US Oil Production… EIA

by Jim Colburn • Monday, April 30, 2018

Today’s release of the EIA’s Monthly Production Report shows record levels of production (here):

Here are comparisons to last month and last year:

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Scott Sheffield, Columbia Energy Exchange, Permian Basin Economics….

by Jim Colburn • Monday, April 30, 2018

Another excellent podcast from the Columbia Energy Exchange here

“U.S. oil production from shale will reach nearly 7 million barrels a day in May – roughly the same amount as the entire U.S. production of oil five years ago. Nearly half of this shale output will come from the Permian Basin, the stretch of shale in west Texas and southeast New Mexico. To understand how the shale revolution is impacting the U.S. energy industry and what’s in store for the future, host Bill Loveless sits down with Scott Sheffield on a new episode of Columbia Energy Exchange. Scott is the chairman and former CEO of Pioneer Natural Resources, a Texas-based independent and a leader in shale development in the Permian Basin. He is also an advisory board member at the Center on Global Energy Policy. Scott and Bill discuss the phenomenal growth in the Permian and other shale regions, capital discipline among independent producers, and the challenges they face in terms of insufficient pipeline capacity and rising costs. They also touch on U.S. energy policy, including the Trump administration’s efforts to deregulate aspects of the oil industry and efforts to expand production offshore and on federal lands.”

 

https://itunes.apple.com/us/podcast/columbia-energy-exchange/id1081481629?mt=2

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Big Oil Firms Holding Back on Drilling… WSJ

by Jim Colburn • Monday, April 30, 2018

Bradley Olson and Sarah Kent, WSJ, write that oil companies are holding back on drilling despite higher oil prices, here …

”The wary response from the world’s biggest producers comes as a global oil glut that has hung over the industry for the past four years finally appears to be withering away. Without stepped-up spending on new oil production, the International Energy Agency warns, the world could flip from abundance to supply crunch by 2020.

A lack of investment is “potentially storing up trouble for the future,” the Paris-based agency said last month.”

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Commodities and geopolitics… The Economist

by Jim Colburn • Monday, April 30, 2018

The Economist has a nice article summarizing the effect of comments and actions from Washington on commodity prices here

”Some oil bulls say Mr Trump’s nomination of Mike Pompeo as secretary of state and his appointment of John Bolton as national security adviser—both Iran hawks—have made sanctions likelier. These could remove at least 500,000 barrels a day of Iranian oil from a market that is already looking tighter because OPEC and non-OPEC producers have restrained output. Abhishek Deshpande, head of oil research at J.P. Morgan, says such sanctions could raise average annual oil prices by about $10 a barrel (Brent crude has been trading near $75). Additional measures threatened against Venezuela if elections on May 20th are not free and fair could squeeze the market yet more.”

Some of this, of course, is already in the market…

And, note the Bloomberg price index:

 

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Josh Angrist, econometrics, online course… Marginal Revolution

by Jim Colburn • Friday, April 27, 2018

I’m looking forward to this:

https://marginalrevolution.com/marginalrevolution/2018/04/josh-angrist-joins-mru.html

 

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‘Mexico First’, US Oil, Natural gas… NY Times…

by Jim Colburn • Friday, April 27, 2018

Clifford Krauss does an excellent job explaining energy policies of Mexico’s leading candidate for president and implications for the US here… Fatih Barol is quoted:

“”To make a U-turn from the current reforms would be detrimental to the Mexican economy,” said Fatih Birol, executive director of the International Energy Agency.”  (Do read the whole thing…)

Here is an excellent look at crude and natural gas trade between countries:

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Relative value, HO/RB….

by Jim Colburn • Thursday, April 26, 2018

I like to check in on the “days supply” for distillates and gasoline updated weekly in This Week In Petroleum by the EIA, here…  Gasoline looks similar to last year, distillates look a bit tighter… Note the bottom chart (from Barchart.com) which shows the Rbob/diesel futures spread (which is my colleague Andy Lebow’s “widowmaker” trade… every market has a widow or widower maker, think March/April natural gas, short vix, etc..), pretty much showing what we see in the days supply pictures…

 

 

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The new Chinese futures contract is showing some life…

by Jim Colburn • Thursday, April 26, 2018

The EIA’s This Week in Petroleum compares the new Chinese oil futures contract to the older WTI, Brent and Oman contracts here

“After one month of trading, the Shanghai futures contract for September 2018 delivery already has more open interest and trading volume than the Oman contract for September delivery. The Shanghai futures contract’s open interest is smaller than that for Brent and WTI, but trading volume has been high compared with the number of contracts outstanding, indicating a high amount of trading turnover (Figure 3).”

The Shanghai contract is denominated in yuan:

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WTI/Brent spread options were active yesterday…

by Jim Colburn • Wednesday, April 25, 2018

WTI/Brent cso’s were very active yesterday especially in June puts… Note the decline in open interest, which indicates traders liquidating positions…  Here is a CME picture of activity:

From Barchart.com, here is a chart of the June Brent/WTI spread:

 

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Permian Basin is growing… Bloomberg

by Jim Colburn • Wednesday, April 25, 2018

Yeah, old news, but here is a reminder from Bloomberg:

And the article suggests the Permian could grow into the largest oil field in the world….

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