If you are worried about the price of crude oil falling off a cliff, read this.
http://www.energyandcapital.com/article ... ubble/3979
Is the price of oil going lower?
Is the price of oil going lower?
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
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kauaigary
Re: Is the price of oil going lower?
Dan, I certainly agree that the price of oil is not going off a cliff but, restrictions on export of oil coupled with steadily rising production across the US, will continue to put pricing pressure on both Canadian and US production. Current syncrude and WCS differentials to Brent are at a near record.
I saw a Bloomie screenshot today that showed 3-2-1 crack at $21+, largely because of the WTI /Brent differential. I saw another Bloomie shot that showed refined product exports are 3.2 million gallons per day.
I'm upbeat on refiners because of the favorable fundamentals which are traceable to US production and US export law.
Cheers,
Gary
I saw a Bloomie screenshot today that showed 3-2-1 crack at $21+, largely because of the WTI /Brent differential. I saw another Bloomie shot that showed refined product exports are 3.2 million gallons per day.
I'm upbeat on refiners because of the favorable fundamentals which are traceable to US production and US export law.
Cheers,
Gary
Re: Is the price of oil going lower?
Keystone pipeline from Cushing,OK to Gulf Coast will open soon. That should bring WTI closer to Brent.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Is the price of oil going lower?
Evan Calio – Morgan Stanley
November 11, 2013 5:03 AM GMT
Top performing energy stocks have lagged since mid-October and earnings beats/misses have been weaker indicators of subsequent performance. US policy reversion on Iran has also added a fundamental fear around oil supply and price.
Performance reversion: top performing energy stocks have materially underperformed since mid-October. On Monday, October 21st, the EPX broke its extended uptrend. Since then, the previously top 10% performing energy equities have underperformed the bottom 90% by ~10%, after having outperformed by ~80% in 2013. The top 20% performing energy equities have underperformed the bottom 80% by ~7% since outperforming by ~70% in 2013. E&P earnings season has mattered less to sector performance while November reversions and weakening commodities have mattered more. We expect that as the US exits refining turnarounds and Keystone line fill begins, both in the next 1-2 weeks, WTI will find support.
Iran into focus as a potential Black Swan for oil. Iran has the ability to add material oil volumes into the market, which could tilt an already well supplied market out of balance and de-rail the US shale crude train in the process. While talks appeared to have stalled this weekend, there remains a higher potential for global policy change with open discussions (UN Security Counsel and Iran), a staggering impact of sanctions in Iran, a new Iranian President, a more open US President, and an expensive global security issue. If sanctions were eased/lifted, a growing inventory of crude could hit the market and depress global pricing while productive capacity could return (1.2MMbpd of pre-sanction capacity). Iran has built significant crude oil stocks since the sanctions began: our commodities team estimates that Iran will end the year with over 110MMBbls of storage capacity, having added at least 25MMBbls YTD. Iran holds at least 25MMBbls offshore on tankers (~2.5% of OECD commercial stocks).
November 11, 2013 5:03 AM GMT
Top performing energy stocks have lagged since mid-October and earnings beats/misses have been weaker indicators of subsequent performance. US policy reversion on Iran has also added a fundamental fear around oil supply and price.
Performance reversion: top performing energy stocks have materially underperformed since mid-October. On Monday, October 21st, the EPX broke its extended uptrend. Since then, the previously top 10% performing energy equities have underperformed the bottom 90% by ~10%, after having outperformed by ~80% in 2013. The top 20% performing energy equities have underperformed the bottom 80% by ~7% since outperforming by ~70% in 2013. E&P earnings season has mattered less to sector performance while November reversions and weakening commodities have mattered more. We expect that as the US exits refining turnarounds and Keystone line fill begins, both in the next 1-2 weeks, WTI will find support.
Iran into focus as a potential Black Swan for oil. Iran has the ability to add material oil volumes into the market, which could tilt an already well supplied market out of balance and de-rail the US shale crude train in the process. While talks appeared to have stalled this weekend, there remains a higher potential for global policy change with open discussions (UN Security Counsel and Iran), a staggering impact of sanctions in Iran, a new Iranian President, a more open US President, and an expensive global security issue. If sanctions were eased/lifted, a growing inventory of crude could hit the market and depress global pricing while productive capacity could return (1.2MMbpd of pre-sanction capacity). Iran has built significant crude oil stocks since the sanctions began: our commodities team estimates that Iran will end the year with over 110MMBbls of storage capacity, having added at least 25MMBbls YTD. Iran holds at least 25MMBbls offshore on tankers (~2.5% of OECD commercial stocks).
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Is the price of oil going lower?
I think there is very little chance of a near-term deal with Iran.
Obama is up to his gills in trouble with the Obamacare mess. The last thing he needs to do is give GOP a reason to label him as soft on Iran.
BTW IMHO, based on many years of dealing directly with the IRS, Obamacare will be a total "Cluster F___". Anyone who thinks the federal government can do a good job on this has never worked with the government. The problems with the website are just the first of many problems.
Obama is up to his gills in trouble with the Obamacare mess. The last thing he needs to do is give GOP a reason to label him as soft on Iran.
BTW IMHO, based on many years of dealing directly with the IRS, Obamacare will be a total "Cluster F___". Anyone who thinks the federal government can do a good job on this has never worked with the government. The problems with the website are just the first of many problems.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
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kauaigary
Re: Is the price of oil going lower?
"Keystone pipeline from Cushing,OK to Gulf Coast will open soon. That should bring WTI closer to Brent."
Yes, but.....how much closer is the open question. While it is clear that the ultimate 700k BPD of Keystone will reduce imports into the Gulf by some amount, it isn't clear to me what portion of pipeline flow will replace rail transport out of Cushing. It would seem logical to me that WTI could rise some as rail transport out of Cushing is reduced but it still isn't clear what the real impact will be. Since I'm invested in two mid-con refiners one of whom has more tie to WTI than the other, it is of some interest to me.
The EIA doesn't track oil flow by truck or rail in and out of specific locations so they aren't much help.
Yes, but.....how much closer is the open question. While it is clear that the ultimate 700k BPD of Keystone will reduce imports into the Gulf by some amount, it isn't clear to me what portion of pipeline flow will replace rail transport out of Cushing. It would seem logical to me that WTI could rise some as rail transport out of Cushing is reduced but it still isn't clear what the real impact will be. Since I'm invested in two mid-con refiners one of whom has more tie to WTI than the other, it is of some interest to me.
The EIA doesn't track oil flow by truck or rail in and out of specific locations so they aren't much help.
Re: Is the price of oil going lower?
Keystone should lower inventory at Cushing, thus narrowing the differential.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group