Permian pipeline woes about to ease…. The Motley Fool

by Jim Colburn • Tuesday, September 25, 2018

Mathew DiLalllo, The Motley Fool, writes that help is on the way, here

”Plains All American is building oil pipelines in the Permian as fast as it can. The company currently has two large projects underway, Sunrise, which it initially expected to finish in January of 2019, and Cactus II, which it hoped would start partial service by the end of 2019.

However, given the crucial need for more pipeline space, Plains is “trying to accelerate both of these projects as much as reasonably practical,” according to Chief Operating Officer Willie Chiang. To do so, Plains is “incurring additional costs to expedite material deliveries and vendor services and even installing temporary generators for our pumps until permanent utility power is available.” Those efforts are paying off, as the company now expects to begin commercial operations on Sunrise on the first of November.

The pipeline will move oil from the Permian up to a hub in Texas, where it can catch a ride on other systems to America’s main oil storage hub in Cushing, Oklahoma. Sunrise should be able to transport 360,000 BPD by the first quarter of next year, with full capacity slated to be as much as 500,000 BPD. That near-term in-service date has helped ease the pressure on oil prices in the Permian, causing the discount with WTI to narrow to $11 per barrel.”

 

 

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Record Brent options volume… Bloomberg

by Jim Colburn • Tuesday, September 25, 2018

Alex Longley, Bloomberg, reports:

”ICE Brent options was record, at ~274k lots.  Call volumes also
reached record at 191k lots, with more than 2 calls traded for
every put.”

The link is here

From the CME’s options tool, here is a snapshot of WTI options activity from yesterday (not a record volume day):

 

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Tumbling currencies, growth rates solid… The Economist

by Jim Colburn • Monday, September 24, 2018

From The Economist:

“A person returning from Mars would assume that something horrible had happened in the region, says Chris Wood of CLSA, a brokerage. But in fact Asia’s emerging economies are enjoying a happy spell of respectable growth and stable consumer prices. Only Pakistan has a combined trade and fiscal deficit as devilish as Turkey’s or Argentina’s. And not even Pakistan has anything like their double-digit rates of inflation. India’s GDP grew by over 8% last quarter, compared with a year earlier. Indonesia’s expanded by over 5% (as it almost always does). And China’s grew by over 6% (as it always does). Nor is a widespread slowdown expected this quarter.”

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The Mystery of Missing Hedge-Fund Performance… Ritholz

by Jim Colburn • Monday, September 24, 2018

Barry Ritholz, The Big Picture, has a great post on underwhelming  hedge fund performance, here

Here is one of 5 theories he lists (do read the whole thing):

”1b. Fat head, long tail: A variation of this is the distribution of alpha among managers; it may still be with the handful of those few geniuses. Jim Chanos of Kynikos Associates has suggested that in the 1970s and 1980s, only 20 to 30 managers were creating alpha out of the hundreds of hedge funds; today, there might still be 20 to 30 reliable alpha generators, but out of 11,000.”

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Brent benchmark set for revamp… Bloomberg

by Jim Colburn • Monday, September 24, 2018

Javier Blas, Dan Murtaugh and Sherry Su, Bloomberg, write here

“S&P Global Platts, the agency that sets the industry
standard for the benchmark, said in a statement on Monday that
it was proposing two major changes for the way that it
calculates the price of Brent.

First, it wants to include in its current price assessment
not only the crude traded on North Sea terminals, but also
what’s delivered in the oil hub of Rotterdam. Second, it’s
seeking industry feedback on a proposal to include grades from
outside the North Sea region for the first time, also delivered
in Rotterdam.”

 

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Tight or well-supplied?… Reuters

by Jim Colburn • Monday, September 24, 2018

Clyde Russell, Reuters, summarizes the OPEC meeting nicely, here

“But the rise in prices doesn’t seem to be an issue for Saudi Arabia, with Energy Minister Khalid al-Falih saying after a meeting of OPEC and its allies in Algiers at the weekend that there was no plan to boost output, even though they could if needed.

“The markets are adequately supplied. I don’t know of any refiner in the world who is looking for oil and is not able to get it,” Falih told reporters after the meeting.”

And this:

”While Iran is unlikely to see a drop to zero exports, initial assessments by several analysts that about 500,000 barrels per day (bpd) of Iranian oil would be lost appear way too optimistic now.

It’s possible that Iranian exports may drop by more than 1 million (bpd), and possibly even as high as 2 million bpd, as major customers with the possible exception of China switch to alternatives.”

 

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Russia overtakes the US in wheat exports… WSJ

by Jim Colburn • Monday, September 24, 2018

When I worked at the USDA in the early 80’s, we tried to figure out how much wheat the USSR needed to import… Here is the WSJ:

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East Coast refiners receiving more domestic crude from the Gulf Coast… EIA

by Jim Colburn • Friday, September 21, 2018

From the EIA’s Today in Energy, here

“Since mid-2017, the East Coast has been receiving as much crude oil by tanker and barge from the Gulf Coast as it has by rail from the Midwest. In April, the volume of crude oil transported by tanker and barge from the Gulf Coast to the East Coast reached the highest level since mid-2014. At the same time, crude oil shipped to the East Coast by rail from the Midwest has fallen 77% from its peak in late 2014. These changes in crude oil shipments, as well as the mix between foreign and domestic crude oil inputs to East Coast refineries, have followed price movements in crude oil markets.

Changes to U.S. crude oil transportation infrastructure in the past three years, such as expanded pipeline capacity out of the Midwest (defined as Petroleum Administration for Defense District 2) and increased availability of coastwise-compliant shipping in the Gulf Coast (PADD 3), have altered the costs of transporting crude oil domestically.”

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WTI put spreads?

by Jim Colburn • Friday, September 21, 2018

What looked like a large volume put spread traded yesterday in WTI options…  Around 18,000 November 66/65 puts traded yesterday… Note the change in open interest below, indicating a likely roll up to the 66 strike…

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Chart book… The Daily Shot

by Jim Colburn • Wednesday, September 19, 2018

It’s always worthwhile to take a look at the Wall Street Journal’s “The Daily Shot” here…  And, here are two of many interesting charts:

This was everyone’s darling just a short time ago:

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