ERCOTexas surpassed all-time peak load in July… EIA

by Jim Colburn • Tuesday, July 31, 2018

Here is what happened to the price:

The link is here:  https://www.eia.gov/todayinenergy/detail.php?id=36775

 

 

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A bearish case for oil… Ed Morse/Financial Post

by Jim Colburn • Monday, July 30, 2018

Ed Morse, Citigroup, makes a case for lower oil prices in an interview with the Financial Post, here

Here is one takeaway:

”“We’ve seen recovery rates go from low single digits to low double digits,” Morse said. “Why is it not going to go to 30 or 40 per cent? Or why, theoretically, won’t it go to the recoverability of conventional oil at 60 per cent?””

He expects Brent to be between $45 and $65 by the end of 2019…

 

 

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Bigger Oil Pipelines Coming… WSJ

by Jim Colburn • Monday, July 30, 2018

Rebecca Elliott from the Wall Street Journal has a nice piece on pipeline construction in Texas, here… Here is just one of many nuggets:

“Morgan Stanley has projected slowdowns of three to six months for some of the area’s new pipeline projects, citing concerns about right-of-way acquisition and the complexity of proposed lines. It forecasts that lack of pipeline capacity will force drillers to curtail their activity next year, limiting annual oil production growth in the Permian to 360,000 barrels a day, down from Wall Street’s consensus estimate of 650,000 barrels.”

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Market leaders… The Economist

by Jim Colburn • Sunday, July 29, 2018

Here are the top performing stock markets in dollar terms, year to date, taken from The Economist’s “Markets” section, here

Norway, +10.6%; Columbia, +9.1%; Saudi Arabia, +16.2%… By the way, the same page shows Euro carbon trading +107.2%….

 

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Trouble with the curve… The Economist

by Jim Colburn • Sunday, July 29, 2018

The Economist explains why bond yields predict recessions here

”AS NAMES for market phenomena go, “inverted yield curve” lacks a certain punch. It is no “death cross” or “vomiting camel”. But what it lacks in panache, the inverted yield curve more than makes up for in predictive potency. Just before each of America’s most recent three recessions the yield curve for government bonds “inverted”, meaning that yields on long-term bonds fell below those on short-term bonds. Economists and stockmarkets seem unconcerned that inversion looms again (see chart). But despite generally strong economic data, there is reason to heed the warning signs flashing across bond markets.”

 

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Rob Arnott talks with Barry Ritholz…

by Jim Colburn • Sunday, July 29, 2018

I found this podcast by Barry Ritholtz to be excellent… Here is a summary:

”This week, we chat with Rob Arnott, the founder and chairman of Research Affiliates (RAFI). The firm’s intellectual property drives the management of over $200 billion in portfolios. Arnott is credited for creating fundamental indexing, better known as Smart Beta. He has published more than 100 articles in journals such as the Journal of Portfolio Management, Harvard Business Review, and the Financial Analysts Journal, where he also served as editor in chief from 2002 through 2006.

Rather than assembling an index by its market capitalization, fundamental indexing uses other metrics such as earnings, dividend yield or book value. The concept is still a passively managed fund, but one that does not get wildly over-weight certain names. The idea was pioneered by Rob Arnott of Research Affiliates (RAFI).

Arnott explains why smart beta is a superior form of index construction of stock picking active management, and provides a chance to outperform versus traditional indexing.”

The link:  http://ritholtz.com/2018/07/mib-rob-arnott-research-affiliates/

 

 

 

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Americans are driving less… Daily Shot

by Jim Colburn • Thursday, July 26, 2018

The excellent Daily Shot at the Wall Street Journal has a nice chart that shows flagging gasoline demand:

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US Oil stock levels… EIA

by Jim Colburn • Wednesday, July 25, 2018

From today’s release of This Week In Petroleum, here is an overview of  US oil stocks:

And here are stock levels in Cushing, Oklahoma, the futures delivery point:

And here is Sep-Oct, from Barchart.com, indicating a market that anticipated the decline, so far:

 

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The EIA comments on what hedgers are doing…

by Jim Colburn • Wednesday, July 25, 2018

From the EIA’s This Week in Petroleum:

“As of the first quarter of 2018, oil companies have also increased the production volumes hedged for the remainder of 2018 and into 2019. Based on company financial statements, 42 of the 46 companies used derivatives such as futures and options to hedge a collective 1.9 million b/d of 2018 production and 0.7 million b/d of 2019 production at weighted-average prices of $52.28/b and $52.44/b, respectively.

Since the end of the first quarter, however, weekly reports from the Commodity Futures Trading Commission have revealed that from March 27, 2018 (the last data point from the first quarter of 2018) through July 17, 2018, commercial hedging positions declined by 89,376 contracts, the equivalent of nearly 90 million barrels (Figure 3). This trend suggests that producers may have financially settled some of their contracts from the first quarter and not added new hedged volumes for 2018 or 2019 in the second and third quarters of 2018.

 

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WTI volatility down to 23%…

by Jim Colburn • Wednesday, July 25, 2018

That is despite major uncertainty over how much oil Iran will actually get to market… Here is Barchart.com:

The yellow line is implied vol; the green is 26.8…

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