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My guess is that your prediction of WTI >$110 will continue to be the case. I checked my crystal ball, and I predict WTI will be $129 no later than July 27th. Please, Do Not shoot the messenger!
The trends I follow are indicating a curve Higher is to be expected. Some are even projecting a price of $200 by EOY. YIKES! Recession? And if that was to actually happen, I would not want to be a ‘D’ running for re-election at mid-terms. Perhaps the EIA is attempting to influence expectations? Who knows? As for me, I am going to wait for Exxon to forecast lower prices before I believe it.
Consider that with the value of producing assets continuing to increase with the high oil price, at some point it should become more economically feasible to drill for reserves rather than purchase them.
All things considered, once this turmoil in the energy and financial markets is worked out, everything points to the GOM becoming a hotbed of activity. As has been stated before, now it is a waiting game for us.
Mrs. Smith
Commercial Oil inventories increased by 2.0 million barrels, the Strategic Petroleum Reserve (SPR) decreased by 7.3 million barrels - EIA Weekly Petroleum Status Report (Link to report in Gulfslope’s Intro), Released June 8, 2022.
This Week in Petroleum: https://www.eia.gov/petroleum/weekly/
Mrs. Smith
‘Journalist Takes Road Trip in Electric Car, Spends More Time Charging Than Sleeping - Now Says Gas Smells So Sweet’, released June 8, 2022.
https://www.westernjournal.com/journalist-takes-road-trip-electric-car-spends-time-charging-sleeping-now-says-gas-smells-sweet/
GM spokesperson admits 95% of 'clean' energy to charge electric cars comes from COAL. I chuckle every time I view this video:
Interesting perspective. Food for thought.
https://townhall.com/columnists/stephenmoore/2022/06/07/beware-100-green-energy-could-destroy-the-planet-n2608294
Excerpt 1:
“Those tens of millions of windmills, solar panels and electric batteries for cars and trucks aren't exactly biodegradable. So, we will have the most prominent energy graveyard with toxic pollutants that will be 100 times larger than any nuclear waste storage. And yet, the Left is worried about plastic straws!”
Excerpt 2:
“I'm all for mining for America's bountiful natural resources of copper, lead, magnesium and precious metals. But ironically, it's the greens that want to shut down mines, which is like saying you want food, but you oppose farming. Talk about cognitive dissonance.”
Excerpt 3:
“In other words, real nature lovers are finally starting to awaken to the reality that wind and solar aren't so green after all. A nuclear plant takes up at most 1 square mile of land. Wind and solar farms require hundreds of thousands of acres. So, to provide enough electric power to keep Manhattan lit up at night would require paving over nearly the whole state of Connecticut with windmills and solar farms.”
By the way, windmills and solar farms are most inefficient at night, lol.
Mrs. Smith
Some of the items mentioned in the June EIA Short-term Energy Outlook (STEO) forecast, released today:
Note: For additional data you can find the ‘STEO’ link in Gulfslope’s Intro.
* 4% increase in the forecast ‘average’ price of WTI showing $102.47/bbl for 2022. Forecast ‘average’ price for WTI in 2023 remains the same at $93.24/bbl.
* 4% increase in the forecast ‘average’ price of Brent reflecting $107.37/bbl for 2022. Forecast ‘average’ price for Brent in 2023 remains the same at $97.24/bbl.
* U.S. Natural Gas ‘residential average’ (dollars per thousand cubic feet) remained unchanged for 2022 and 2023 at $14.49 and $14.78, respectively. Natural gas prices are rising mainly because of three factors: natural gas inventories that are below the five-year average, steady demand for U.S. liquefied natural gas (LNG) exports, and high demand for natural gas from the electric power sector given limited opportunities for natural gas-to-coal switching.
* 10% increase in GDP for 2023 to 3.4. The forecast GDP for 2022 remains unchanged at 3.1.
* 22% decline in Russia’s forecast production of total liquid fuels down from 11.3 million b/d in 1Q22 to 9.3 million b/d in 4Q23.
* 3% increase in OPEC crude oil production which is forecast to average 29.2 million b/d in 2H22, up 0.8 million b/d from 1H22.
* U.S. natural gas fuel costs for electricity generators will increase 59% in 2022. The EIA does not expect a significant decline in generation from natural gas-fired power plants because of the limited ability of coal power plants to act as an alternative source of generation. The U.S. natural gas generation share will average 37% and 36% in 2022 and 2023, respectively.
* The U.S. residential electricity price will average 14.6 cents/kWh between June and August 2022, up 4.8% from summer 2021. The forecast summer commercial sector price averages 12.0 cents/kWh (up 4.7%) and the forecast industrial sector price averages 7.7 cents/kWh (up 3.2%). Higher retail electricity prices largely reflect higher wholesale power prices and higher natural gas prices. The EIA expects the summer increases in retail residential electricity prices will range from an increase of 2.4% in the West South Central region to a 16.1% increase in New England.
29th OPEC and non-OPEC Ministerial Meeting
https://www.opec.org/opec_web/en/press_room/6882.htm
The 29th OPEC and non-OPEC Ministerial Meeting was held via videoconference on June 2, 2022. The Meeting noted the most recent reopening from lockdowns in major global economic centers. It further noted that global refinery intake is expected to increase after seasonal maintenance. The Meeting highlighted the importance of stable and balanced markets for both crude oil and refined products.
The Meeting therefore resolved to:
1. Reaffirm the decision of the 10th OPEC and non-OPEC Ministerial meeting on April 12, 2020 and further endorsed in subsequent meetings, including the 19th OPEC and non-OPEC Ministerial Meeting on July 18, 2021.
2. Reconfirm the production adjustment plan and the monthly production adjustment mechanism approved at the 19th OPEC and non-OPEC Ministerial Meeting and the decision to adjust upward the monthly overall production by 0.432 mb/d for the month of July 2022.
3. Advance the planned overall production adjustment for the month of September and redistribute equally the 0.432 mb/d production increase over the months of July and August 2022. Therefore, July production will be adjusted upward by 0.648 mb/d as per the attached schedule.
OPEC Production Table:https://www.opec.org/opec_web/static_files_project/media/downloads/press_room/Production%20table%20-%2028th%20ONOMM.pdf
4. Extend the compensation period until the end of December 2022 as requested by some underperforming countries and request that underperforming countries submit their plans by June 17, 2022. Compensation plans should be submitted in accordance with the statement of the 15th OPEC and non-OPEC Ministerial Meeting.
5. Reiterate the critical importance of adhering to full conformity and to the compensation mechanism.
6. Hold the 30th OPEC and non-OPEC Ministerial Meeting on June 30, 2022.
‘DON’T WRITE OFF COAL. WE NEED IT TO ENSURE POWER GRID RELIABILITY’, released June 7, 2022.
https://www.heartland.org/news-opinion/news/dont-write-off-coal-we-need-it-to-ensure-power-grid-reliability
The power generation mix that has underpinned grid reliability and affordable electricity is currently under threat — a “perfect storm” of market failure and regulatory overreach in place of sound energy policy.
Weather forecasters predict a long, hot summer for most of the United States, with significant implications for the nation’s electric power grids. For example, the North American Electric Reliability Corporation (NERC), the regulatory authority that oversees grid operations in the U.S. and Canada, recently warned that the entire West and many areas of the Midwest face an “elevated risk” of insufficient electricity supply because of slim reserve margins. The potential shortfall is especially acute in Michigan, where the grid operator plans controlled outages this summer. For the Gulf Coast, NERC deems the risk of insufficient operating reserves to be “high” during peak demand conditions.
How did we get here? In part, looming power shortages can be attributed to a robust domestic economy that rebounded quickly from the COVID-19 induced recession. When production and consumption increase, the demand for electricity grows in tandem. But the main culprit is the “energy transition,” with its emphasis on weaning the power grid off fossil fuels. According to NERC, the premature retirements of baseload generating units, such as coal and nuclear plants, combined with the intermittency of wind and solar as power sources, have seriously impaired grid resiliency and reliability.
In fact, NERC warned as early as 2018 that “an accelerated retirement of coal-fired and nuclear plants could lead to power outages, temporary shortfalls in surplus generation, and transmission problems.”
To make matters worse, the energy-transition has been disrupted by supply-chain problems, inflation, and a federal investigation alleging China’s solar-panel manufacturers are circumventing tariffs. Combined, these factors are slowing the build-out of renewables and new investment in large-scale battery storage.
Since 2007, electricity output from the nation’s fleet of coal plants has fallen by more than 50 percent, displaced mainly by renewables, and now accounts for only 22 percent of utility-scale generation. Forty gigawatts (GWs) of installed coal capacity have been shuttered in recent years, and another 27 GWs are scheduled to go offline by 2025. Greater use of natural gas for power generation, coupled with federal and state subsidies and mandates for renewable energy, has further hastened the demise of coal plants.
Unlike wind turbines and solar panels, coal plants are always on, regardless of the time of day or weather conditions. Coal plants keep months of fuel on site, providing additional security and resiliency to the grid. What’s more, natural gas-fired generation, which supplies about 40 percent of the electrons to the nation’s power grids, has become much more expensive. In recent months, the spot price for natural gas has nearly doubled, while the cost of thermal coal has increased only modestly.
Market failures in pricing bulk power, combined with the Environmental Protection Administration’s (EPA) agenda to accelerate coal plant closures, has put our electric power grids — and our economy — at risk. What’s more, the coal fleet is being pushed aside much faster than reliable alternatives can be incorporated into transmission networks.
Eliminating policies that cause market distortions, such as the huge subsidies to wind and solar projects, would be one way to sustain base-load power generation. But because renewables have strong political support, those subsidies are likely to remain in place. Instead, to keep baseload power in the mix, and to encourage investment in new generation, we need a pricing system that recognizes the value of coal and nuclear facilities in providing grid security and an adequate reserve margin.
To keep our power grids agile and reliable, nuclear, coal, natural gas, solar, wind and hydro all will be required. Unfortunately, the generation mix that has underpinned grid reliability and affordable electricity is currently under threat — a “perfect storm” of market failure and regulatory overreach in place of sound energy policy.
Renewables Struggle To Replace Reliable Energy. Are Blackouts Inevitable?
Released May 24, 2022: https://thefederalist.com/2022/05/24/report-deadly-summer-blackouts-inevitable-as-renewables-struggle-to-replace-reliable-energy/
North American Electric Reliability Corporation (NERC) Announcement: https://www.nerc.com/news/Headlines%20DL/May%2018%202022%20SRA%20Announcement.pdf
NERC 2022 Summer Reliability Assessment: https://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_SRA_2022.pdf
‘This is all a man-made energy crisis on the part of leaders who worship at the altar of the green agenda while plunging our country into the dark ages.
Americans will need to brace for deadly blackouts under a hotter-than-usual summer, warned a major energy non-profit in a sobering report last week.
On Wednesday, the North American Electric Reliability Corporation (NERC) released its annual summer assessment covering June through September with grim predictions of repeated blackouts throughout the country. The entire western United States, along with a majority of the Midwest, Texas, and the western south, face “high” or “elevated” risks of “energy emergencies” brought by severe drought, unreliable solar, and supply chain issues hampering conventional sources.
“We’ve been doing this for close to 30 years,” NERC Director of Reliability Assessment and Performance Analysis John Moura told CBS News. “This is probably one of the grimmest pictures we’ve painted in a while.”
Last week, the summer outlook from the National Oceanic and Atmospheric Administration forecast temperatures above what the agency considers normal compared to the prior 143 years with relatively low precipitation across much of the west and the plains.
Lack of water and higher-than-normal temperatures are expected to stress the nation’s power grid beyond capacity. Low water levels, the NERC emphasizes, will limit plants’ ability to keep cool while directly reducing power generated by hydroelectric dams.
“Energy output from hydro generators throughout most of the Western United States is being affected by widespread drought and below-normal snowpack,” the authors wrote.
Solar panels, on the other hand, will be unable to generate power from the sun once clouded out by smoke from wildfires, seemingly worse every year as a consequence of negligent land management. Critically, Moura told BNN Bloomberg the early retirement of fossil fuel plants shares much of the blame for this year’s vulnerabilities in the nation’s energy infrastructure.
“The pace of our grid transformation is out of sync,” Moura told the paper as President Joe Biden rushes to promote unreliable renewables in the place of reliable, lower-cost coal and natural gas. At the same time, the Biden administration is shutting down domestic energy projects in the form of fossil fuels even as gas prices continue to reach new records daily.
Larry Behrens, the communications director for the energy non-profit Power the Future, blamed the coming blackouts on “the failed green agenda,” highlighting New Mexico as a prime example.
“In New Mexico, Governor Michelle Lujan Grisham has forced the state to embrace her own ‘mini’ Green New Deal and now the state faces blackouts as reliable power is abandoned while hard-working men and women lose their jobs,” Behrens told The Federalist.
Grisham signed the climate package in 2019 during her first year in office. It mandates state electricity completely carbon-free by 2045. PNM, the state’s largest power provider, warned of outages in February.
“Make no mistake,” Behrens added, “this is all a man-made energy crisis on the part of leaders who worship at the altar of the green agenda while plunging our country into the dark ages.”
California and Texas have already begun to experience periodic blackouts as a consequence of a rushed transition to intermittent power sources by wind and solar. The rolling blackouts in California fueled in part the September recall effort against Democrat Gov. Gavin Newsom.
Power outages are deadly episodes, especially during heat waves when air conditioning no longer becomes available to the elderly. Last summer, officials in Washington attributed the deaths of two women in their 60s to overheating as regional energy distributors implemented rolling blackouts due to overwhelming demand amid a heatwave. Legacy outlets wrongly blamed climate change for the high temperatures.
‘International oil and natural gas companies reported increased cash flow and higher proved reserves in 2021’
This Week in Petroleum, Release Date: June 2, 2022
https://www.eia.gov/petroleum/weekly/
Commercial Oil inventories decreased by 5.1 million barrels, the Strategic Petroleum Reserve (SPR) decreased by 5.4 million barrels - EIA Weekly Petroleum Status Report, Released June 2, 2022.
Did anyone notice the GOM Rig Count went down 2 rigs last week? I hope this is not the start of a trend. We will have more clarity when the weekly report is released this afternoon. You can find the link in the Intro.
Mrs. Smith
The Swamp only wants to implement the changes that benefit them, and supports the agenda crafted to hand them more power and enrich them. What is good for the country does not usually even get on the agenda. For example, no oil and gas support in the agenda in spite of $5 gasoline?
The mid-terms are coming, and we are going to do well enough that they should be able to stall the Swamp’s agenda. But if R’s do not get 2/3 of both houses, they will not be able to make significant changes without some D participation. Could be an issue.
So I guess the question becomes, what percentage of the voters wish to pursue an agenda that steers the country towards a Venezuelan outcome vs what percentage want to return to the direction the country was on before the ‘transformative change’ began (2009). I just have to believe that when voters consider gasoline prices, inflation, immigration, and all the other calamities we will be enduring this summer, they will want to change directions. So barring election ‘anomalies’ some of this will be addressed.
The lesson I learned from observing the past decade of politics is that when politicians start using new terminology, one should be distrustful until all details are revealed. And no more voting on a bill to find out what is in it. If the content of the bill cannot be explained and found agreeable, it does not deserve a vote.
You are correct to assume that the DC creatures are going to feel the pressure. And if they try to resist the mood of the people, it will reveal that, in reality, they are actually more stupid than what they believe us to be.
To quote an old joke, “Congressmen should be required to dress like NASCAR drivers, so we can know their corporate sponsors.“
And “I do not approve of political jokes. I have seen too many of them get elected.”
Mrs. Smith
A four-step plan.
Focus, focus, focus. Recommended meditation. Visualize your GSPE stock portfolio at $0.50 a share.
Step one. Follow us to the mid-terms.
Step two. Drill the well.
Step three. Follow us to the 2024 election.
Step four. Return our country to prosperity.
Mrs. Smith
Is this a real change in fundamentals? Probably not. Or only manipulation? Most likely. They were able to get it down where they could buy shares cheapo. Next, they will back off, and let the price rise again. Then sell back to us at $0.012 later on. The Creepy Crew Cabal strikes again. Value of all GSPE trades at the lowest point was under $160. And I did not get in on any of the action! Woe is me.
With GSPE I am seeing it only as an investment. Longer term evidently. Certainly there are some short-term trading aspects, but the volume and value of those do not tempt me. Include me in the group where the main attraction is in the drilling of a successful well and a stock price of greater than $0.50.
And I do not wait for the moon and stars to properly align so I get my dirt bid price. I just dollar-cost-average. Of course, the cheaper the shares, the better, but the price is not the most critical element. With all the global energy demands for oil and gas over the long-term, drilling the Tau 2 will happen at some point.
And when it does, the cost basis between $0.012 and $0.007 will not be of the greatest significance. Accumulating and owning the shares is most important, and the volume available to purchase is the thing on which to focus.
Mrs. Smith
Treasure hunting? I prefer Black Gold. The old-fashioned way. Of course, Gulfslope is a lot more high-tech.
I will no longer be posting the “weekly and monthly reports” to the GSPE board. For those of you that found them informative or helpful, and for the convenience of the users of this board, I have organized links to these reports. If you wish to access this information, it is located in the Gulfslope Introduction page. Simply click the report you wish to view.
Mrs. Smith
Amen. Good Post. Hopefully, the mid-terms will occur before any of that gets well developed. While we are on the subject, here is an original idea on how to challenge climate change.
‘What might a climate change class action lawsuit look like?’, Released May 24, 2022, By Christopher Garbacz
https://www.americanthinker.com/blog/2022/05/what_might_a_climate_change_class_action_lawsuit_look_like.html
In two previous articles at American Thinker (here and here), I have suggested filing a climate change class action lawsuit to determine if the planet is in danger of total destruction from anthropogenic climate change and to assess dollar damages if the court concludes there is no danger. This essay examines examples of situations that might justify a lawsuit.
Defendants would be the usual suspects in government, universities, foundations, Green non-profits, renewables corporations, and their lobbyists. Greens have filed such lawsuits against governments for moving too slowly to implement the Green Agenda and against corporations for promoting disinformation about the Green Agenda.
Greens have been unsuccessful with these lawsuits because they cannot prove damages. After all, a computer model from the U.N. IPCC does not prove damages.
However, it is quite clear that the Green Agenda has damaged and will damage numerous business entities, and it's possible to reach a reasonable estimate of dollar damages.
ExxonMobile, which invests in "green" energy, provides a good example of what a suit could look like. ExxonMobil said today it is planning a hydrogen production plant and one of the world's largest carbon capture and storage projects at its integrated refining and petrochemical site at Baytown, Texas, supporting efforts to reduce emissions from company operations and local industry. … "[T]his project can play an important part in achieving America's lower-emissions aspirations[.]"
Reducing up to 30% of CO2 at the plant alone would cost $1 billion or so, and that doesn't consider the company's other "green" schemes. Pensions & Investments Research Consultants (PIRC), a British proxy adviser, has been urging shareholders to vote against five directors, including ExxonMobil's chairman, Darren Woods, for wasting money through these Green investments.
Obviously, "achieving America's lower-emissions aspirations" isn't needed if the U.N. IPCC model doesn't prove future damages from higher "earth temperatures." Therefore, the investment resources committed to this project and similar past and ongoing projects are unnecessary expenditures and directly harm shareholders.
While the PIRC does not call for vetting the U.N. IPCC modeling, this would seem to be an excellent opportunity to do so. If ousting the CEO and the directors is not successful, shareholders could go to court and make their case against the Green Agenda. Numerous other corporations could face similar suits.
The Texas electric blackout kerfuffle of February 2021 is another example of a costly, even deadly, Green Agenda item: Nobody yet knew just how widespread the blackouts would become — that they would spread across almost the entire state, leave an unprecedented 11 million Texans freezing in the dark for as long as three days, and result in as many as seven hundred deaths. But neither could the governor, legislators, and regulators who are supposed to oversee the state's electric grid claim to be surprised. They had been warned repeatedly, by experts and by previous calamities — including a major blackout in 2011 — that the grid was uniquely vulnerable to cold weather.
All kinds of excuses have been made for grid failure. Still, but for backing away from fossil fuel and heavily depending on wind, this never would have happened. How much is a life worth?
The North American Electricity Council (NERC) has warned that rolling blackouts around the country are likely this summer. The reason is that renewables have replaced fossil generation in many states. Renewables work only part of the time, so backup power (read: fossil fuel) is required for a reliable electric grid. Too much fossil fuel has already been taken offline because of the Green Agenda to save the planet. This would make for an excellent class action lawsuit as suggested.
Foundations and universities that the left captured can be sued too for essentially misappropriating funding to the Green Agenda cause, which is not scientifically proven. Board members could right the ship internally, but, if necessary, suits could be filed.
Renewable proponents could be challenged in public service commission hearings around the country. Intervene and provide testimony on the science of the U.N. IPCC modeling. This has never been done, though it seems so logical to insist on verification.
President Biden admits that his administration wants to destroy fossil fuels and replace them with renewable energy. The only reason to do so is the unfounded claim that the world will be destroyed otherwise. If this reason can be debunked with climate change class action lawsuits, America and the world will greatly benefit. It's easy to think of many other possibilities for such lawsuits.
How do you turn the Green Agenda on its head? Say, "Class action lawsuits will save the planet."
Commercial Oil inventories decreased by 1 million barrels, the Strategic Petroleum Reserve (SPR) decreased by 6 million barrels - EIA Weekly Petroleum Status Report, Release Date: May 25, 2022
Full Report with Graphs: https://www.eia.gov/petroleum/supply/weekly/pdf/wpsrall.pdf
This Week in Petroleum: https://www.eia.gov/petroleum/weekly/
WTI $112.12/bbl - 12:17 pm CDT 25/05/2022: https://oilprice.com/oil-price-charts/#WTI-Crude
Summary of Weekly Petroleum Data for the week ending 5/20/2022
HIGHLIGHTS:
U.S. crude oil refinery inputs averaged 16.3 million barrels per day during the week ending May 20, 2022 which was 334,000 barrels per day more than the previous week’s average. Refineries operated at 93.2% of their operable capacity last week. Gasoline production decreased last week, averaging 9.4 million barrels per day. Distillate fuel production increased last week, averaging 5.1 million barrels per day.
U.S. crude oil imports averaged 6.5 million barrels per day last week, down by 82,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 6.4 million barrels per day, 8.6% more than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 847,000 barrels per day, and distillate fuel imports averaged 80,000 barrels per day.
The Strategic Petroleum Reserve (SPR) including non-U.S. stocks held under foreign or commercial storage agreements decreased by 6.0 million barrels from the previous week currently at 532 million barrels.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 1.0 million barrels from the previous week. At 419.8 million barrels, U.S. crude oil inventories are about 14% below the five year average for this time of year. Total motor gasoline inventories decreased by 0.5 million barrels last week and are about 8% below the five year average for this time of year. Finished gasoline and blending components inventories both decreased last week. Distillate fuel inventories increased by 1.7 million barrels last week and are about 21% below the five year average for this time of year. Propane/propylene inventories increased by 1.8 million barrels last week and are about 8% below the five year average for this time of year. Total commercial petroleum inventories increased by 0.7 million barrels last week.
Total products supplied over the last four-week period averaged 19.5 million barrels a day, up by 2.1% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 8.8 million barrels a day, down by 2.7% from the same period last year. Distillate fuel product supplied averaged 3.9 million barrels a day over the past four weeks, down by 7.2% from the same period last year. Jet fuel product supplied was up 22.0% compared with the same four-week period last year.
The West Texas Intermediate crude oil price was $112.63 per barrel on May 20, 2022, $2.11 above last week’s price and $49.02 more than a year ago. The spot price for conventional gasoline in the New York Harbor was $3.918 per gallon, $0.070 less than last week’s price but $1.862 above a year ago. The spot price for ultra-low sulfur diesel fuel in the New York Harbor was $4.004 per gallon, $1.335 below last week’s price but $2.007 over a year ago.
The national average retail regular gasoline price increased to $4.593 per gallon on May 23, 2022, $0.102 above last week’s price and $1.573 over a year ago. The national average retail diesel fuel price decreased to $5.571 per gallon, $0.042 per gallon less than last week’s price but $2.318 higher than a year ago.
‘FERC approves new natural gas pipeline projects to increase U.S. exports’, Released May 24, 2022
https://www.eia.gov/todayinenergy/detail.php?id=52478
‘Don’t Look to Oil Companies to Lower High Retail Gasoline Prices’, Released May 10, 2022
https://www.dallasfed.org/research/economics/2022/0510
Mrs. Smith
Federal Reserve Bank of Dallas ”Energy Slideshow”, Updated May 9, 2022
See link below for slideshow charts on Energy Prices, Global Petroleum Data, National Outlook Data, and Regional Activity:
https://www.dallasfed.org/-/media/Documents/research/energy/energycharts.pdf?la=en
Mrs. Smith
If they do not already have one, there is a possibility that Gulfslope will need a new Tau 2 Exploration Plan for SS351. No big deal. Maybe it is a good thing.
I suspect they will go for the deep pay targets this time and plan to make it as far as they can. If they happen to hit a good commercial zone, they may decide to make a well at that depth. They can always drill a Tau 3 to the deeper depths at a later time, as in Mahogany Field / 26 wells.
Yes, Delek’s financial position should be improving every day. They may not even want an additional Partner.
I think the oil and gas market is definitely red hot. And probably undervalued as well. Check out this link.
https://financialpost.com/commodities/energy/oil-gas/eric-nuttall-energy-stocks-remain-woefully-undervalued-despite-the-massively-bullish-backdrop
I believe the Republicans will make enough gains to take back control of the Congress after the mid-term elections. That will mean they are in charge of spending, and also have the ability to put a stop to much of the harmful agenda. Hoping Gulfslope can drill Tau 2 at that point.
By the way, Louisiana Light Sweet $114.23/bbl up 100%, lol.
Mrs. Smith
Other considerations for discussion from any posters with drilling expertise or sources.
There are finite resources available of the type that Gulfslope will need for drilling the Tau 2 well.
Not only the rig, but one that is Managed Pressure Drilling (MPD) capable. And BOPs of the correct size and pressure. These might be the two most important considerations in the next design plan.
Remember, the Tau 1 had many mechanical issues that caused an additional number of strings of casing to be utilized from the design (8 total). After the final episode, the hole size was just too small and the costs too high to continue with that well.
MPD may well reduce the necessity of installing some of those additional strings of casing and sidetracks. And therefore save much time and drilling dollars.
But by ‘beginning’ with larger hole sizes and larger casing in the first place, the operator reserves the ability to continue drilling to the targets by installing any additional casing strings that are necessary. This option requires the larger size BOP’s and casing at the start.
Next, higher pressures than expected were encountered in Tau 1. So casings with higher working pressures should be planned.
The lessons learned from Tau 1 are we need larger BOPs with higher working pressure at the outset, a larger hole, larger casing with higher pressure capability, and a MPD system. Hopefully that is the plan they are working on.
These options will lower the mechanical risks and the potential overall cost. Mr. Seitz knows this. The only limitations will be the actual drilling budget and the equipment availability.
There cannot be that many BOP stacks of the correct size and working pressure accessible in the GOM. I wonder how many are available for rental at this time? Any time? I just do not have the personal expertise to answer these questions.
Drill pipe of the right size, pressure, weight, type, and amount? It might be hard to get right now too. Same thing for casing and bits. Delivery times?
With only 17 rigs working GOM today, these may not become really serious issues. But say we get to 25 rigs? I would start to worry. Service companies are starting to have difficulty replacing their stock. And inflation is attacking already high prices. Better increase that drilling budget another 25%.
The ‘Breakeven’ on the Tau 2 was forecast to be $20 per barrel. Even if you double that to $40 per barrel the margin is there for vast profit.
Point is, all this takes much planning and coordination with long delivery times for items not readily available. And you cannot buy them on credit.
Although the Tau prospect will not expire until the end of 2025, I have a few concerns regarding the supply chain. We are told that the company is working on the drilling plan. And I trust they are. But these plans do not have an unlimited window of viability. I am sure the plans can be finalized quickly. Financing for partners is most likely the hold up in my opinion.
Sorry. Just rambling. Apologies.
Mrs. Smith
Spreadsheets are not only for balancing checkbooks.
Imagine a rocket just re-entering earth’s atmosphere with the intent to land on a barge in the middle of the ocean. Would it be controlled by a Mission Control similar to the one NASA uses?
No. The communication and decision times are too slow. Instead, the rocket is equipped with hundreds of sensors and instruments that are measuring literally everything, in real time, constantly, many times per second.
Results are calculated and listed in the master spreadsheet. For each result is a programmed order. “If this, then that. Or if that, then this.” The decisions are made and implemented in nano or pico seconds, because that is how quickly the rocket must be controlled.
Now say that, hypothetically, there is a stock trading program measuring inputs and categorizing them into a spreadsheet. The programming is tracking a stock and making buy/sell decisions based on programmed orders. Is this not what the human traders are up against with the MM’s trading programs?
These decisions are implemented as soon as the programmed status is obtained. The number of trades is only limited by the actual speed of the movement of the stock and the speed of the data communication. Trades can happen unlimited times per minute as long as the programming criteria is met. Which leads me back to the question from Gold80302 of “who is buying this stock” and why.
Buying TSLA or XOM would make some dollars. A small amount per trade perhaps, but with many trades per minute, cumulatively, over a trading day, it adds up. Just an observation.
Why would a commercial investment organization really be interested in a GSPE? This stock would not be a good choice since the volume is too low and erratic. And the value of an entire day’s trading might be only $25,000, or even less. The value of the time required for the trading program to be used to buy a stock like GSPE just does not make sense. Maybe as spec says, it is a lone trader’s “lotto” play. That is a better possibility.
Or might it be somebody looking to increase an ownership stake (Delek or GSPE insiders)? Or establishing an ownership stake (CENAQ insiders)? Just as likely. Perhaps more so if an investment decision is planned.
I know there is no way for us to know the answer. But it is on my mind too, and I cannot shake it. Looking for clues. Needle-in-the-haystack progress. And not enough hours to allocate. But the fact remains, somebody is buying GSPE stock at this time. And this is more significant than who is selling, as long as it is not a GSPE insider’s action.
Mrs. Smith
Seems like momentum for our side is building.
More ideas that support the premise that we need to change how we handle our energy.
For your convenience additional light reading.
https://www.americanthinker.com/blog/2022/05/when_it_comes_to_energy_production_the_midterm_elections_matter.html
https://dailycaller.com/2022/05/19/bidens-unelected-bureaucrats-greatest-threat-america-energy-security/
https://dailycaller.com/2022/05/19/biden-administration-oil-gas-drilling-permit-delays/
https://redstate.com/nick-arama/2022/05/20/must-watch-sen-sullivan-lists-what-biden-has-done-just-in-last-three-weeks-to-block-oil-production-n567587
https://www.realclearenergy.org/articles/2022/05/18/reliable_power_during_the_energy_transition_requires_natural_gas_833051.html
Mrs. Smith
Considering all the accumulated data, the Tau prospect is probably of greater interest. My guess is there are few GOM leases that hold de-risked prospects similar to Gulfslope’s Tau field. But if one can be located, and the price is right, certainly Delek would consider it.
By the way, I do not eat gold anymore either. It has a metallic after taste that even Ketchup cannot cover up.
Mrs. Smith
US Oil and Gas Rig Count up 14 reflecting 728 rigs as of 5/20/2022. GOM Offshore Rig Count remained the same from the previous week and is currently showing 17 rigs. Gulfslope’s Tau prospect is located in GOM Louisiana Offshore waters.
https://rigcount.bakerhughes.com
http://www.dnr.louisiana.gov/assets/TAD/data/drill_weekly/WeeklyRigCountUpdate.pdf
Mrs. Smith
At the start, I was of the opinion that the primary obstacle needing to be overcome in order to find a partner to drill the Tau 2 was the oil price. I am now coming to realize that, although a big part of the decision to drill, the price may not have been the biggest impediment after all. The biggest problem all along has been the arrogant, condescending, narcissistic desire of government bureaucrats to ‘fundamentally transform’ this country at all costs. Read this link and view these videos from Thursday. I think people are starting to see the monster that has been created.
https://redstate.com/nick-arama/2022/05/19/manchin-exposes-insane-biden-plan-on-oil-leases-during-haaland-testimony-n567194
I am now convinced the problem is actually government interference in the market and how government bureaucrats wish to control the choices that we have in our lives and the amount of freedom we have to make those choices. I fear that this is only the tip of the iceberg and that our lives and this country will be negatively affected going forward as corporations have noticed and are responding. It really is a sad state of affairs. And I am sad for us all, our careers, our quality of life, families, jobs, savings, and the generations following.
The insidious harm is everywhere around us. And the warnings and alarms are being ignored. Warnings such as the electric grid can not handle the move to EVs. Even if it could, there will not be enough electricity to charge all those vehicles. Renewables do not have the battery technology required to store the energy they do generate. No need to be concerned about the price tag either. But no worries, we will not need electricity at night, or in the winter, or when it is cloudy, etc. The bureaucrats will continue to shut down more gas and coal electric generating plants and outlaw ICE vehicles anyway. Forget the consequences of the agenda. Full speed ahead!
It just seems that these decisions are being made 10 or 15 years prematurely, before the technology exists to support it all. Perhaps one day soon we will find ourselves lacking the ability to maintain even basic electricity needs, much less power transportation. I hope to not be in an elevator, an EV, or on a train when it happens.
But the emotion I am mostly feeling is anger. Yes, I am angry at those politicians that have decided to cripple this country and this industry in their quest to force their vision of how we will live our lives on us. I am angry that these nitwits are bringing this non-productive and inefficient waste into my life at a time when I was hoping to be able to focus my time, effort, and energy in a totally different direction.
They now have my attention. And if they get your attention too, then we, and others, can begin the process of stopping their momentum and rebuilding the mess their naïveté has created. In between we may even see Tau 2 get drilled. Let us get serious, get focused, and get going.
Mrs. Smith
That is a good question. On this board, we regularly discuss who is selling. But I too have often wondered if who is buying is not more important.
Mrs. Smith
API Monthly Statistical Report ‘MSR’, Released 5/19/2022. API Statistics Department & Office of the Chief Economist
For Notable Chart Details and Data By Section see ‘MSR’ pdf link: https://www.api.org/-/media/Files/Publications/Monthly%20Statistical%20Report/2022-04/API-Monthly-Statistical-Report-Apr-2022.pdf
API Energy Tomorrow Blog | MSR: Record Pull for U.S. Oil Exports in April Spurred Historically Low Inventories, Released 5/19/2022: https://www.api.org/news-policy-and-issues/blog/2022/05/19/msr-record-pull-for-us-oil-exports-in-april-spurred-historically-low-inventories
EXECUTIVE SUMMARY:
* U.S. petroleum demand (19.3 mb/d) decreased to its lowest for any month since March 2021.
* U.S. production of crude oil and natural gas liquids (NGLs) together remained flat in April.
* With Russia’s war in Ukraine, U.S. petroleum net exports rose to 1.4 mb/d, their highest on record since 1947.
* U.S. crude oil commercial inventories (ex-SPR) were the lowest for April since 2014 and showed the lowest year-to-date stock building on record since 2005.
U.S. petroleum demand fell by 0.1 million barrels per day (mb/d) in March and by another 1.0 mb/d in April. Excluding the 2020-2021 pandemic, this was the largest two-month decrease since September 2008. The vast majority of the fall was in “other oils” (that is, naphtha, gasoil, propane, and propylene) that feed refinery and petrochemical operations which enable consumer products like medical plastics, films, and packaging. As motor fuel prices remained near record-high levels, however, U.S. gasoline demand remained flat (compared seasonal increases historically since 2012), and distillate fuel oil demand dropped for a second straight month. Residual fuel oil demand tripled year-on-year with fuel substitution.
U.S. crude oil production rose by 158,000 barrels per day (b/d) in April but was largely offset by a 130,000 b/d decrease in natural gas liquids (NGL) field production. Meanwhile, U.S. refinery activity remained solid with a capacity utilization rate over 90% for the second straight month. And with the potential loss of Russian crude oil and petroleum products to global markets, U.S. petroleum net exports rose to 1.4 mb/d, their second highest for any month on record since 1947. Consequently, U.S. crude oil inventories remained at their lowest for the month since 2014. Notably, U.S. commercial crude oil inventories between December and April each year on record since 2005 have historically risen by an average of more than 40 million barrels in advance of increased refining activity preceding the summer driving season. As of April 2022 year-to-date, however, U.S. crude oil inventories fell by 3.4 million barrels.
Leading economic indicators weakened. API’s Distillate Economic Indicator suggested slowed growth of U.S. industrial production and broader economic activity
Demand
U.S. petroleum demand (19.3 mb/d) fell to its lowest since March 2021.
– Motor gasoline demand (8.7 mb/d) flattened along with urban commuting.
– Distillate demand dropped for a 2nd straight month.
– Jet fuel demand continued to rise above 1.5 mb/d.
– Other oils’ demand dropped by 1.0 mb/d in April.
Prices & Macroeconomy
• Crude oil and gasoline prices receded in April.
• Leading indicators showed weaker industrial growth and consumer sentiment.
Supply
• Growth of U.S. crude oil production offset by lower NGL production.
International trade
• Global geopolitics spurred record-high U.S. petroleum exports.
Industry operations
• U.S. refining capacity utilization rate over 90% for a second straight month.
Inventories
• Crude Historically low crude oil inventories and unusually low accumulation oil inventories fell to their lowest for April since 2014.
PETROLEUM FACTS AT A GLANCE – May 2022 RELEASE
1. Total U.S. supply of crude oil, natural gas liquids and other liquids in April 2022: 18,507,000 b/d, up by 742,000 b/d compared with April 2021 (April 2021: 17,765,000 b/d) [API]
2. U.S. crude oil production in April 2022: 11,840,000 b/d (of which 440,000 b/d was Alaskan) (April 2021: 11,230,000 b/d). U.S. production of natural gas liquids in April 2022: 5,600,000 b/d (April 2021: 5,443,000 b/d). [API]
3. Total petroleum products delivered to the domestic market in April 2022: 19,284,000 b/d (April 2021: 19,459,000 b/d). [API]
4. U.S. petroleum exports in April 2022: 9,615 ,000 b/d (April 2021: 9,110,000 b/d). [API]
5. U.S. petroleum trade balance contracted by 508,000 b/d to imply April 2022 net exports of 1,351,000 b/d (April 2021: 843,000 b/d net exports). [API]
API - Proposed Offshore Energy Program Shows Disconnect Between Political Rhetoric, May 19, 2022 Press Release: https://www.api.org/news-policy-and-issues/news/2022/05/19/api-proposed-offshore-program-shows-disconnect-between-rhetoric-and-reality
WASHINGTON, May 19, 2022 — The American Petroleum Institute (API) today released the following statement from Senior Vice President of Policy, Economics and Regulatory Affairs Frank Macchiarola in response to the Department of Interior's (DOI) proposed 5-Year Program for federal offshore leasing on the Outer Continental Shelf:
“Today’s announcement from the Department of the Interior confirms they are significantly behind in this multi-year process and will release a proposed program by June 30 - the day they should be finalizing it. The practical effect of this is that it is unlikely there will be offshore lease sales before the end of 2023. This is one more example of the disconnect between the administration’s political rhetoric and policy reality. As energy prices and geopolitical volatility continue to rise, we urge the administration to end the continued mixed signals on energy policy and remove regulatory hurdles that are hindering American producers’ ability to increase supply and meet the growing energy demand.”
API and NOIA released an analysis recently explaining how a lapse in the 5-year program could jeopardize American energy security, cost thousands of jobs and billions in lost state and local revenues. View the fact sheet here: https://www.api.org/~/media/Files/News/2022/03/API-Factsheet-Offshore-Leasing-5-Year%20Program-Report
API and NOIA Analysis here: https://www.api.org/news-policy-and-issues/news/2022/03/29/potential-lapse-in-5-year-leasing-program-threatens-american-energy-security
The Economic Impacts of a 5-Year Leasing Program Delay for the Gulf of Mexico Oil and Natural Gas Industry here: https://www.api.org/~/media/Files/News/2022/03/EIAP-5-year-Program-Leasing-Delay-Report-03-24-22
API represents all segments of America’s natural gas and oil industry, which supports more than 11 million U.S. jobs and is backed by a growing grassroots movement of millions of Americans. Our nearly 600 members produce, process and distribute the majority of the nation’s energy, and participate in API Energy Excellence®, which is accelerating environmental and safety progress by fostering new technologies and transparent reporting. API was formed in 1919 as a standards-setting organization and has developed more than 800 standards to enhance operational and environmental safety, efficiency and sustainability.
In the future, I will continue to review this 10-Q as time permits. But for now, a few more comments regarding Gulfslope’s March 2022 10-Q.
I, like most of us, am not a geologist. But I have been curious about the target layers known as M1A-M6. Something that had not been confirmed in 10-Qs prior to this one, and I quote, is that the “Tau prospect extends over BOTH Ship Shoal lease Blocks 336 and 351”. This statement was actually mentioned twice in the latest 10-Q, validating the idea of the existence of Recoverable Resources in both blocks. I was hoping for some clarification that this was the case, and they did.
The Tau 1 well was drilled from Gulfslope’s surface location at SS, Block 336 which is the lease that will be allowed to expire. But the remaining lease is Ship Shoal, Block 351, G36121, which will not expire until October 31, 2025. Please note, although the drill bit NEVER entered the deeper layers of SS Block 351, the majority of the Tau 1 well costs were capitalized to this block. In my opinion, this is an indication that Block 351 was determined to hold the targets with the most financial potential, or this would not have been done. This was the reason I was hoping for the clarification mentioned above.
Reminder, Gulfslope still has assets (9.1 million in Oil and Gas Properties, 13.5 million in Net Deferred Tax Assets, and some Common and Preferred Stock). So there should be a way to create more working capital while carrying over any remaining financial obligations. Also, the majority of the working capital deficit (90%) is Related Party Loans and Payables owed mostly to Mr. Seitz.
So as spec said, the game continues. On to extra innings.
Mrs. Smith
BlackRock, the largest asset manager in the world, said it will likely vote to support fewer climate proposals from companies in its investment portfolio in 2022 than it did in 2021.
https://www.cnbc.com/2022/05/11/blackrock-to-vote-for-fewer-climate-provisions-in-2022-than-2021.html
I see this as a positive development. It might mean the management of the large institutional asset managers, such as BlackRock or Vanguard, are beginning to realize that the ESG investing guidelines, supported by the Biden administration to limit investment in oil and gas projects, can have a profound negative impact on the investment earnings of their customers and clients. That could lead to lawsuits regarding loss of income and mismanagement of assets.
Mrs. Smith
Commercial Oil inventories decreased by 3.4 million barrels, the Strategic Petroleum Reserve (SPR) decreased by 5 million barrels - EIA Weekly Petroleum Status Report, Release Date: May 18, 2022
Full Report with Graphs: https://www.eia.gov/petroleum/supply/weekly/pdf/wpsrall.pdf
This Week in Petroleum: https://www.eia.gov/petroleum/weekly/
WTI $109.59/bbl - June Contract, 17:00 pm CDT 5/18/2022: https://oilprice.com/oil-price-charts/#WTI-Crude
Summary of Weekly Petroleum Data for the week ending 5/13/2022
HIGHLIGHTS:
U.S. crude oil refinery inputs averaged 15.9 million barrels per day during the week ending May 13, 2022 which was 239,000 barrels per day more than the previous week’s average. Refineries operated at 91.8% of their operable capacity last week. Gasoline production decreased last week, averaging 9.6 million barrels per day. Distillate fuel production decreased last week, averaging 4.9 million barrels per day.
U.S. crude oil imports averaged 6.6 million barrels per day last week, up by 299,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 6.3 million barrels per day, 4.7% more than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 876,000 barrels per day, and distillate fuel imports averaged 114,000 barrels per day.
The Strategic Petroleum Reserve (SPR) including non-U.S. stocks held under foreign or commercial storage agreements decreased by 5 million barrels from the previous week currently at 538 million barrels.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 3.4 million barrels from the previous week. At 420.8 million barrels, U.S. crude oil inventories are about 14% below the five year average for this time of year. Total motor gasoline inventories decreased by 4.8 million barrels last week and are about 8% below the five year average for this time of year. Finished gasoline and blending components inventories both decreased last week. Distillate fuel inventories increased by 1.2 million barrels last week and are about 22% below the five year average for this time of year. Propane/propylene inventories increased by 0.3 million barrels last week and are about 10% below the five year average for this time
of year. Total commercial petroleum inventories decreased last week by 2.9 million barrels last week.
Total products supplied over the last four-week period averaged 19.5 million barrels a day, up by 1.7% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 8.8 million barrels a day, down by 1.2% from the same period last year. Distillate fuel product supplied averaged 3.8 million barrels a day over the past four weeks, down by 6.7% from the same period last year. Jet fuel product supplied was up 28.6% compared with the same four-week period last year.
The West Texas Intermediate crude oil price was $110.52 per barrel on May 13, 2022, $0.80 above last week’s price and $45.20 more than a year ago. The spot price for conventional gasoline in the New York Harbor was $3.988 per gallon, $0.138 more than last week’s price and $1.837 above a year ago. The spot price for ultra-low sulfur diesel fuel in the New York Harbor was $5.339 per gallon, $0.571 above last week’s price and $3.294 over a year ago.
The national average retail regular gasoline price increased to $4.491 per gallon on May 16, 2022, $0.163 above last week’s price and $1.463 over a year ago. The national average retail diesel fuel price decreased to $5.613 per gallon, $0.010 per gallon less than last week’s price but $2.364 higher than a year ago.
This is not a press release, but a 36 page 10-Q report, which contains pertinent information to comply with SEC guidelines.
Remember, companies must not mislead investors by sugar coating or hyping future plans just to have a more upbeat outlook.
The initial scan did not reveal any surprises or unexpected information. I will take a deeper look at it when I have more time.
Yes, I am still struggling with the thought that I will remain a moderator for another 2-1/2 years. The silver lining is, I will have an opportunity to improve the accuracy of my posts and the current presidential term will have ended!
Mrs. Smith
Good News!
Nancy Pelosi, Et al. are trying to pass a bill called the ‘Consumer Fuel Price Gouging Prevention Act’. This is better known as gasoline price fixing.
Link to House Bill 7688: https://www.congress.gov/117/bills/hr7688/BILLS-117hr7688ih.pdf
I think I read somewhere that Jimmy Carter tried this back when he did not have a clue either. If I remember correctly, it mostly caused gasoline shortages.
Yes. Oil companies will produce some for sale in the USA at that price. But most gasoline production will be sold elsewhere at market prices.
It is reassuring to know that if we can find gasoline to buy, we will not suffer price gouging.
While I am complaining about government incompetencies read this link below regarding renewable source electricity for charging your EV, and what this will cost us.
https://irinaslav.substack.com/p/power-renewable-power?r=evt1i&s=r&utm_campaign=post&utm_medium=email
Mrs. Smith
OPEC Featured Article - ‘Non-OPEC oil supply development’, Released May 12, 2022
OECD Composite Leading Indicators News Release, Paris, May 10, 2022:
https://www.oecd.org/sdd/leading-indicators/composite-leading-indicators-cli-oecd-05-2022.pdf
FEATURED ARTICLE: Non-OPEC Oil Supply Development
In 2021, non-OPEC supply increased by 0.59 mb/d. US liquids production increased by 0.15 mb/d y-o-y, mainly on the back of increased NGLs output from non-conventional basins and a few project start-ups in the Gulf of Mexico. At the same time, US tight crude and condensate production decreased by 70 tb/d, with all major US shale basins showing drops, except for the Permian. Output in the Permian increased by 0.2 mb/d y-o-y, supported by a lower breakeven price and higher drilling rig activities. Cumulative production in Canada rose by around 0.3 mb/d as production from oil sand basins hit a high of 3.3 mb/d in October 2021. China, Guyana, Argentina and Norway also contributed to production growth in 2021. This was offset by a cumulative supply decline of 0.6 mb/d, mainly from the UK, Brazil, Colombia and Indonesia.
Spending for oil and gas exploration and production (E&P) in non-OPEC countries increased by US$16 bn in 2021 to US$350 bn, and is expected to rise by around 14% in 2022. On a country level, E&P spending for 2022 is forecast to increase in Brazil, the US, Canada, and Norway by 36%, 28%, 15%, and 11%, respectively.
However, the overall level remains below pre-pandemic levels and significantly below the high of US$749 bn seen in 2014. Upstream spending by major international companies has increased in response to higher oil prices and world oil demand growth, but remains lower than the level seen in 2019, as major shale producers continue to focus on capital discipline to improve their balance sheets.
For 2022, non-OPEC liquids supply is forecast to grow y-o-y by 2.4 mb/d, a downward revision of 0.3 mb/d from the previous month’s assessment. This is on the back of geopolitical developments and the impact of sanctions on Russian oil imports.
Liquids output in the OECD is expected to increase by 1.6 mb/d, on the back of production increases in the US, Canada, and Norway. US crude oil production is anticipated to grow by 0.9 mb/d, y-o-y, with NGLs and biofuels production set to rise too. In the US, the oil rig count has rebounded from 287 units in January 2021 to 552 units in the last week of April 2022. Moreover, US core oil frac operations continue to show steady increases.
Canadian oil production, particularly Alberta’s oil sands, is forecast to grow by 0.16 mb/d y-o-y. Production growth in the North Sea and OECD Europe countries is projected at around 0.1 mb/d, supported by the start-up of the second phase of the Johan Sverdrup field development in 4Q22, which is projected to add 0.22 mb/d to Norway’s output.
In the non-OECD region, total liquids output growth is forecast at 0.7 mb/d y-o-y. Latin America is the key driver of this supply growth. It is forecast to increase by 0.27 mb/d y-o-y in 2022, mainly from two offshore start-ups of Mero-1 and Peregrino Phase 2 in Brazil and Liza-2 FPSO in Guyana. Kazakhstan and China’s liquids output are also expected to rise, by 0.14 mb/d and 0.08 mb/d, respectively.
Uncertainties to the forecast remain large, especially given recent geopolitical developments in Eastern Europe. Moreover, high inflation levels, coupled with labour shortages and tighter monetary policies by major central banks may also impact the cost of oil production and investment levels in the upstream beyond the short term. Ineede OPEC Member Countries and countries participating in the DoC will continue to closely monitor market developments over the course of the year and safeguard a stable and balanced market for the benefit of all oil market participants; consumers and producers alike.
May 2022 OPEC Monthly Oil Market Report “MOMR”, Released 5/12/2022
5/2022 MOMR PDF: https://momr.opec.org/pdf-download/res/pdf_delivery_momr.php?secToken2=accept
5/2022 MOMR Video: https://players.brightcove.net/34306109001/default_default/index.html?videoId=6305990837112
WTI $110.49/bbl - June Contract, 20:31 pm CDT 5/13/2022: https://oilprice.com/oil-price-charts/45 : https://oilprice.com/oil-price-charts/45
Oil Market Highlights:
Crude Oil Price Movements
Crude oil spot prices dropped in April after three-consecutive months of rises. The OPEC Reference Basket dropped by $7.84, or 6.9%, to settle at $105.64/b. Crude futures prices declined m-o-m in April, amid elevated market volatility, fuelled by persistent uncertainty regarding market outlook. The ICE Brent front month fell $6.54, or 5.8%, in April to average $105.92/b and NYMEX WTI decreased by $6.62, or 6.1%, to average $101.64/b. Consequently, the Brent/WTI futures spread widened 8¢ to average $4.28/b. The market structure of all three major crude benchmarks – ICE Brent, NYMEX WTI and DME Oman – softened significantly, but remained in backwardation. Hedge funds and other money managers kept net long positions in WTI and Brent little changed after the previous month’s sharp selloff.
World Economy
World economic growth in 2022 is revised down to 3.5% from 3.9% in last month’s assessment, following growth of 5.8% in 2021. US GDP growth for 2022 is revised down to 3.2% from 3.8%, after growth was reported at 5.7% for 2021. Euro-zone economic growth for 2022 is revised down to 3.1% from 3.5%, following growth of 5.4% in 2021. Japan’s economic growth for 2022 is revised down to 1.8% from 1.9%, after growth of 1.7% in 2021. China’s 2022 growth is revised down to 5.1% from 5.3%, after growth of 8.1% in 2021. India’s 2022 GDP growth was revised down to 7.1% from 7.2%, after 2021 growth stood at 8.1%. Brazil’s economic growth forecast for 2022 is revised down to 0.7% from 1.2%, following growth of 4.6% in 2021. For Russia, the 2022 GDP growth forecast is revised down to show a contraction of 6%, compared with a contraction of 2% expected in last month’s assessment, which follows reported growth of 4.7% in 2021. Challenges related to ongoing geopolitical tensions, the continued pandemic, rising inflation, aggravated supply chain issues, high sovereign debt levels in many regions and expected monetary tightening by central banks in the US, the UK, Japan and the euro area require close monitoring.
World Oil Demand
World oil demand growth in 2021 remains broadly unchanged from the previous month’s assessment at 5.7 mb/d. World oil demand growth in 2022 is expected to increase by 3.4 mb/d y-o-y, representing a downward revision of 0.3 mb/d from last month’s report, with 1.8 mb/d in the OECD and 1.6 mb/d in the non-OECD. Oil demand growth in 2Q22 is projected to be slower at 2.8 mb/d, compared with 5.2 mb/d in 1Q22. Demand in 2022 is expected to be impacted by ongoing geopolitical developments in Eastern Europe, as well as COVID-19 pandemic restrictions.
World Oil Supply
Non-OPEC liquids supply growth y-o-y in 2021 is broadly unchanged at around 0.6 mb/d. Total US liquids production is estimated to have increased y-o-y by 0.15 mb/d. Non-OPEC supply growth for 2022 is revised down by 0.3 mb/d y-o-y to 2.4 mb/d. Russia’s liquids production for 2022 is revised down by 0.36 mb/d. The US liquids supply growth forecast for 2022 is broadly unchanged at 1.29 mb/d. The main drivers of liquids supply growth for the year are expected to be the US, Canada, Brazil, Kazakhstan, Guyana and Norway. OPEC NGLs are forecast to grow by 0.1 mb/d both in 2021 and 2022 to average 5.1 mb/d and 5.3 mb/d, respectively. OPEC-13 crude oil production in April, increased by 153 tb/d m-o-m, to average 28.65 mb/d, according to available secondary sources.
Product Markets and Refining Operations
Refinery margins on all main trading hubs continued to soar in April, amid a continued tightening in global product balances, and lower crude prices. Favourable product demand-side dynamics, as the overall negative impact of Covid-19 further diminishes on a global level, strengthened fuel markets in general, including that of jet fuel, despite some mobility restrictions in a few Asian countries. Middle distillates were the main margin contributor over the month, while their margins spread widened further versus that of gasoline. Going forward, refinery intakes are expected to rise and that could provide partial relief to the global product shortage, and potentially de-pressure product prices.
Tanker Market
Suezmax and Aframax rates continued to outperform those in the VLCC class, with gains of 61% and 28% m-o-m. The Suezmax market was supported by a strong market in the Atlantic basin while Aframax saw from support from both the East and West markets. After a sluggish start to the year, VLCC rates finally saw a pickup of 24%. However, gains were short-lived dissipating by the end of the month amid ample availability. Clean rates continued to perform well, gaining a further 15%. The market has been supported by strength in the East and rising activity in tanker demand West of Suez, amid preparations ahead of the driving season in the Northern Hemisphere.
Crude and Refined Products Trade
Preliminary data shows US crude imports declined to an 11-month low of 5.9 mb/d in April, while exports averaged 3.4 mb/d for a gain of 5% m-o-m. US product exports strengthened for the seventh month in a row, averaging 6.4 mb/d, supported by strong flows to Latin America and increasing flows to Europe. In March, China’s crude imports averaged 10.1 mb/d, recovering from the weak performance the month before. Recently released customs data shows China’s crude imports increased to 10.5 mb/d in April, despite expectations that reduced demand due to COVID-19 lockdowns would weigh on imports. China’s product imports declined 8%, while product exports rebounded, amid unexpectedly strong gasoil outflows. With domestic demand impacted by lockdowns, China’s product outflows are likely to be higher than previously expected in April, particularly for jet fuel. India’s crude imports dipped in March, but remained near the strong performance seen over the previous four months, averaging 4.5 mb/d for the month. Product exports saw a robust increase of 26% or about 0.3 mb/d to average 1.7 mb/d in March, the highest since September 2013, as Europe sought alternatives to Russian oil product flows. Japan’s crude imports have risen steadily since the start of the year, averaging 2.9 mb/d in March, amid healthy demand.
Commercial Stock Movements
Preliminary March data showed total OECD commercial oil stocks increasing m-o-m by 10.1 mb. At 2,621 mb, inventories were 298 mb lower than the same time a year ago, 304 mb lower than the latest five-year average, and 293 mb below the 2015–2019 average. Within the components, crude stocks rose m-o-m by 12.9 mb, while products stocks fell m-o-m by 2.8 mb. At 1,265 mb, OECD crude stocks were 189 mb lower than the latest five-year average and 198 mb below the 2015-2019 average. OECD product stocks stood at 1,356 mb, representing a deficit of 115 mb compared with the latest five-year average and 95 mb below the 2015–2019 average. In terms of days of forward cover, OECD commercial stocks fell m-o-m by 0.3 days in March to stand at 57.4 days. This is 8.8 days below March 2021 levels, 8.7 days less than the latest five-year average, and 5.0 days lower than the 2015–2019 average
Balance of Supply and Demand
Demand for OPEC crude in 2021 was revised up by 0.1 mb/d from the previous month’s assessment to stand at 28.2 mb/d, which is around 5.0 mb/d higher than in 2020. Demand for OPEC crude in 2022 was revised up by 0.1 mb/d from the previous month to stand at 29.0 mb/d, which is around 0.8 mb/d higher than in 2021.
Offshore GOM Rig Count increased by 1 rig from the previous week and is currently showing 17 rigs. US Total Oil and Gas Rig Count increased by 9 reflecting 714 rigs as of 5/13/2022. Gulfslope’s Tau prospect is located in GOM Louisiana Offshore waters.
https://rigcount.bakerhughes.com
http://www.dnr.louisiana.gov/assets/TAD/data/drill_weekly/WeeklyRigCountUpdate.pdf
Mrs. Smith
In case you do not already know where I stand, full disclosure: I never supported an agenda that did not uphold the values of this great country and what it stands for.
Then we elected someone president that did not need more money or power and already had fame and fortune. Sure there was plenty of ego, and you needed to have your facts straight if you wished to challenge him.
He was hard to back down, enjoyed a good game of hardball, and was not intimidated by anyone. But he had the one thing his political adversaries lacked. He was doing it all for the COUNTRY and for the people. Not for himself. Not his family. Not the party. Not the power brokers. Not the special interests. Just the Stars and Stripes. And us. And that friends, is the critical element the politics of today is missing.
So, you are EXACTLY right. We will need that kind of leadership to get back to prosperity and energy independence.
Mrs. Smith
Yes, Obama was right. Joe has not lost his touch. As stated in my prior post, I do not trust in the lip service. I need bonafide proof. We just did not get it… or did we?
Mrs. Smith
Commercial Oil inventories increased by 8.5 million barrels, the Strategic Petroleum Reserve (SPR) decreased by 7.0 million barrels - EIA Weekly Petroleum Status Report, Release Date: May 11, 2022
Full Report with Graphs: https://www.eia.gov/petroleum/supply/weekly/pdf/wpsrall.pdf
This Week in Petroleum: https://www.eia.gov/petroleum/weekly/
WTI $105.25/bbl - June Contract, 14:02 pm CDT 11/05/2022: https://oilprice.com/oil-price-charts/#WTI-Crude
Summary of Weekly Petroleum Data for the week ending 5/06/2022
HIGHLIGHTS:
U.S. crude oil refinery inputs averaged 15.7 million barrels per day during the week ending May 6, 2022 which was 230,000 barrels per day more than the previous week’s average. Refineries operated at 90.0% of their operable capacity last week. Gasoline production increased last week, averaging 9.7 million barrels per day. Distillate fuel production increased last week, averaging 4.9 million barrels per day.
U.S. crude oil imports averaged 6.3 million barrels per day last week, down by 62,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 6.1 million barrels per day, 6.2% more than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 695,000 barrels per day, and distillate fuel imports averaged 122,000 barrels per day.
The Strategic Petroleum Reserve (SPR) including non-U.S. stocks held under foreign or commercial storage agreements decreased by 7.0 million barrels from the previous week currently at 543 million barrels.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 8.5 million barrels from the previous week. At 424.2 million barrels, U.S. crude oil inventories are about 13% below the five year average for this time of year. Total motor gasoline inventories decreased by 3.6 million barrels last week and are about 5% below the five year average for this time of year. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories decreased by 0.9 million barrels last week and are about 23% below the five year average for this time of year. Propane/propylene inventories increased by 3.4 million barrels last week and are about 8% below the five year average for this time of year. Total commercial petroleum inventories increased by 9.9 million barrels last week.
Total products supplied over the last four-week period averaged 19.4 million barrels a day, up by 1.6% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 8.8 million barrels a day, down by 1.4% from the same period last year. Distillate fuel product supplied averaged 3.8 million barrels a day over the past four weeks, down by 5.5% from the same period last year. Jet fuel product supplied was up 26.9% compared with the same four-week period last year.
The West Texas Intermediate crude oil price was $109.72 per barrel on May 6, 2022, $5.13 above last week’s price and $44.76 more than a year ago. The spot price for conventional gasoline in the New York Harbor was $3.850 per gallon, $0.417 more than last week’s price and $1.729 above a year ago. The spot price for ultra-low sulfur diesel fuel in the New York Harbor was $4.768 per gallon, $0.144 above last week’s price and $2.755 over a year ago.
The national average retail regular gasoline price increased to $4.328 per gallon on May 9, 2022, $0.146 above last week’s price and $1.367 over a year ago. The national average retail diesel fuel price increased to $5.623 per gallon, $0.114 per gallon more than last week’s price and $2.437 higher than a year ago.