Lybia, Nigeria causing problems for OPEC… WSJ

by Jim Colburn • Friday, September 22, 2017

 From Benoit Faucon, Summer Said and Sarah Kent at the Wall Street Journal:”

“Libya and Nigeria have added 550,000 barrels a day of crude-oil production since October, the month OPEC uses as a benchmark for its cuts, according to figures from the International Energy Agency.

That new output wipes out almost half of the cuts achieved by OPEC’s other members over 1.2 million barrels a day, over 1.2 million barrels a day, even more than they promised last year to slash.”

I’m interested the comment by Ian Taylor:

However, Libya and Nigeria are pumping out so much new oil that, combined with robust output from the U.S., they are keeping the world well supplied with crude and weighing down prices, said Ian Taylor, chief executive of Vitol Group, the world’s largest independent oil trader.

Mr. Taylor said he doesn’t see oil reaching $60 a barrel this year. “I would be very surprised to see it with a six in front of it before the end of the year,”he said. “I don’t think it’s going to happen.”

Currently the WTI crude oil option with the most open interest is the Dec $60 call, with 64,201 open… The Dec 45 put has over 50,000 contracts open… These active strikes seem to have traced out an expected trading range for WTI…

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US vs emerging stock markets… Bloomberg

by Jim Colburn • Thursday, September 21, 2017

Here is the link

“Stock prices in emerging markets have historically reflected that higher growth. The Emerging Markets Index outpaced the S&P 500 by 3.8 percentage points annually from its inception in January 1988 to August 2007. But they, too, have stumbled in recent years. The S&P 500 has beaten the Emerging Markets Index by 4.9 percentage points annually over the last 10 years through August.”

 

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Brent/WTI spread an incentive for US oil exports… WSJ

by Jim Colburn • Thursday, September 21, 2017

Alison Sider and Lynn Cook at the Wall Street Journal discuss the widening Brent/WTI crude oil price spread here

“A difference of at least $4 makes it attractive for a refiner in countries like China or South Korea to buy oil from shale producers in Texas and North Dakota, said R.T. Dukes, an oil expert with consulting firm Wood Mackenzie.

“Get to a $4 spread and you can take it anywhere in the world,” he said.”

The spread moved above $6 and is now at $5.88…  Here is the chart:

Do read the whole thing: https://www.wsj.com/articles/lower-u-s-oil-prices-are-a-shot-in-the-arm-for-crude-exports-1505986208?tesla=y

 

 

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September Oil Market Pod Cast…

by Jim Colburn • Wednesday, September 20, 2017

Recorded Friday, September 15th…

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Buffet wins bet…

by Jim Colburn • Monday, September 18, 2017

Alex Tabarrok at Marginal Revolution quotes the NY Post:

“NYPost: The Oracle of Omaha once again has proven that Wall Street’s pricey investments are often a lousy deal. Warren Buffett made a $1 million bet at end of 2007 with hedge fund manager Ted Seides of Protégé Partners. Buffett wagered that a low-cost S&P 500 index fund would perform better than a group of Protégé’s hedge funds.

Buffett’s index investment bet is so far ahead that Seides concedes the match, although it doesn’t officially end until Dec. 31.

The problem for Seides is his five funds through the middle of this year have been only able to gain 2.2% a year since 2008, compared with more than 7% a year for the S&P 500 — a huge difference. That means Seides’ $1 million hedge fund investments have only earned $220,000 [through 2016] in the same period that Buffett’s low-fee investment gained $854,000.”

(The interesting part is I thought I was the only one left who still reads the NY Post…)

Here is a chart from Carpe Diem which compares hedge fund returns to the S&P:

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Jarrett Renshaw, Reuters, on diesel supplies…

by Jim Colburn • Sunday, September 17, 2017

Jarrett Renshaw, Reuters, discusses diesel supplies here

“Thanks to surprising summer demand, particularly from exports, inventories of diesel, jet fuel and heating oil were heading into the busy winter at their lowest levels in three years….

Harvey’s effects cost refiners even more production of fuel, raising the possibility of shortages and higher prices if the United States suffers another major disruption or an unexpectedly frigid winter….

U.S. distillate stocks are now at three-year lows for this time of year, and 5.2 percent below their historical average…

The inventory also sets the stage for a bullish run in the diesel market. The 3-2-1 crack spread CL321-1=R, a measure of the profit refineries make from converting three barrels of oil into gasoline and diesel, is at $20.63 a barrel, the highest level seasonally since 2012, and more than $6 above the average during that time.”

Here are distillate stocks compared to the 5 year range from the EIA:

 

 

 

 

 

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Traders Make Money as Oil Prices Go Nowhere… WSJ

by Jim Colburn • Sunday, September 17, 2017

From Stephanie Chang, WSJ:

“Many traders are adapting by pursuing what is known on Wall Street as a mean-reverting strategy, generally one that wagers prices will fall when oil is above a certain level and rise when it declines below a threshold.”

 


There is always a “however”:

“Even practitioners of the mean-reversion trade warn that it can be hazardous. Such trades typically make up a small portion of Mr. van Essen’s fund activity, he said, but his use of it has increased to more than 50% over the past year.

“I don’t think it’s going to last” more than another year, said Mr. van Essen. “Commodities are changing and you have to adapt.””

 

 

 

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How gasoline gets to Florida… EIA

by Jim Colburn • Friday, September 15, 2017

In “Today in Energy” the EIA shows how gasoline gets to various parts of Florida… Here is a map:

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US refinery runs in a chart…

by Jim Colburn • Friday, September 15, 2017

4 week average refinery runs from “This Week in Petroleum“:

Here is a longer term perspective:

 

 

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Power generation from wind during Harvey… EIA

by Jim Colburn • Wednesday, September 13, 2017

In case you were wondering:

https://www.eia.gov/todayinenergy/detail.php?id=32892

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