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[SKEP + 229]

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Edited September 4, 2019 by SKEP

[Auson + 123]

9 hours ago, SKEP said:

Here is my take.  I say the numbers show too much supply. 

EIA REPORTS 10 MILLION BBLS DROP USA CRUDE INVENTORY.  

Looking at one data point of just 12% of the world production is ludicrous. One needs to look at the market as a whole considering all inputs and outputs. 

Imports/Exports , Refining stock input/output and consumption, production, etc, etc

Even if one wants to get a rough estimate of U.S. Inventory of crude consider this . . .

* U.S. Crude Inventory drops 10 mm bbls/week 

* U.S. Crude Exports increased 216K bbls/day . 

* U.S. Crude Imports decreased 1.7 mm bbls/day.

THATS 1.9 MM BBLS/DAY PUT ON THE WORLD MKT.  THAT CHANGED (DELTA) FROM PREVIOUS WEEK.

1.9 MM X 7 DAYS = 13.3 MILLION BARRELS CHANGE FROM PREVIOUS WEEK.   

THIS 13.3 Million bbls/week accounts for more than the 10 mm bbls weekly drop reported by EIA.

SO 13.3 MILLION BBLS SHIFTED TO THE WORLD INVENTORY FROM U.S.  NO "MASSIVE" 10 MILLION BBLS DECLINE.

* NO TIGHT SUPPLY

* TOO MUCH SUPPLY

Read the CNBC article U.S. Exports will flood the market.  According to CITI Oil Analyst current exports of 3 mm bbls/day will increase 1 mm bbls this year, additional 1 mm bbls next year = total U.S. Crude Exports 5 MILLION BARRELS/DAY IN 2020 

NOW . . . . Orbital Insight Corp said there was a recent world crude Inventory drop of 20 mm bbls.  Energy Aspects also said world Inventory recently dropped some 18 mm bbls. (They are now working together).

THE BIG DIFFERENCE BTW THE TWO IS :

* Energy Aspects says it is due to "extrodinary tight supply" of all grades of oil.

* Orbital Insight explains it's due to routine yearly summer supply drop in U.S. and OECD from increased gasoline and diesel consumption. This seasonal supply drop is normal.

* Energy Aspects continues to blame backwardation on tight supply. Backwardation occurs when their is a sharp price spike upward in the upfront months from increased demand. It's not from tight supply when both upfront and out months prices are dropping below to unusual lower prices.  It's not short term increase in demand . . . IT'S THE FLOOD OF SUPPLY ABOUT TO BE EXPORTED TO WORLD MARKET FROM THE  PERMIAN EXPECTED IN THE OUT MONTHS.

When Energy Aspects Amrita Send was asked by Bloomberg Business News how backwardation could occur from tight supply while oil trading in $50s, Amrita blamed President Trump (again) and "his" trade war.  To admit she has been wrong the whole year must be extremly difficult to admit.

Read the CNBC Article.  The CITI Oil Analyst projects Brent price going to low $50's and WTI high $40s.  I think both in mid $50s absent a Mideast war.

TOO MUCH SUPPLY

Note: record 12.5 mm bbls/day U.S. production last week.  That's 700K /day increase year to date (8 months). The producers in the PERMIAN starting to complete the DUCs now that pipelines starting up.

CNBC ARTICLE

https://www.cnbc.com/2019/08/27/the-us-is-about-to-send-a-lot-more-oil-into-an-oversupplied-market.html 

CITI Oil Analyst has been right all along. He actually analyzes the numbers. He doesn't parrot the latest pronouncement from Saudi Oil Minister Khalid al-Falih

OPEC Oil Ministers shouldn't be popping the champagne bottles based on that EIA Report

 

SKEP,

I think I am right in saying there has not been one analyst ever who has been right all along !

If the USA has too much oil why import 5.9m barrels a day ?

If you take into account the products draw its total - 27M barrels a week !

Gasoline -2.1M

Distillates -2.1M

Commercial -11.2M

Cushing -1.98M

 

 

 

[SKEP + 229]

On 8/29/2019 at 4:30 AM, Auson said:

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99% of analyst are lazy.  They don't work the numbers.  I gave a simple example of crude inventory adding DAILY import and export numbers .  Analyst don't even do that. 

Can't blame analyst for everything.  There has never been much transparency in this industry. 

Reading the public companies SEC earnings filings reveal some good info. 

Per your examples: 

Commercial: Thats usually the actual number unless there is some movement in strategic reserve.

Cushing is already included in inventory number.  They just break out for some that like to see it because it is the defacto U.S. benchmark. Not as relevent now that new pipelines coming online. Now there is a West Yexas Light  and Houston quoted price.

Re product: Whether gasoline, distillates, etc you calculate for a given week: 

Beginning Inv + refining new production + imports - exports - consumption = change Inventory

THE MOST IMPORTANT NUMBER IS THE CONSUMPTION NUMBER WHICH IS NOT EVEN CONSIDERED By ANALYST. .

WE ARE IN THE MIDDLE OF THE SUMMER MAJOR GASOLINE AND DIESEL CONSUMPTION PRODuCTS.  ALL INVENTORIES GO DOWN .  .  .   ITS NORMAL. IT WILL REVERSE IN A MONTH OR SO.

The U.S. now produces plenty of oil for their own consumption. But the U.S. is in the energy business.  They usually export 8 to 10 mm bbls/day of refined product for profit .

Also the oil companies make money by avoiding U.S. taxes thru transfer pricing.  U.S. Companies don't pay U.S. Corporporste Income Tax thru "transfer pricing".  Shift "profit" to offshore subsidiaries. Too long to explain now but it is a big part of it.  About six or seven years ago I was looking at investing in Conoco Phillips stock. They made $5billion profit that year.  But Conoco USA lost money. How is that ?  Transfer pricing. . . . a shell game.

THAT IS WHY I NOW DEPEND ON ORBITAL INSIGHT CORP.  SATELLITE SURVEY DATA.  

THAT is why Energy aspects is now working with Orbital Insight.

You are more right than wrong when you say no analyst are correct.  There has never been transparency in the Oil Industry whether OPEC or Majors.  

NOTE: When there has been a hint of a trade agreement progress oil jumps 3% to 4% in price.  When/If a trade agreement is signed oil will probably increase oil price 10% or more. The effect on demand is over blown . . . it's not enough to overcome coming supply.  Even though ARAMCO and others say demand is strong in all regions now. Goes to show you oil market doesn't trade on fundamentals 

I think that all changes over next 18 months.

Read the CNBC article.  The article gives you an idea where oil is going.  Citi oil analyst is better than most

 

Edited September 4, 2019 by SKEP

[Auson + 123]

5 hours ago, SKEP said:

99% of analyst are lazy.  They don't work the numbers.  I gave a simple example of crude inventory adding DAILY import and export numbers .  Analyst don't even do that. They're mostly frauds.

Per your examples: 

Commercial thats usually the actual number unless there is some movement in strategic reserve.

Cushing is already included in inventory number.  They just break out for some that like to see it. Not as relevent now that new pipelines coming online.

Re product whether gasoline, distillates, etc you calculate for a given week: 

Beginning Inv + refining new production + imports - exports - consumption = change Inventory

THE MOST IMPORTANT NUMBER IS THE CONSUMPTION NUMBER WHICH IS NOT EVEN CONSIDERED By ANALYST. .

WE ARE IN THE MIDDLE OF THE SUMMER MAJOR GASOLINE AND DIESEL CONSUMPTION FOR PRODICTS.  ALL INVENTORIES GO DOWN .  .  .   ITS NORMAL. IT WILL REVERSE IN A MONTH OR SO.

The U.S. now has plenty of oil for their own consumption. But the U.S. is in the energy business.  They usually export 8 to 10 mm bbls/day of refined product for profit .

Also the oil companies make money by avoiding U.S. taxes thru transfer pricing.  U.S. Companies don't pay U.S. Corporporste Income Tax thru "transfer pricing".  Too long to explain now but it is a big part of it.  About six or seven years ago I was looking at investing in Conoco Phillips stock. They made $5billion profit.  But Conoco USA lost money. How is that ?  Transfer pricing

THAT IS WHY I NOW DEPEND ON ORBITAL INSIGHT CORP.  SATELLITE SURVEY DATA.  

THAT is why Energy aspects is now working with Orbital Insight.

You are more right than wrong when you say no analyst are correct.  There has never been transparency in the Oil Industry whether OPEC or Majors.  

NOTE: When there has been a hint of a trade agreement progress oil jumps 3% to 4% in price.  When/If a trade agreement is signed oil will probably increase oil price 10% or more. The effect on demand is over blown . . . it's not enough to overcome coming supply.  Even though ARAMCO and others say demand is strong in all regions now. Goes to show you oil market doesn't trade on fundamentals 

I think that all changes over next 18 months.

Read the CNBC article.  The article gives you an idea where oil is going.  Citi oil analyst is better than most

 

 I think I would pay more attention to Vitol's analysis than Citi. But once again any free analysis probably isn't worth much.

All the best

[SKEP + 229]

On 8/29/2019 at 12:55 PM, Auson said:

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Edited September 4, 2019 by SKEP

[Douglas Buckland + 6,308]

Damn SKEP! We agree on something! There is definitely "TOO MUCH SUPPLY" (as per the title of your article).

Now if 'Shale Oil America' would get their act together and be a team player, we could fix this problem!

(Rant by SKEP to follow...).

[Ward Smith + 6,615]

16 hours ago, SKEP said:

The U.S. now produces plenty of oil for their own consumption. But the U.S. is in the energy business.  They usually export 8 to 10 mm bbls/day of refined product for profit .

Looked too high so I checked. Closer to 3.5 million bbl/day refined exports, but we also Import refined products. Thanks to Jones Act, it's cheaper to import gasoline from Europe than get it from the gulf. 

For some reason I can't post images anymore

 

 

Edited August 30, 2019 by Ward Smith

[SKEP + 229]

On 8/30/2019 at 12:00 AM, Ward Smith said:

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Edited September 4, 2019 by SKEP

[SKEP + 229]

On 8/29/2019 at 11:45 PM, Douglas Buckland said:

Damn SKEP! We agree on something! There is definitely "TOO MUCH SUPPLY" (as per the title of your article).

Now if 'Shale Oil America' would get their act together and be a team player, we could fix this problem

No rant Douglas

Good luck

 

 

Edited August 31, 2019 by SKEP

[J.mo + 165]

9 hours ago, Douglas Buckland said:

Damn SKEP! We agree on something! There is definitely "TOO MUCH SUPPLY" (as per the title of your article).

Now if 'Shale Oil America' would get their act together and be a team player, we could fix this problem!

(Rant by SKEP to follow...).

And why must that be shale? Why not any of the numerous producers and countries worldwide?

Would you like the slowdown of hard working people and good jobs in the patch of America? 

I certainly wouldn't. these are all good, high paying industry jobs supporting great families. Dont turn the sights on Capitalism and the great United states and their people in face of fear and frantic. Put that pressure elsewhere. As Americans we are what we are due to perseverance. Too often we throw ourselves under the bus for the rest of the world. 

[Douglas Buckland + 6,308]

37 minutes ago, J.mo said:

And why must that be shale? Why not any of the numerous producers and countries worldwide?

Would you like the slowdown of hard working people and good jobs in the patch of America? 

I certainly wouldn't. these are all good, high paying industry jobs supporting great families. Dont turn the sights on Capitalism and the great United states and their people in face of fear and frantic. Put that pressure elsewhere. As Americans we are what we are due to perseverance. Too often we throw ourselves under the bus for the rest of the world. 

Everyone else IS taking action to support an oil price that is readonable! Only the US is showing no restraint.

For your info, I too used to be a hard working American until the oilfield went belly up in 2015. There are many Americans overseas who are hit by this slump. From what you say, it is only the Americans in the US oil patch that count.

[Ward Smith + 6,615]

5 hours ago, SKEP said:

Last week 5,313,000 Petrobas products + Petrochem ? + 3,120,000 oil = 

The U.S. petrochemical industry exports a huge amount of product Im trying to find an edtimated number of bbls used for these exports 

My link has it for the US. I don't know about Brazil

[SKEP + 229]

On 8/30/2019 at 12:45 PM, Ward Smith said:

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Edited September 4, 2019 by SKEP

[SKEP + 229]

On 8/30/2019 at 9:48 AM, Douglas Buckland said:

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Edited September 4, 2019 by SKEP

[Tomasz + 1,608]

Shale oil production from December to June increased by just 50.000 barrels per day. 

You cant win long-term with decline rates because the more shale oil you produced you need more and more wells just to maintain production so we can definately speak about shale growth peak in 2018. In a situation where shale is nowadays about 90 % of growth in world oil supply I wait for  brent in 70s because WTI breakeven is about  60 $ and you have to take under consideration   discount of local grades to wti and wti discount to  Brent.

In oil prices environment below 60 $ frackers simple dont earn any money - just check negative cash flow of something like 90 % shale oil companies. The difference in 2019 is that now investors ddont pour cheap money into shale industry because they dont see any profit in prices environment below lets say 60-65 $ for WTI.

I suggest listening to last great interview with Art Berman on his site

 http://www.artberman.com/president-trump-inadvertently-helping-bankrupt-us-shale-oil-producers/

I agree with most of his comments especially that marginal barrel cost is constantly increasing not decreasing because easy fields are more and more depleted so we need unconventional oil= today cost of marginal barrel is something about 60 $ and 20 years ago it was less than 30 $.

 

Edited August 30, 2019 by Tomasz

[SKEP + 229]

On 8/30/2019 at 9:06 AM, J.mo said:

 

                                                        .

                           

 

 

 

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Edited August 31, 2019 by SKEP

[Auson + 123]

On 8/30/2019 at 4:45 AM, Douglas Buckland said:

Damn SKEP! We agree on something! There is definitely "TOO MUCH SUPPLY" (as per the title of your article).

Now if 'Shale Oil America' would get their act together and be a team player, we could fix this problem!

(Rant by SKEP to follow...).

Douglas Buckland,

Am I right in thinking that oil is not oil, is not oil. The API of shale being so high it isn't as useable as a lower API oil ? All the production and storeage numbers just state crude with no reference to how light or sour that crude is ?

[James Regan + 1,776]

On 8/30/2019 at 10:06 AM, J.mo said:

And why must that be shale? Why not any of the numerous producers and countries worldwide?

Would you like the slowdown of hard working people and good jobs in the patch of America? 

I certainly wouldn't. these are all good, high paying industry jobs supporting great families. Dont turn the sights on Capitalism and the great United states and their people in face of fear and frantic. Put that pressure elsewhere. As Americans we are what we are due to perseverance. Too often we throw ourselves under the bus for the rest of the world. 

https://youtu.be/09-GbpOd9T4

My MEME of the day, sorry couldn't resist, this is our forum in 30 secs 😂

Sorry @Douglas Buckland your Tuco lol.....

Have a good week folks, some us have to go to work...

Edited September 2, 2019 by James Regan