu.

However, the price decline comes even as storage remains remarkably tight. Natural gas inventories stood at 1,247 billion cubic feet (Bcf) as of April 12. Notably, despite the large increase of 92 Bcf from the week earlier, gas inventories were still 414 Bcf below the five-year average, and also at multi-year lows for the time of year.

 

(Click to enlarge)

Why are prices hovering close to their lowest levels in years, even though inventories have been decimated? Related: Artificial Intelligence Could Solve Nuclear Fusion's Biggest Problem

The answer largely comes down to record levels of production, with output continuing to rise on an ongoing basis. Analysts and gas traders have largely shrugged off low storage levels, expecting that the “injection season” – the months between April and November when demand is seasonally soft – will see storage levels fill up quickly, replenishing depleted stocks.

 

(Click to enlarge)

‘‘This is a very bad development here’’ for gas futures, Bob Yawger, director of the futures division at Mizuho Securities USA, told Bloomberg in an interview. ‘‘This is below the multi-year low and we are basically in no man’s land right now.’’

He we on to say ‘‘We have just a lot of gas production in this country,’’, adding that ‘‘Storage is in fact pretty far behind last year, but you can have as much gas as you want and as soon as you want it. That’s what’s killing the market.’’

The Marcellus and Utica Shales (classified by the EIA as the “Appalachia Region”) continue to pump out the nation’s largest amount of gas, with production above 30,000 million cubic feet per day. Output is expected to rise by another 353 million cubic feet per day in May, according to the EIA’s Drilling Productivity Report.

The Permian is adding huge volumes of new supply as well, a byproduct of the oil drilling frenzy. The Permian is now the U.S.’ second largest shale gas producer, expected to top 14,000 million cubic feet per day next month.

However, much of the Permian’s natural gas is going up in smoke because there is not enough pipeline capacity to move all of the gas to market.

The gas glut in the Permian has become so acute that prices recently crashed deep into negative territory. The state has relatively lax standards on flaring, allowing producers to simply burn off gas they can’t capture. Permian drillers were flaring gas at the rate equivalent to the entire residential demand in the state of Texas at the end of 2018, according to Bloomberg. Surely, the volumes of gas going up into the air have climbed since then.

Still, with the Permian and Marcellus adding record gas supply, along with a revived Haynesville Shale, the U.S. continues to break new records for gas output. That means that prices have little chance of climbing significantly higher in the short run.

By Nick Cunningham of Oilprice.com

Save As Many As You Can

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 37245
    • View Profile
🛢️ U.S. to Eliminate Iran Oil Waivers After May 2 Expiration
« Reply #817 on: April 22, 2019, 09:01:10 AM »
Gotta prop up those oil prices somehow!

RE

https://www.bloomberg.com/news/articles/2019-04-22/u-s-said-to-eliminate-iran-oil-waivers-after-may-2-expiration


Photographer: Ali Mohammadi/Bloomberg
politics
U.S. to Eliminate Iran Oil Waivers After May 2 Expiration
By Nick Wadhams
April 21, 2019, 4:48 PM AKDT Updated on April 22, 2019, 1:11 AM AKDT

    Announcement of Trump decision said to be planned for Monday
    Pompeo secures offset commitments from Saudi Arabia, U.A.E.

The Trump administration won’t renew waivers that let countries buy Iranian oil without facing U.S. sanctions, according to four people familiar with the matter, a move that roiled energy markets and risks upsetting major importers such as China and India.

U.S. Secretary of State Michael Pompeo planned to announce the decision Monday morning in Washington, said the people, who asked not to be identified discussing a plan that hasn’t been formally unveiled. The current set of waivers -- issued to China, Greece, India, Italy, Japan, South Korea, Taiwan and Turkey -- expire May 2.

The administration will also announce commitments from other suppliers, including Saudi Arabia and the United Arab Emirates, that will offset the loss of Iranian crude on the market, according to two of the people.
Who's Buying?

Asian importers took a big chunk of March-loading Iranian oil

Source: Bloomberg tanker tracking

Note: Europe and Syria bought zero Iranian oil for March

The decision not to renew the waivers is a victory for National Security Advisor John Bolton and his allies who had argued that U.S. promises to get tough on Iran were meaningless with waivers still in place. Pompeo and his team had been more cautious, though they also maintained that the market was well-enough supplied to ramp up pressure on Iran.

“The maximum pressure campaign could not be maximalist until the administration cut off Iran’s oil exports,” said Mark Dubowitz, the chief executive officer of the Foundation for Defense of Democracies and a supporter of additional sanctions on Iran. “With this decision, Iran’s economy will be under severe pressure as its hard currency earnings dry up and its foreign exchange reserves plummet.”
Oil Rises

The State Department declined to comment Sunday night. One of the people said that President Donald Trump had briefed Saudi Arabia’s Crown Prince Mohammed Bin Salman and U.A.E. Crown Prince Mohammed Bin Zayed on the decision in phone calls in the last few days. The U.S. decision was reported earlier by the Washington Post.

The price of Brent crude, the global oil benchmark, rose as much as 3.3 percent to $74.31 a barrel on Monday, the highest intraday level in almost six months.

Trump’s efforts to cut Iranian supplies have rocked oil markets in the past year. After running up above $85 a barrel in anticipation of sanctions, oil plunged to near $50 in the last three months of 2018 as the administration unexpectedly granted the waivers.
For more on the U.S. Iran oil waivers:

    How U.S. Ending Iran Waivers Could Affect Oil Markets and Beyond
    Oil Jumps as U.S. Is Said to End Iran Waivers After May 2 Expiry
    Iran Oil Buyers Stay on Sidelines as Waiver Decision Looms
    Trump Team Divided Over Iran Oil Waivers as Deadline Nears

China, the largest buyer of Iranian crude, reiterated its opposition to unilateral sanctions on Monday and accused the U.S. of reaching beyond its jurisdiction. “China’s cooperation with Iran is open, transparent, reasonable and legitimate, and should be respected,” Foreign Ministry spokesman Geng Shuang said in response to a question on the waivers at a regular briefing in Beijing. Geng didn’t elaborate on how China would respond.

Japan and South Korea, two of the U.S.’s closest allies and long-time buyers of Iranian oil, said they were aware of the reports about the waivers but didn’t confirm the decision. Japan’s chief cabinet secretary, Yoshihide Suga, said Monday in Tokyo that the government had kept in close contact with the U.S. and expressed the view that “there should be no damage to the activities of Japanese companies.”

An Indian foreign ministry spokesman declined to comment when reached by phone Monday. State-run Indian Oil Corp. -- the nation’s bigger refiner and top buyer of Iranian oil -- has been lining up alternative suppliers since last year to hedge against the loss of crude from Iran, according to a company official.

Trump withdrew from the 2015 nuclear deal between Iran and world powers almost a year ago and revived a range of sanctions against Iran and any countries doing business with the Islamic Republic. But he and his top advisers have been wary of disrupting energy markets and spurring a hike in U.S. pump prices. For that reason, they allowed waivers for Iran’s biggest buyers of crude, including China, India and Turkey.

One of the people said that some of the countries that had previously received waivers would be given a little more time to wind down purchases. The person described that not as a waiver but more as a brief grace period.
Zero Exports

Bolton and officials in the Energy Department have argued that it’s time for the administration to make good on its desire to push Iran’s oil exports to zero. While Pompeo’s team, led by Iran special representative Brian Hook, cautioned that a sudden removal of Iranian crude from the market -- about 1.1 million barrels a day -- could fuel volatility and lead to a price spike.

“We certainly aren’t looking to grant any exceptions or waivers,” Hook said in an interview this month with Kevin Cirilli on Bloomberg Radio’s “Sound On.” Oil markets are better supplied this year than last, and that “puts us in a better position to accelerate the path to zero,” he said.

The administration had also faced growing pressure from Iran hawks in the Senate, including Ted Cruz of Texas and Tom Cotton of Arkansas, to cut waivers to zero. Some senators had threatened to hold up administration nominees if the waivers stayed in place and argued that continuing to grant exemptions would be a direct contradiction of the Trump administration’s decision to leave the Iran deal.

The risk now is the decision could spike crude prices just as Trump begins to gear up to campaign for a second term. His administration had been wary of doing anything that could push crude prices above $70 a barrel.
Save As Many As You Can

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 37245
    • View Profile
What could possibly go wrong?

RE

https://www.politico.com/story/2019/04/22/trump-oil-prices-opec-legislation-1273467

A threat in Trump’s back pocket: Shaking up the global oil industry

Some lawmakers want to take on OPEC. Now they’re itching for Trump to get on board with an idea he backed before becoming president.

By ELI OKUN
04/22/2019 07:03 PM EDT


Taking a cue from President Donald Trump, U.S. lawmakers could soon have a new message to foreign oil producers: NO COLLUSION!

Trump regularly deploys his Twitter account to fight oil-price upticks, trying to browbeat the world’s oil-producing bloc — the Organization of the Petroleum Exporting Countries — into boosting production so prices will fall. His administration’s Monday announcement on ending sanctions waivers for buying Iranian oil risks pushing prices higher and could rev up congressional calls to push OPEC harder.

Now Trump’s saber-rattling on OPEC has oil producers and traders unnerved by the prospect he could back cartel-busting legislation that sends prices into a tailspin.

The No Oil Producing and Exporting Cartels Act, a bipartisan bill known as NOPEC, would allow the attorney general to bring an antitrust suit against the bloc — removing the sovereign immunity that currently protects OPEC countries. Lawmakers have been trying and failing to turn it into law for two decades.

Trump’s badgering of OPEC has breathed new life into the effort and renewed attention on it from Wall Street to Texas shale fields to OPEC’s Vienna headquarters.
Morning Energy newsletter

The source for energy and environment news — weekday mornings, in your inbox.
Email

By signing up you agree to receive email newsletters or alerts from POLITICO. You can unsubscribe at any time.

“We are hostage to other countries’ decisions based on their national interests, not on ours,” retired Adm. Dennis Blair, director of national intelligence under Obama and a NOPEC proponent, said recently.

Long before he became president, Trump openly endorsed the idea in his 2011 book “Time to Get Tough.” Assistant Attorney General Makan Delrahim, who heads the Justice Department’s antitrust division, backed NOPEC in a 2008 op-ed. The DOJ, which would have the ultimate power to bring a suit, hasn’t taken a position on the bill and declined to comment.

Trump closely tracks oil prices — which are featured regularly on cable TV business programs — and has tweeted frustrations with OPEC nine times over the past year, usually whenever price spikes push the threat back into headlines. He’s tweeted another seven times about oil prices and production more broadly.

His oil fixation appears to come from a recognition of oil’s pivotal role in the economy: Rising gasoline prices, which can quickly burn through consumer pocketbooks, have been associated with most U.S. recessions since World War II. Yet two nations Trump has engaged with most — Russia and Saudi Arabia — are pivotal in pushing prices higher.

The Trump tweets are turning heads around the world. They’re often moving markets, at least for a day or two. And Trump has helped reanimate the OPEC bloc as one of American politicians’ favorite international boogeymen — in part a holdover from dynamics of the 1970s and ’80s that still underlie many of the president’s political instincts.

Oil experts are split over what happens next. They’re waiting to see if Trump will finally weigh in on NOPEC from the White House — particularly if prices rise much more over a short time period. Those two changes are “the matches that could set the thing afire,” said Bob McNally, president of consulting firm Rapidan Energy Group.

Heading into Trump’s re-election campaign, the national average price of gas currently sits under $3 per gallon. It’s been rising gradually through most of 2019, though oil prices are still below their most recent peak in early October. Crucial Midwestern swing states have seen some of the biggest hikes this year.

Some analysts predict that if it breaches the $3 threshold, pain at the pump will surge into political salience. Trump’s political team has been focused on touting the country’s extended economic expansion, on track to become the longest in history this summer, as a central reelection messaging plank.

Politicians have been happy to cast OPEC as the central culprit behind high gas prices for decades. Many still do.

But that might not reflect reality as cleanly as it once did. U.S. oil production has been surging during the Obama and Trump administrations, consistently breaking old records.
Gas pump

Energy
Trump gambles with gas prices as he goes after Iran

By NAHAL TOOSI and BEN LEFEBVRE

As the energy landscape has swung toward U.S. shale production, what’s best for American businesses and consumers isn’t as clear as it was during the 20th-century OPEC battles.

“The ideal oil price for the U.S. now may be a Goldilocks scenario of not too high, not too low,” said Jason Bordoff, director of Columbia University’s Center on Global Energy Policy.

Enter NOPEC. It’s a debate that scrambles the usual partisan battle lines and dances across nearly every foreign policy flashpoint.

Supporters view the bill as a fundamental free-market measure, applying the principle of fighting anti-competitive corporate collusion to countries that are acting like businesses. They say oil markets should be left to supply and demand — not manipulated by a group that has wielded significant control over prices for decades.

Even momentum toward passage could already be giving the U.S. leverage. “I think oil prices would be $10 higher but for the fact that this bill is threatening,” said Amy Myers Jaffe, director of the program for energy security and climate change at the Council on Foreign Relations.

An array of NOPEC opponents — including the U.S. Chamber of Commerce, domestic oil interests and OPEC member nations — warn that the legislation would plunge the oil world into chaos, unsettling markets where OPEC has recently acted as a stabilizing force. Price spikes might follow, but so could a crash in prices not seen in decades.

That would ravage the growing U.S. oil industry, which last year leapt ahead of Russia and Saudi Arabia to become the largest producer of crude oil in the world and supports millions of jobs.

Opponents also worry that NOPEC would upend fragile diplomatic relations with Saudi Arabia and other states in the bloc.

OPEC is signaling concern. The bloc reportedly has been considering its first-ever major influence campaign in the U.S. to try to improve its public image. OPEC officials have warned Wall Street about risks from NOPEC. Russia in December even cited the bill as one reason it didn’t want to pursue more formal integration with OPEC.

NOPEC has appeared to divide the Trump administration, which has been mulling it internally through an interagency review process for months.

Energy Secretary Rick Perry warned in February that the bill could have ramifications “way past its intended consequences.”

Many experts expect the ultimate decision could emerge in a Trump tweet. “That would be a pretty straightforward catalyst,” said Kevin Book, managing director for research at ClearView Energy. “This is a bill that’s going to be difficult for the Congress to stop.”

NOPEC sailed out of the House Judiciary Committee without objection in February — a rare occasion for bipartisan bonhomie, as Rep. David Cicilline (D-R.I.) called it “a tool to speak softly and carry a big stick.”

“Ultimately this legislation allows us to fight back,” said Rep. Steve Chabot (R-Ohio), the bill’s House sponsor.

But the bill has yet to come up for a vote on the House floor or in Senate committee. The office of Senate Judiciary Chairman Lindsey Graham (R-S.C.) declined to comment.

Several experts told POLITICO that vocal support from bands of Judiciary Committee members hasn’t historically extended up the ranks. And Trump’s predecessors consistently threatened vetoes. Even when NOPEC has progressed — it passed both chambers in 2007 — the bill never had presidential support.
President Donald Trump talks to Florida Gov. Ron DeSantis

Energy and Environment
The confidential oil plan that could cost Trump reelection

By ZACK COLMAN and BEN LEFEBVRE

“House and Senate leadership are not enthusiastic about this thing,” McNally said. But if Trump backed it, “is Mitch McConnell going to die on NOPEC Hill? I don’t think so.”

Some lawmakers who favor NOPEC view it as a way to punish Saudi Arabia if Trump won’t otherwise take on Crown Prince Mohammad bin Salman, who is seen as a Trump administration ally.

But a tangled web of foreign policy considerations is at play. Dangling over the debate are two impending deadlines and several geopolitical crises, such as chaos in Libya.

The Trump administration’s sanctions on Iranian oil have tightened oil supplies, helping drive prices up. The announcement this week — ahead of an early May deadline — that the U.S. will end waivers for several countries that are still buying Iranian oil could nudge prices even higher. Iranian officials in return threatened to close the Strait of Hormuz, which is crucial for moving oil.

Already, oil prices rose Monday on the news, though Trump tweeted a rare message of cooperation with OPEC to try to tamp down concerns: “Saudi Arabia and others in OPEC will more than make up the Oil Flow difference in our now Full Sanctions on Iranian Oil.” That coordination, if it pans out and tames prices, could spell bad news for boosters of the NOPEC legislation.

In June, OPEC and allies like Russia will convene in Vienna. There they’ll debate whether to continue supply cuts that reduced output by more than 1 million barrels a day.

Then there’s the crisis in Venezuela. The ongoing political tumult and massive humanitarian disaster under Nicolás Maduro’s authoritarian government had already shrunk oil output — and then the Trump administration’s sanctions, aimed at forcing Maduro out, hit.

Even as new foreign policy developments alter the NOPEC calculus daily, there’s plenty of skepticism that Trump will actually go out on a limb and endorse it — without which it might be difficult for backers to muscle the bill past congressional leaders.

In the administration, “the reticence is because of just how big of a market impact this [could] have,” said Varsha Koduvayur, a senior research analyst on the Gulf states at the Foundation for Defense of Democracies, a Washington think tank. It would be “unprecedented to strip the sovereign immunity that has guarded OPEC members” for six decades, she added.

And lawmakers might prefer other avenues to punish Saudi Arabia for its perpetuation of Yemen’s humanitarian disaster and the murder last year of Washington Post columnist Jamal Khashoggi. Both chambers recently tried to force Trump’s hand on support for the Yemen war.

But with ties to so many volatile countries and mercurial political actors, the NOPEC debate could bubble above the surface at any moment.

“In today’s world,” Jaffe said, “it’s very hard to predict what could blow up.”
Save As Many As You Can

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 37245
    • View Profile
🛢️ Natural Gas: A $1 Handle Is Coming
« Reply #819 on: April 23, 2019, 12:16:30 AM »
Who cooda node?

RE

https://seekingalpha.com/article/4255780-natural-gas-1-handle-coming

Natural Gas: A $1 Handle Is Coming

 

Natural Gas: A $1 Handle Is Coming

Apr. 22, 2019 3:59 PM ET
|
23 comments
|
Includes: BOIL, DGAZ, GAZB, KOLD, UGAZ, UNG, UNL
Anthony Lerner
Momentum, contrarian, arbitrage, commodities
Summary

I believe the $2.50 floor will break this week.

I expect NG prices will go under $2.

Natural gas production is soaring.

Gas prices in West Texas are already $0.

An extended period of low prices is necessary to spur new demand.

Natural gas prices are going to head lower this spring. I believe NG prices will soon be under $2.00. Historically, natural gas at $2.50 has been a decent bottom. A look at the 20-year chart below shows that since June of 2016, NG prices have been above $2.50 and have held every time they flirted with $2.50. In fact, going all the way back to 1999, NG prices have only been below $2.50 four times and only briefly each time. NG has almost never been below $2.00 in the last 20 years. This is all about to change. I believe NG prices will break significantly below $2.50 this week. I also think that NG will spend significant amounts of time below $2.00 over the next couple of years. The snarky well-worn Wall Street adage is that nothing cures high prices like high prices. The opposite is also true: nothing cures low prices like low prices.

Natural Gas production is soaring

The chart below tells it all. Since September 2016, dry gas production has risen from 70 BCF per day to nearly 90 BCF per day. Demand growth is good, but not enough. LNG exports remain largely a dream. There are only two functioning LNG export facilities in the USA. Others are coming, but production growth is far outpacing any export capacity.

Data used in above chart is from the EIA

Associated gas is a big problem. In the Permian basin and Eagle Ford shale, we generally consider that the producers are drilling for oil. Strictly speaking, that is true. Dedicated gas rig counts have been steady nationwide at around 185 for a few years now. Oil rig counts are over 1,000. In the Permian and Eagle Ford, every well produces oil AND natural gas. The page below published by the EIA illustrates the problem. The first two charts are crucial. Each new well produces 600 barrels of oil per day. EACH NEW WELL ALSO PRODUCES 1.2 million cubic feet of gas per day. There are 500 rigs operating in the Permian alone. That is a lot of associated gas. An overwhelming amount.

This is a picture of West Texas gas prices at WAHA hub over the last couple of years.

https://s3.amazonaws.com/ipiApiProduction/bidWeekImage/WTXWAHA_Apr2019_c1a318a0-bcb0-4499-b8bd-589395ab02bf.png

Note that gas prices have been under $2 in west Texas since 4Q 2017! Recently gas prices hit ZERO - $0.00 - in West Texas. In fact, some producers had to actually PAY to get their gas taken away. This problem is not going to go away. It will get worse. The thousands of Drilled Uncompleted wells in the Permian basin represent several BCF per day of gas waiting to come online. This adds to soaring production from all the other gas fields nationwide. The West Texas low-priced gas phenomenon will spread and drive natural gas prices nationwide under $2.

What this means for prices and investments

Natural gas prices will establish a new lower range for a few years; likely $1.50-3.00. There will be volatility and price spikes as always during hot summers and cold winters, but the "base case" will be low prices and supply outstripping demand. This is bad news for gas-centric independent producers. Some will not survive. On the other hand, M&A activity should really heat up. Chevron (NYSE:CVX)/Anadarko (NYSE:APC) is only the beginning. Big producers will be able to pick up natural gas assets from weaker companies at bargain prices. Furthermore, low natural gas prices will be generally good for the economy nationwide. Electricity prices should trend lower since half our power is produced from natural gas. Heavy industry will also benefit since the USA has the cheapest energy in the world now. A period of low prices will spur new demand from multiple sources both internal and external to the USA. Nothing cures low prices like low prices. Plan for $1 natural gas.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Save As Many As You Can

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 37245
    • View Profile
The Blowback begins!

RE

https://www.thisisinsider.com/oil-prices-trump-tightens-squeeze-on-iran-2019-4

Oil prices soar after Trump tightens his squeeze on Iran, while Tehran threatens to close one of the world's most important shipping lanes in retaliation
Theron Mohamed


trump rouhani iran 2x1 Michael Gruber/Getty Images; Olivier Douliery-Pool/Getty Images; Samantha Lee/Business Insider

    Oil prices jumped to a six-month high on Tuesday after the US government decided not to renew waivers due to expire in May for buyers of Iranian crude, according to Bloomberg.
    Without the waivers, nations such as China, India, and Turkey will face sanctions if they continue purchasing oil from the OPEC cartel's fourth-largest producer after May 1.
    RBC Capital Markets anticipates a loss of 700,000 to 800,000 barrels a day without the waivers.
    In retaliation, Iran has threatened to close the Strait of Hormuz, a crucial shipping lane in the global oil trade and the only seaborne route out of the Persian Gulf.
    Follow the price of oil live at Markets Insider.

Oil prices jumped to a six-month high on Tuesday after the US government decided not to renew waivers that have spared countries that buy Iranian crude oil from US sanctions.

The Trump administration issued waivers to countries such as China, India, and Turkey last year to keep oil prices from rising in a tight market, according to The Guardian. Those nations are now set to face sanctions if they continue purchasing oil from the OPEC cartel's fourth-largest producer after May 1.

Iran has begun discussions with regional partners to minimize damage to its oil exports, according to Bloomberg. It has also threatened to close the Strait of Hormuz, a crucial shipping lane in the global oil trade and the only seaborne route out of the Persian Gulf.

RBC Capital Markets anticipates an output loss of 700,000 to 800,000 barrels a day after Trump removed the waivers, but Saudi Arabia has promised to help fill the supply gap.

Brent crude and West Texas Intermediate have surged more than 35% this year as producers have tightened supply and disruptions in Venezuela, Nigeria, and Libya have restricted output, according to Bloomberg.

There's a "very real prospect of an abrupt spike in prices if there is not enough supply to fill the gap," said Neil Wilson, the chief market analyst for Markets.com.

"It is no guarantee that Saudi Arabia can simply open the taps, moreover having made that mistake last year ahead of the sanctions being imposed, the country will seek clear evidence that it needs to raise output before doing so."

Any increase in oil prices, however, might prove to be temporary.

"I do not necessarily think that ending the Iranian oil export is a long term bullish scenario for the oil market," said Naeem Aslam, the chief market analyst at TF Global Markets.

"The fact is that this has further suppressed the odds of OPEC+ countries [keeping] the oil supply curbed in their next meeting."

Here's the market roundup as of 9:46 a.m. in London (4:46 a.m. ET):

The oil news sent Brent crude up 0.4% to about $74.30 and WTI crude up 0.7% to $66.

Asian stocks were mostly down. The Shanghai Composite slid 0.5%, the SZSE Component fell 1%, and Hong Kong's Hang Seng dipped 0.3%.

European markets were mixed, with Germany's DAX and the Euro Stoxx 50 down about 0.2% while Britain's FTSE 100 rose 0.2%.

US markets were set to open flat, as the Dow, the S&P 500 and the Nasdaq all traded within 0.1% of their opening level.
Save As Many As You Can

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 37245
    • View Profile
🛢️ Apache Shuts In Permian Gas Production As Prices Crash
« Reply #821 on: April 25, 2019, 02:25:39 AM »
Who cooda node?

RE

https://oilprice.com/Latest-Energy-News/World-News/Apache-Shuts-In-Permian-Gas-Production-As-Prices-Crash.html

Apache Shuts In Permian Gas Production As Prices Crash
By Tsvetana Paraskova - Apr 23, 2019, 3:00 PM CDT


Apache Corporation said on Tuesday that it had temporarily started to delay natural gas production at its Alpine High play in the Permian in late March to mitigate the impact of the extremely low prices at the Waha hub in West Texas.

Currently, the company is deferring around 250 million cubic feet (MMcf) per day of gross gas production.

Natural gas prices at the Waha hub plummeted to record low negative levels in early April, as pipeline constraints and problems at compressor stations at one pipeline stranded gas produced in the Permian.

Spot prices at the Waha hub plunged to a record low of minus $4.28 per million British thermal units (MMBtu) in the first week of April.

Gas production in the Permian has been rising in lockstep with crude oil production, and even though gas takeaway capacity has attracted less media attention, pipeline constraints for natural gas are similar to those of crude oil pipeline capacity.

The natural gas takeaway capacity constraints have resulted in more gas flaring in the Permian on the one hand, and in a record-high spread between the Waha gas hub price and the U.S. benchmark Henry Hub in Louisiana, on the other hand.

“We will closely monitor daily pricing and return our gas to sales when it is profitable to do so. We are carefully managing these actions so there is no adverse impact on long-term wellbore integrity or reservoir productivity and look forward to returning this production to market as soon as practical,” John J. Christmann IV, CEO and president of Apache Corporation, said in a statement today.

Apache contracted two years ago more than 1 billion cubic feet (Bcf) per day of long-term, firm takeaway capacity from the Permian Basin on Kinder Morgan’s pipeline projects Gulf Coast Express and Permian Highway, Apache said, noting that Gulf Coast Express is expected to be in service later this year, while Permian Highway is set to start operations next year.

“We anticipate relatively wide and volatile natural gas price differentials in the Permian Basin until the Gulf Coast Express pipeline enters service. As a long-term returns-focused company, we know that production deferrals such as this will improve financial performance despite the impact on near-term volumes. This is the proper approach from both an environmental and economic perspective relative to other industry practices such as flaring or selling associated gas at a negative or unprofitable price,” Apache’s Christmann said.

By Tsvetana Paraskova for Oilprice.com
Save As Many As You Can

Online K-Dog

  • Global Moderator
  • Sous Chef
  • *****
  • Posts: 3034
    • View Profile
    • K-Dog
the oil stash
« Reply #822 on: April 25, 2019, 07:15:29 AM »
Quote
This is the proper approach from both an environmental and economic perspective relative to other industry practices such as flaring or selling associated gas at a negative or unprofitable price,”

Can't argue against that!

Which leads me to contemplate the Drake equation.  What if a race of aliens had reached a point of cultural advancement equivalent to 17th century Europe but had only enough coal to get a tight oil industry going as they had no cheap oil at all with which to conduct wars and other foolishness.  They could still be around perhaps living long and happy lives to age 1200 earth years by now I'll guess.



The last two terms must be refined to account for civilizations which drown in their own poop and pee as ours will.  Those unrefined terms are why we have made no contact.

This could lead to the KDOG terms.

The number of civilizations which can cope with environmental degradation due to overpopulation.

The number of civilizations which can cope with resource depletion issues due to                                     .

You fill in the blank.  This is a quiz.


Under ideal conditions of temperature and pressure the organism will grow without limit.

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 37245
    • View Profile
🛢️ Why Your Gasoline Won’t Take You As Far As it Used To
« Reply #823 on: May 05, 2019, 12:56:32 AM »
This like getting those 5oz cans of Tuna at the same price you used to get 6oz.  Most J6Ps don't notice it.  I do.

RE

https://oilprice.com/Energy/Energy-General/Why-Your-Gasoline-Wont-Take-You-As-Far-As-it-Used-To.html

Why Your Gasoline Won’t Take You As Far As it Used To
By Robert Rapier - May 04, 2019, 10:00 AM CDT


Over the weekend, I saw a passing reference on Twitter to the declining energy content of gasoline. Intuitively I know this to be correct for reasons I discuss below. But the poster linked to data from the Energy Information Administration (EIA) that I hadn’t previously seen.

The EIA doesn’t directly tabulate the energy content of gasoline. But they do provide two pieces of data that let us calculate it ourselves from two relevant tables in the April 2019 Monthly Energy Review.

Table 3.5 provides Petroleum Products Supplied by Type in thousands of barrels per day, while Table 3.6 provides Heat Content of Petroleum Products Supplied by Type in trillion Btus per year.

From the annual numbers, doing the appropriate conversions (which includes accounting for leap years) provides the energy content of gasoline, in BTUs per gallon, since 1949. What we find is that the EIA reported a constant energy content of gasoline from 1949 to 1992 of 125,071 Btu/gallon. I have always typically used 125,000 Btu/gal as the standard value for gasoline.

The energy content of gasoline

Starting in 1993, the EIA shows the energy content start to decline. The decline accelerates in 2006. What happened then? I have seen two explanations floated.

I have heard some suggest that the shale oil boom in the U.S., which created an abundance of light oil, ultimately lowered the BTU value of gasoline. This is unlikely for a couple of reasons.

First, to change the energy content of gasoline you must change the composition. As I explained in a previous article, adding butane is a recipe change that takes place seasonally. It impacts the vapor pressure of the gasoline, but it also impacts the energy content. Butane has an energy content of 103,000 BTU/gal, so the more butane, the lower the energy content of the gasoline blend. This means that winter gasoline, which contains more butane, has a lower energy content.
Related: Overly Bullish Hedge Funds Set The Stage For Oil Price Drop

But the other reason that shale oil can’t be the culprit is that U.S. oil production didn’t start to move higher until 2009. By then, the EIA was already reporting that U.S. gasoline’s energy content had fallen to 121,167 BTU/gal.

Here’s the real culprit:


The impact of ethanol blending on the energy content of gasoline

The 2005 energy bill gave us the Renewable Fuel Standard (RFS), which mandated that an increasing amount of ethanol had to be blended into the fuel supply. As the mandate ramped up, so did ethanol production. In turn, the energy content of gasoline declined.

As was the case with butane blending, adding ethanol is fundamentally changing the recipe of gasoline. The energy content of ethanol is 76,000 Btu/gal, so as ethanol blending ramped up, the energy content in a gallon of gasoline fell.

But we also know ethanol is the reason because the EIA table actually includes the footnote: “Beginning in 1993, also includes fuel ethanol blended into motor gasoline.”

To be clear, it’s not a huge decline in energy content. It’s about 4% across the national gasoline pool (~140 billion gallons per year), and it is masked somewhat by the rising fuel economy standards of automobiles.

Falling energy content in gasoline has a couple of implications. One is that most vehicles will now require more gasoline to travel the same distance. In other words, fuel efficiency will have declined along with gasoline’s energy content.
Related: Oil Falls On Soaring U.S. Crude Inventories

But the other is that today’s daily consumption of 9.3 million barrels per day of gasoline is equivalent in energy terms to the consumption of 8.9 million barrels per day 20 years ago. Or, another way to think of that is that if we were consuming the same number of gallons of gasoline as we were 20 years ago, our energy consumption would have declined.

I will note one more item in conclusion. It is clear, given the consistency of the EIA data, that they are just calculating an energy content. If they were actually taking measurements, we would see more variability.

Further, I looked at the monthly values over the past year, and the EIA numbers for the energy content of gasoline are the same in summer and winter. This isn’t correct, which means they are simply using calculated numbers that average the energy content out over the entire year.

By Robert Rapier
Save As Many As You Can

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 37245
    • View Profile
Well Magoo, you've done it again!

Wrecking the economy is a first class ticket to getting his ass booted out of office.  I can't imagine the Koch Bros are too happy with this stunt.

RE

Business News
May 5, 2019 / 4:50 PM / Updated 2 hours ago
Oil prices tumble by more than 2 percent after Trump announces new tariffs on Chinese goods
Henning Gloystein


SINGAPORE (Reuters) - Oil prices tumbled by more than 2 percent on Monday after U.S. President Donald Trump on Sunday said he would sharply hike tariffs on Chinese goods this week, risking derailing months of trade talks between the world’s two biggest economies.

U.S. West Texas Intermediate (WTI) crude futures were at $60.44 per barrel at 0032 GMT on Monday, down $1.50 per barrel, or 2.4 percent, from their last settlement.

Brent crude oil futures were at $69.34 per barrel, down $1.51 per barrel, or 2.1 percent, from their last close.

Trump on Sunday said on Twitter he would drastically hike U.S. tariffs on Chinese goods this week, pulling down global financial markets, including crude oil futures.

The Wall Street Journal reported that Beijing is considering cancelling all trade talks with Washington.

“Trump has taken the proverbial sledgehammer to the walnut this morning ... by threatening to slap a 25 percent tariff on a mind-boggling $525 billion of Chinese goods by this Friday,” said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.
Save As Many As You Can

 

Related Topics

  Subject / Started by Replies Last post
Oil Price Crash!!!

Started by RE « 1 2 ... 10 11 » Podcasts

162 Replies
38974 Views
Last post January 15, 2015, 05:57:20 AM
by MKing
1 Replies
1278 Views
Last post December 15, 2014, 05:33:25 AM
by MKing
The Crash of 2015: Day 29-30

Started by Thomas Lewis Energy

0 Replies
920 Views
Last post February 03, 2015, 01:08:53 AM
by Thomas Lewis