Trump’s tweets affect soybeans… Business Insider

by Jim Colburn • Friday, July 20, 2018

I thought the soybean market would just reroute supplies with the overall effect being producers recieve a little bit lower price, consumers pay a little more, but Business Insider quoting a Goldman study says otherwise, as does the market (my bold):

“After the Trump administration imposed a 25% tariff on roughly $34 billion worth of Chinese goods, China retaliated with similar tariffs on American products including soybeans. Soybean futures for November delivery fell last week to $8.26 per bushel, the lowest in nearly a decade.

“The result is consistent with our commodity team’s view that trade tensions should have a minor impact on commodity markets with the sole exception of soybeans, where it is not possible to completely reroute supplies should China levy tariffs on US soybeans,” Goldman’s James Weldon said in a note on Thursday. As the New York Times reported, China’s farms are generally too underdeveloped to replace a shortfall in imports.“

Here is the link:  http://www.businessinsider.com/how-trump-tweets-on-trade-affect-markets-2018-7

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Byron Wien… RealClearMarkets

by Jim Colburn • Friday, July 20, 2018

Byron Wien has a nice piece at RealClearMarkets, here

“For most of the post–World War II period the world has forged constructive trade agreements that have enhanced the globalization process. Arguably, this trend started with the General Agreement on Tariffs and Trade (GATT) in 1947, when the average tariff rate between participating countries was 22%. But with each successive treaty, including the North American Free Trade Agreement, the European Union, the proposed Trans-Pacific Partnership and others, average rates around the world drew closer to low single-digits. The U.S. saw its tariff rate fall from a high of 30% in 1918 to a low of 1.3% in 2010. The current trade confrontation between the United States and its trading partners around the world represents a potential reversal of that trend.”

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Natural gas, too… EIA

by Jim Colburn • Wednesday, July 18, 2018

Natural gas production in the Permian is outstripping takeaway capacity… Here is the EIA’s Today in Energy:

”The natural gas spot price spread between the Permian Basin, as priced at the Waha Hub in western Texas, and the U.S. national benchmark Henry Hub in Louisiana has grown considerably in the past year. Natural gas prices at Waha are nearly a dollar per million British thermal units (MMBtu) lower than Henry Hub prices. This spread widened as the ability to transport the increased natural gas production in the Permian Basin in western Texas and southeastern New Mexico was constrained by existing pipeline capacity.”

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Carbon Dioxide Emissions: Global and US… Timothy Taylor

by Jim Colburn • Wednesday, July 18, 2018

Timothy Taylor of the Conversable Economist blog has some interesting comments on global/US carbon emissions here:

http://conversableeconomist.blogspot.com/2018/07/carbon-dioxide-emissions-global-and-us.html

 

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LNG Markets/Meg Gentle, CEO Tellirian… Columbia Energy Exchange

by Jim Colburn • Wednesday, July 18, 2018

Meg talks to Bill Loveless about LNG on the Columbia Energy Exchange here:

https://itunes.apple.com/us/podcast/columbia-energy-exchange/id1081481629?mt=2&i=1000415917288

”The U.S. is becoming a leader in the global market for liquefied natural gas (LNG), amid record gas production at home and growing demand for the fuel abroad. What opportunities does that present for the U.S.? And what challenges follow from this changing global market? In this edition of Columbia Energy Exchange, host Bill Loveless sits down with Meg Gentle, the president and CEO of Tellurian Inc. Bill and Meg got together outside the World Gas Conference in Washington, D.C. to talk about the emergence of the LNG export business in the U.S. and the opportunities for sales of gas in China, Europe and the rest of the world. They also discussed potential obstacles to growth in that business, including the prospect of trade wars between the U.S. and other nations. Finally, they touched on her status as one of the relatively few women at the top of the corporate ladder in the oil and gas business, and whether she thinks that will change any time soon.”

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Will China Buy Even More Iranian Oil?… WSJ

by Jim Colburn • Tuesday, July 17, 2018

Sarah McFarlane and Benoit Faucon, Wall Street Journal, suggest that China may buy more oil from Iran, here
”Lower demand because of sanctions will make Iranian oil cheap at a time when two of China’s other traditional suppliers, Libya and Venezuela, are struggling. China’s rising needs could allow it to buy more oil from Iran without moving away from other suppliers, such as Saudi Arabia. The world’s No. 2 economy is expected to need an extra 500,000 barrels a day in 2018 and 400,000 barrels a day in 2019, according to the International Energy Agency’s latest monthly report.”
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WTI options update…

by Jim Colburn • Tuesday, July 17, 2018

Options trading was active on yesterday’s sharp down move plus August WTI options expire today…  113,739 calls and 165,215 puts traded… Most of these were in August with 8 of the top 10 busiest calls and 7 of 10 puts were in August…  Open interest climbed more in calls, 20,661 than in puts, 9,302… Implied vol moved up to 27.9, which is the highest since 9/2017 and actually shows up on our long term vol chart:

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ND oilfields set 3 new records in May… Bismarck Tribune

by Jim Colburn • Monday, July 16, 2018

And they are:

”As oil production hit 1,244,629 bbl/day in May, natural gas production hit almost 2.32 billion cubic feet per day, with producing wells at 14,755 for the month — all new state records.”

However…

”There’s still a shortage of hydraulic fracturing crews, Helms said. Frack jobs take about 10 to 14 days to complete — more efficient than 2014, but needing more manpower.”

Here is the link: https://bismarcktribune.com/bakken/triple-crown-nd-oilfields-set-new-records-for-may/article_7a950d70-27e3-528f-acf1-4d70def546e5.html#tncms-source=block-contextual-fallback

 

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Some charts from OPEC’s monthly Oil Market Report…

by Jim Colburn • Monday, July 16, 2018

The link to OPEC’s monthly report is here….

A large increase in Saudi production was offset some by Libya…  Venezuela continues to decline…

Market consensus is that Russia could increase oil production by around 300,000 b/d… Here is Russia’s total liquids production with some history:

The supply/demand balance shows the call on OPEC crude (Difference (a-b)):

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Some traders hit hard from volatile spreads… Reuters

by Jim Colburn • Monday, July 16, 2018

Here is a Brent/WTI crude spread chart from Reuters:

From Reuters:

“However, it is the big, sudden moves that tend to claim trade casualties, sometimes earning the moniker “widowmaker”.

Since the June spike, the spread has narrowed sharply again. The shrinking discount was helped by a rise in the price of WTI due to an unexpected outage at the Syncrude oil sands site in Canada, which can produce up to 360,000 bpd.”

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