CO2 emissions from coal… EIA

by Jim Colburn • Monday, November 13, 2017

The EIA’s Today in Energy has some interesting charts on emissions from coal use…

”Carbon dioxide (CO2) emissions associated with coal consumption in the United States fell by a record 231 million metric tons in 2015. More than 60% of the annual decrease occurred in 10 states, led by Texas, Indiana, Ohio, Illinois, and Pennsylvania, according to EIA’s state-level carbon dioxide emissions data. Most of the decline in 2015 U.S. coal consumption occurred in the electric power sector, where reduced coal-fired electricity generation was largely offset by higher natural gas-fired electricity generation.”

And here is the EIA on overall CO2 emissions from the Short Term Energy Outlook:

”After declining by 1.6% in 2016, energy-related carbon dioxide (CO2) emissions are projected to decrease by 0.8% in 2017 and then to increase by 2.1% in 2018. Energy-related CO2 emissions are sensitive to changes in weather, economic growth, and energy prices.”

 

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Mexico’s fuel thirst… Bloomberg via Houston Chronicle

by Jim Colburn • Friday, November 10, 2017

Lots of good stuff from Laura Blewitt, Bloomberg via the Houston Chronicle:

“Nationwide gross oil refinery inputs will rise above 17 million barrels a day before the year ends, according to Energy Aspects, even amid a busy maintenance season and interruptions at plants in the U.S. Gulf of Mexico that were clobbered by Hurricane Harvey in the third quarter.”

We are at around 16.4 now…

And this:

“The chance to skip out on compliance with costly U.S. biofuels regulations by exporting fuel is a huge incentive for overseas sales. Under the Renewable Fuel Standard, refiners aren’t required to buy blending credits called RINs for barrels that are exported. Mexico has potential to demand 600,000 barrels a day of gasoline imports as its own refineries limp.”

There is more:  http://www.chron.com/business/energy/article/Mexico-s-fuel-thirst-sets-up-refiners-for-big-year-12344165.php

 

 

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US petroleum stocks… EIA

by Jim Colburn • Friday, November 10, 2017

Here is the weekly look at crude oil, gasoline and distillate stocks compared to 5 year highs and lows:

https://www.eia.gov/petroleum/weekly/

 

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Brent/WTI spread explained by the EIA…

by Jim Colburn • Thursday, November 9, 2017

Here is recent history from the EIA’s This Week in Petroleum:

“The WTI price spread with Brent reflects the transportation costs associated with bringing crude oil from Cushing to the U.S. Gulf Coast and with exporting crude oil to Asia, the marginal market in which Brent and WTI crude oils compete.”…

“EIA estimates that, without pipeline constraints, moving crude oil from Cushing to the U.S. Gulf Coast typically costs $3.50/b, but it has gotten more expensive as transportation constraints have developed.”…

Here are stock levels showing a buildup of oil in Cushing, the delivery point for WTI futures:

And this:

”The remainder of the Brent-WTI spread is associated with transporting light sweet crude oil from the U.S. Gulf Coast to Asia. With the removal of restrictions on exporting domestically produced crude oil in December 2015, additional supplies of light sweet crude oil that cannot be economically processed at refineries or transported domestically can now be exported. Once exported, WTI competes with Brent directly in the global market. U.S. crude oil export data suggest that the marginal competitive market for WTI and Brent is in Asia. So far in 2017, China is the second-largest destination for U.S. crude oil exports at 173,000 barrels per day (b/d).”

More pipeline capacity will be needed to drain Cushing:

”Many other factors may influence the Brent-WTI spread, although those factors are likely to fluctuate and average out over the course of many months. EIA forecasts the Brent-WTI spread will remain at $6/b until the second quarter of 2018, when increased transportation capacity between inland crude oil production and the Gulf Coast is brought online.
These projects include the 0.4 million barrel per day (b/d) Midland-to-Sealy pipeline that will increase crude oil flows out of the Permian to the U.S. Gulf Coast when it becomes operational, currently planned for the second quarter of 2018. Other pipeline projects will increase Midwest refineries’ access to crude oils in the Permian region, potentially resulting in lower crude oil stocks at the Cushing pricing hub. Uncertainty associated with this element of the Brent-WTI spread forecast comes from potential changes in U.S. crude oil production growth rates and delays in pipeline completions. EIA expects that the additional transportation capacity between domestic crude oil production and the U.S. Gulf Coast will result in the Brent-WTI spread reverting to an underlying $4/b, based on estimated transportation costs and the costs of exporting to Asia.”

Here is the link:

https://www.eia.gov/petroleum/weekly/

 

 

 

 

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Venezuela’s rig count… Bloomberg

by Jim Colburn • Wednesday, November 8, 2017

Lucia Kassai, Bloomberg, reminds us that Venezuela’s oil industry is in decline:

“The number of active oil rigs in Venezuela is heading for a second annual decline, Baker Hughes Inc. data published Tuesday showed. That means lower output and a drop in the much-needed dollars the country requires to service its debt. Once Latin America’s largest oil producer, Venezuela lost the top spot to Brazil amid triple-digit inflation, unpaid debts to oil-service companies and lack of investment.”

Here is a nice chart from tradingeconomics.com:

(Through July 2017)

 

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Crude oil options update…

by Jim Colburn • Tuesday, November 7, 2017

Implied volatility for December WTI crude oil options (currently the front month) jumped from 21% on Friday to 27.9% on Monday…. The most active option yesterday was the December $60 call with 30,199 contracts traded.. This option traded in a range of $.06 to $31… Open interest for the $60 call dropped sharply by 9,548 contracts to 44,733… The call had over 60,000 earlier in its life…

Total WTI options (LO) volume was heavy with 439,791 trading, 277,513 of these were calls…  Last year, on November 30th, total volume was 579,935, I show as a record amount (around an important OPEC meeting)…

December options go off the board on November 15th, which makes them gone before the next OPEC meeting…  Perhaps that is why they traded so low from an implied vol perspective (market rallies also tend to pressure vols in crude oil)…

Here is the Oil Vix chart which tries to measure what traders are thinking about volatility over the next thirty days… This measure moved from 24.8 on Friday to 26.85 yesterday:

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Consensus estimates of world GDP catching up to nowcasts…

by Jim Colburn • Tuesday, November 7, 2017

The article from FT Alphaville is about China’s growth relative to world growth, but here is one takeaway:

And we do see world petroleum demand growth supporting this….

Here is the link:  https://www.ft.com/content/b5acd68c-b9f8-3c8c-9abf-1baf75592ea9

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Hedge Funds go all-in on oil: Kemp/Reuters

by Jim Colburn • Monday, November 6, 2017

The excellent John Kemp summarizes hedge funds’ positions in energy markets here:

”Hedge funds and other money managers had amassed a net bullish position in crude and refined products amounting to more than 1 billion barrels of oil as of Oct. 31.”

”The net long position in the five major contracts covering Brent, WTI, gasoline and heating oil has surged by almost 720 million barrels since the end of June and is now just 3 million below the record of 1,025 million set in February.

Bullish records or multi-year highs are being set all over the place:

Long positions in Brent are at a record 587 million barrels.

Net long position in Brent is at a record 530 million barrels.

Long positions in gasoline are at a record 107 million barrels.

Net long position in gasoline is the highest since April 2014.

Long positions in heating oil are at record 84 million barrels.

Net long position in heating oil is at a record 68 million barrels.”

 

 

 

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Geopolitical tensions in the Middle East… WSJ

by Jim Colburn • Monday, November 6, 2017

The Saudi-Iran Cold War intensifies… Here is the Wall Street Journal:

”The latest salvo in the Iran-Saudi struggle came Saturday, when Lebanese Prime Minister Saad Hariri abruptly resigned while in Saudi Arabia. As he stepped down, he criticized Iran and its Lebanese proxy, the Shiite militia and political group Hezbollah, for fomenting violence in the region and added that he feared for his life. Mr. Hariri is Sunni Muslim and a close political ally of Saudi Arabia.”

There is this:

”Also Saturday, Saudi forces intercepted a ballistic missile fired by Yemen’s Houthi rebels just east of Riyadh’s main airport, according to the official Saudi Press Agency. Since 2015, Saudi Arabia has led a military coalition trying to defeat the Houthis, a Shiite group coalition members see as a proxy of Iran.”

And, also, from the WSJ:

”Oil prices are now up 3% since Thursday’s close. Driving the action: slowing supply growth in the U.S., and a lightning strike against potential rivals by Saudi crown prince Mohammed bin Salman Saturday night which left more than sixty Saudi royals and other elites in detention, including the former head of the country’s National Guard.”

Here is the WTI crude oil price over the past year, from Barchart.com:

The Oil VIX, a measure of expected volatility over the next thirty days, is below average:

 

 

 

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Investors not happy with this bull market… NY Times

by Jim Colburn • Monday, November 6, 2017

From Landon Thomas, Jr. of The New York Times:

”Rarely has a bull market been so unloved. Since March 2009, the Standard & Poor’s 500 stock index has nearly quadrupled in value. This year, not only is the index up 15 percent, but it also seems to have stopped going down at all: October was the 12th straight month that the S.&P. has logged a positive return, the first time that has happened since 1935.”

”According to Charles Schwab, which oversees $3.1 trillion in retail investments, the cash portion of client accounts was 11.1 percent as of September. That is down from 13 percent at the end of last year, but it is still a sizable ratio, which suggests that investors are not dumping their entire savings into the stock market, at least for now.”

He goes on to quote some analysts and wealth managers to make his point… Here is the link:  https://www.nytimes.com/2017/11/05/business/bull-market-investors.html?rref=collection%2Fsectioncollection%2Fbusiness&action=click&contentCollection=business&region=rank&module=package&version=highlights&contentPlacement=2&pgtype=sectionfront

 

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