The Biggest Oil Story of 2017

US oil exports boom as OPEC cuts production.
There have been plenty of eye-catching stories in the energy industry this year, but one notable development has been the rise of the U. S. as a crude oil exporter. The ban on crude exports from the U. S. was lifted at the end of 2015, and exports ticked up in the following year, but only modestly. 2017, however, was the year that the floodgates opened.
In the first half of the year, there were several weeks when the U. S. topped 1 million barrels per day (mb/d), but exports averaged about 750,000 bpd between January and June.

This post was published at Wolf Street by Nick Cunningham ‘ Dec 29, 2017.

Renewable Electricity Generation Surpasses Nuclear For First Time Since 1984

U. S. monthly electricity generation from utility-scale renewable sources exceeded nuclear generation for the first time since July 1984, in March, and again in April, the EIA reports.
This outcome reflects both seasonal and trend growth in renewable generation, as well as maintenance and refueling schedules for nuclear plants, which tend to undergo maintenance during spring and fall months, when overall electricity demand is lower than in summer or winter.
Record generation from both wind and solar as well as recent increases in hydroelectric power as a result of high precipitation across much of the West over the past winter contributed to the overall rise in renewable electricity generation this spring, while nuclear generation in April was at its lowest monthly level since April 2014. However, EIA’s latest Short-Term Energy Outlook (STEO) projects that monthly nuclear electricity generation will surpass renewables again during the summer months of 2017 and that nuclear will generate more electricity than renewables for all of 2017.

This post was published at Zero Hedge on Thu, 12/28/2017 –.

North Korean Defectors Show Signs Of Radiation Exposure

South Korean scientists and doctors who have been examining North Korean defectors have stumbled upon yet another horrifying discovery: At least four of the defectors have shown signs of radiation exposure, the South Korean government said on Wednesday – although researchers could not confirm if the radiation was related to Pyongyang’s nuclear weapons program.
Earlier today, we noted that one of the defectors had also tested positive for Anthrax antibodies, suggesting that North Korean leader Kim Jong Un has continued his chemical weapons program despite signing an international chemical weapons treaty. Of course, the North Korean government has denied that chemical weapons are being used.

This post was published at Zero Hedge on Dec 27, 2017.

THE U.S. SHALE OIL INDUSTRY: Swindling & Stealing Energy To Stay Alive

While the U. S. Shale Energy Industry continues to borrow money to produce uneconomical oil and gas, there is another important phenomenon that is not understood by the analyst community. The critical factor overlooked by the media is the fact that the U. S. shale industry is swindling and stealing energy from other areas to stay alive. Let me explain.
First, let’s take a look at some interesting graphs done by the Bloomberg Gadfly. The first chart below shows how the U. S. shale industry continues to burn through investor cash regardless of $100 or $50 oil prices:

This post was published at SRSrocco Report on DECEMBER 26, 2017.

Is Holiday Gift-Giving Just A Big Waste?

Is Christmas bad for the economy? Do gifts destroy value? Are they a drag on the economy, as many economists suggest?
In ‘The economist’s guide to gift-giving’ at FT, Tim Harford collects the research of these economists who say that ‘Gifts typically destroy value. The total deadweight loss of Christmas in the US alone was $12bn.’
They say that givers pay more than the most the recipient is willing to pay for the gifted item.1 This difference in their willingness to pay is interpreted as a waste.
The same economists and authors point out all of the bad gifts. Many times, gifts aren’t even used or enjoyed by the recipient, only to end up in the attic for a few years and then sold at a yard sale or donated to the local thrift store. From the FT article:
If you give someone a jumper that doesn’t fit, a book they’ve already read or a box of chocolates when they’re on a diet, this is a waste of valuable resources. Fossil fuels have been burnt, tedious hours have been worked, trees have been felled, all to produce products that were unwanted. The same resources could have been devoted, instead, to goods that people actually do value.

This post was published at Ludwig von Mises Institute on Dec 25, 2017.

Saudi Economy Contracts For First Time In 8 Years, Unveils Record Spending Spree To Boost Growth

Back when oil was at $100 and above, the Saudi economy was firing on all cylinders, and nobody even dreamed that the crown jewel of Saudi Arabia – Aramaco – would be on the IPO block in just a few years. However, with oil stuck firmly in the $50 range, things for the Saudi economy are going from bad to worse, and today Riyadh – when it wasn’t busy preventing Yemeni ballistic missiles from hitting the royal palace – said its economy contracted for the first time in eight years as a result of austerity measures and the stagnant price of oil, as the Kingdom announced record spending to stimulate growth.
OPEC’s biggest oil producer said 2017 GDP shrank 0.5% due to a drop in crude production, as part of the 2016 Vienna production cut agreement, but mostly due to lower oil prices. The last time the Saudi economy contracted was in 2009, when GDP fell 2.1% after the global financial crisis sent oil prices crashing. Riyadh also posted a higher-than-expected budget deficit in 2017 and forecast another shortfall next year for the fifth year in a row due to the drop in oil revenues: the finance ministry said it estimates a budget deficit of $52 billion for 2018.
More surprising was the Saudis announcement of a radically expansionary budget for 2018, projecting the highest spending ever despite low oil prices in a bid to stimulate the sluggish economic, saying it expects the GDP to grow by 2.7%. While we wish Riyadh good luck with that, we now know why confiscating the wealth of ultra wealthy Saudi royals was a key component of the country’s economic plan…

This post was published at Zero Hedge on Dec 19, 2017.

Let Them Eat (Yellow)Cake – Where The Uranium Comes From

Uranium is in high demand, as it is used as fuel in nuclear power plants around the world. Statista’s Dyfed Loesche notes that according to the German Institute for Geosciences and Natural Resources BGR, Kazakhstan is the biggest producer of the radioactive metal. The central Asian country produced around 24,600 metric tons of the substance in 2016. This is a share of close to 40 percent of the worldwide production.

This post was published at Zero Hedge on Dec 18, 2017.

Goldman: These Are the Hottest Commodities in 2018

Goldman Sachs continues to ratchet up predictions for commodities, laying out a bullish case for commodities of all stripes in 2018.
The investment bank said that its forecast a year ago for higher commodity prices ‘played out much better than expected.’ The bank pointed to industrial metal prices, which are up 24 percent this year, plus the 13 percent increase in oil prices.
But looking forward, Goldman sees plenty of room to run. ‘The demand backdrop today is now even stronger than a year ago, with robust and synchronous global growth clearly evident,’ Goldman analysts, led by Jeffrey Currie, wrote in a December 11 research note. The extension of the OPEC deal also led the bank to revise up its forecast for oil prices, as inventories should continue to fall throughout 2018.
There are other reasons to be bullish on commodities. The investment bank argues that commodities tend to outperform other asset classes when central banks move to tighten rates. That is because rate hikes typically occur when demand is exceeding supply – the higher prices resulting from that mismatch are why central banks are trying to raise rates, but it is those higher prices that support the investment case into commodities.
The report concluded that “a positive carry in key commodity markets and already strong global demand growth across the commodity complex reinforces the case for owning commodities. And hence we maintain our 12-month overweight recommendation, now with a forecasted return of almost 10 percent.”

This post was published at FinancialSense on 12/15/2017.

Omarosa Says She Has A “Profound Story” To Tell About The Trump Administration

After reportedly setting off alarms in the White House after trying to enter the residence after she’d been sacked by Chief of Staff John Kelly, Omarosa Manigault Newman is threatening to go nuclear. In an interview with Good Morning America’s Michael Strahan, Manigault Newman said there were a lot of things she was ‘very unhappy with’ during her almost 12 months in the White House.
“I have to be very careful about how I answer this but there were a lot of things that I observed during the last year that I was very unhappy with, that I was very uncomfortable with, things that I observed, that I heard, that I listened to,” she said.
After spending the entire interview denying reports about her rumored feud with Kelly and the involvement of the Secret Service in her removal from the White Wing, Manigault Newman abruptly switched gears, turning suddenly critical of her former colleagues.


This post was published at Zero Hedge on Dec 14, 2017.

Satellite Images Show North Korea Building New Tunnel At Nuclear-Test Site

Despite earlier hope amid Tillerson’s comments on diplomacy with North Korea, a new batch of satellite images suggests that North Korean leader Kim Jong Un is ignoring warnings from Chinese (as well as American and South Korean) scientists and instead pressing ahead with the country’s nuclear testing regimen at Punggye-ri, a facility situated in the country’s mountainous northeast.
As scientist from several countries have tried to explain, satellite images suggest Punggye-ri is suffering from ‘Tired Mountain Syndrome’ – a phenomenon first documented by spy satellites examining Soviet nuclear test sites. After being warned by Chinese scientists about the dangers, two tunnels collapsed near the testing chamber back in October, killing 200 North Korean workers.
According to 38North, a blog that closely tracks North Korea related news, work on what appears to be a new tunnel near the site’s West Portal is progressing, leaving the North Portal – where the last five tests were conducted – mostly dormant and likely abandoned, at least for the time being.

This post was published at Zero Hedge on Dec 12, 2017.

Huge Hub Explosion Sparks Surge In UK NatGas Prices

It has been a tough week already for those that heat their homes in Britain (and those that trade Natural Gas). Following extreme weather warnings and the forties pipeline crack shutdown, an explosion at one of the Europe’s biggest gas hubs further tightened supplies sending gas futures prices up by the most in 8 years.
As Bloomberg reports, gas futures rose the most in more than eight years in Britain, which already is struggling to absorb the impact of a crack that shut down a North Sea pipeline network. After snow fell for two days in London, cooler-than-normal temperatures spread from the Alps to Scandinavia, raising demand for heating fuels.


This post was published at Zero Hedge on Dec 12, 2017.

Is Oil About to Collapse?

US producers simply don’t play along with OPEC and Russia.
WTI really does look like it is about to collapse. Let’s be clear, I am not necessarily talking about a return to the sub-$30 of the beginning of 2016 here, but a return to the more recent lows around $42 before too long is distinctly possible, and if that happens, who knows where we go from there? There are, as I have noted in the past, reasons to believe that the long-term path of oil is still upward, but more immediately there is one dominant factor that keeps adding downward pressure, large and still growing supply from North American shale producers.
Some say, as in this FT piece, that there are signs that U. S. shale production has peaked, but then that was also supposed to be the case in 2015 and 2016. I am sure that if I could bother to go back further I would find that the same thing was said in previous years too. The fact is though, that as the EIA chart below shows, after dropping off as price declined at earlier this year, U. S. crude production is growing again and will be higher this year than last and is expected to be higher again in 2018.

This post was published at Wolf Street by Martin Tiller ‘ Dec 9, 2017.

Are US Shale Stocks Finally Set for a Rebound?

After years of meager returns and overspending to boost production at all costs, US shale explorers and drillers are finally about to see their share prices rise next year, according to veteran energy investor Shawn Reynolds.
The new wave of a more disciplined approach to spending and the focus on higher returns will benefit mostly the exploration and production companies. Drilling firms and oilfield services providers are also set to benefit, Reynolds told Bloomberg in an interview published on Friday.
Read Energy Analyst: “Meaningful Upside” for Oil Prices…
Shale companies have already started to realize the need to finally reward their shareholders, and firms are now planning within their means, not just spending to grow production at any cost.
Shale companies now have more growth potential than conventional oil and gas producers, because shale firms face lowered risks in resources extraction, said Reynolds, a fund manager at Van Eck Associates.
‘With shale, you have incredible visibility on growth, possibly the best visibility of any industry in the entire market, and lower risk,’ Reynolds told Bloomberg.

This post was published at FinancialSense on 12/08/201.

Weekend Reading: Recession Risk Hidden In Tax Bill

Authored by Lance Roberts via RealInvestmentAdvice.com,
Since the election, equity bulls have been pinning their hopes on ‘tax cuts’ as the needed injection to support currently elevated stock prices. Stocks have advanced sharply since the election on these expectations, and while earnings have recovered, primarily due to the rise in oil prices, whatever economic growth was to come from tax reform has likely already been priced in.
For some background on our views, both Michael Lebowitz and I have been discussing the tax bills as they are currently proposed since May of this year.
The Spurious Math Of A Tax Cut Rally Corporate Tax Cuts – The Seen & Unseen 3-Myths About Tax Cuts Bull Trap: The False Promise Of Tax Cuts The Conundrum Of Debt, Tax Cuts & The Economy Tax Cuts – The Economic Cure-All Buy The Rumor – Sell The News
We are currently in the second longest economic expansion since WWII. While Republican lawmakers are betting on jump-starting economic growth, the problem becomes the length of the current liquidity-driven expansion. All economic cycles end, and we are already closer to the end of the current expansion than not.

This post was published at Zero Hedge on Dec 8, 2017.

The One Indicator OPEC Must Watch

Authored by Nick Cunningham via OilPrice.com,
‘We will not let go of our current approach until we reach a balanced market,’ Saudi oil minister Khalid al-Falih saidMonday at a news conference in Riyadh.
OPEC ended months of speculation last week when it decided to extend its production cuts through the end of 2018, easing concerns that the limits would be lifted before the oil market was ready. But while it put some uncertainty to rest, the next question is what OPEC does when the oil market becomes ‘balanced’? What is the exit strategy?
There isn’t one at the moment, and we can assume OPEC doesn’t know what comes next. But we do know that the group has one key metric in mind: inventories. The target is to bring global oil inventories back down to the five-year average.
Oil inventories exploded between 2014 and 2017, hitting record levels that left the world awash in oil. That metric, arguably more than any other, exemplified the glut of supply that led to the crash of prices.
It has been a stubborn thing, getting those inventories back down to average levels. A wave of shale bankruptcies didn’t do it, the vanishing rig count didn’t do it either. That led OPEC and a handful of non-OPEC countries led by Russia to limit their production. But even that deal didn’t seem to be doing the trick at the start of 2017, as inventories remained stuck at elevated levels. The euphoria that followed the announcement of the initial deal gave way to a renewed sense of gloom, which pushed WTI back down into the low-$40s by mid-2017.

This post was published at Zero Hedge on Dec 6, 2017.

The U.S. Government Creates and Exacerbates the Nuclear Threat

The whole situation is a ‘Catch 22’ scenario: damned if you do, and damned if you don’t. The problem: we’re American citizens and this is our country. The concurrent problem? It is our country that caused this predicament to occur with North Korea…in a pattern of American imperialism that has been going on actively for about a hundred years. The problem is twofold:
1. North Korea can strike the U. S. with an EMP (Electromagnetic Pulse) attack and/or nuclear missiles, yet:
2. The United States government, through the current and prior two administrations has set the stage for this…as either:
A purposefully-created ‘threat’ to give America a ‘bogeyman’/Emmanuel Goldstein to focus on in a ‘Two-Minutes Hate’ drill…keep the ‘threat level’ alive, or A threat of insignificance grown and nurtured for the express purpose of taking down the country…while reaping profits and power for the oligarchy all along. There is an American oligarchy. The oligarchy is not only made up of business and industrial magnates, but of politicos and religious leaders. The business magnates need the lawmakers and politicos to give them ‘carte blanche’ with tax breaks and incentives such as government contracts. The system needs the general populace (or the ‘proletariat’) to pay taxes and ‘grunt’ out spending on consumer goods and services that keeps the whole thing intact. As in the movie ‘THX-1138,’ there must be periods to pay the utilities, pay for the food, pay taxes on gasoline, taxes on property, taxes on consumer goods, yearly tax increases, and insurances…health, automobile, homeowner…required insurances…

This post was published at shtfplan on December 4th, 2017.

WTI Slumps Despite OPEC ‘Deal’ As Russia Questions Remain

Both WTI and RBOB prices are tumbling this morning after OPEC member agree to limit oil output through the end of 2018. While this is bullishly longer-than-expected (6-9mo was expected), OPEC members now rely on Russia to agree to these terms, and it appears the market is questioning that. Furthermore, despite US shale output at record highs, Saudi officials are shrugging off any impact.
As The Wall Street Journal reports, OPEC members agreed in principle Thursday to keep limiting their output through the end of 2018, according to people familiar with the matter, providing assurance for an oil industry still struggling through a fragile recovery.
The accord signals that the world’s biggest oil-producing countries believe that a global oversupply of oil is still weighing down oil prices, even a year after they struck their first agreement to cut crude production. Oil in storage – a proxy for the global glut – remains well above historical averages, national oil ministers said.
Any agreement OPEC strikes will be contingent on support from a group of producers outside the cartel led by Russia, which pumps more crude than any country in the world. The Russia-led delegations are meeting with OPEC to hash out a final agreement.

This post was published at Zero Hedge on Nov 30, 2017.

WTI Tumbles Below $57 As OPEC-Hype Fades

Goldman’s Damien Courvalin seems to have perfecvtly summed things up – the market was pricing in an OPEC production cut extension of 6-9 months (accounting for around a $2.50 premium in the price). Today’s jawboning from Russia seems to signal April discussions (so a 6-month extension) which is a disappointment – and so WTI prices are tumbling…
Sell the leaked, jawboned news?
As we previously wrote, in conclusion, Goldman believes that oil prices have overshot fundamentals and that price risks are skewed to the downside into Thursday’s meeting.

This post was published at Zero Hedge on Nov 29, 2017.

WTI/RBOB Spike On OPEC Headlines After Bearish Inventory/Production Data

Update: WTI/RBOB was fading after DOE data but then Kuwait dropped the following meaningless headline: OPEC JMMC RECOMMENDS EXTENSION, DIDN’T FINALIZE DURATION. And the algos took over…
Last night’s API-reported surprise crude build sparked selling that not even Russia/Saudi jawboning could rescue, but DOE data showed the exact opposite with a big crude draw and even bigger gasoline draw. Added to a new record high in US crude production and RBOB is fading and WTI is not rallying.
As Bloomberg reports, the U. S. has proven at least one thing this year with its expansion of crude and products exports: we are becoming more energy independent than ever before.

This post was published at Zero Hedge on Nov 29, 2017.