22
Dec

Wrap – Week Ended 12/21/18

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The Blotter is updated. 

Questions and comments under The Wrap will be addressed in the Monday post. 

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21 Responses to “Wrap – Week Ended 12/21/18”

  1. 1
    Baylor Says:

    NON-OPEC supply set to rapidly decline

    https://investoralmanac.com/2018/12/12/conventional-non-opec-oil-declines-are-set-to-rapidly-accelerate/

  2. 2
    Baylor Says:

    Hadn’t seen this

    https://www.forbes.com/sites/arielcohen/2018/12/21/americas-oil-and-gas-reserves-double-with-massive-new-permian-discovery/

     

     

  3. 3
    zman Says:

    Oil Inventory report delayed until Friday due to closure of government. 

    The NG inventory report will be on Friday as well. 

  4. 4
    Baylor Says:

    JamesT – was thinking this based on something you asked about last week. 

    Shorting DWT May be a good trade setting up soon if you don’t think oil will go much lower. You get the inherent decay of it bottoms and stays there for a while as well

    sjoetinf DGAZ and UGAZ have been very profitable trades here recently 

  5. 5
    Baylor Says:

    Alerian 2019 mid stream outlook  no

    mention of ET 

    https://investoralmanac.com/wp-content/uploads/2018/12/Alerian-2019-Midstream-Outlook-12.18.18.pdf

  6. 6
    brodway Says:

    interesting that TRGP is back to its lows yielding almost 10%

  7. 7
    zman Says:

    From tomorrow's post:

    WTI fell 11% last week to end at $45.59.  11%. The front month looks like this cliff. It's down 40% of $30.37 from the October 3rd close. What has changed between then and now?

    • Saudi Arabia was discovered to have murdered a journalist. Saudi did little to defend oil well into the slide and exported elevated levels to the U.S. exactly through the week of the U.S. midterms.

    And then …  

    • OPEC+ has agreed to shed 1.2 mm bopd from the market.  Energy journalists have cast a skeptical eye on the cuts (much as they did last time only to be met with 120%+ type compliance).
    • Saudi Arabia has said it will cut exports to the U.S. by 1 mm bopd. 
    • Saudi Arabia has said it will cut output by more than it's agreed upon level.
    • Saudi Arabia established it's largest budget, up 7% over 2018 and based this on a $70 oil price.   
    • Canada agreed to whack another 0.3 mm bopd.
    • The U.S. set a new weekly record for exports (without barrels going to China which has choked off its intake over the trade spat).
    • U.S. stocks have started to seasonally decline.
    • The EIA has reduced its expectation for near term oil output.
    • Libya has shown that all is not safe with its output levels.
    • Countries importing oil from Iran has imported less.
    • Global demand estimates have remained largely unchanged. 
    • Shorts have bolstered their positions and longs have ebbed (until the last couple of weeks). 
    • And Tariff wars have prompted fears in the commodity and equity and debt markets. 

    Continuing on, Brent closed down 11% as well at $53.82 and the OPEC basket was off 8% closing at $53.92. We see this as very much over done.

  8. 8
    Baylor Says:

    TRGP pe ration near 30 while ET around 10.7. 

    $8B market cap vs $32B

     

  9. 9
    zman Says:

    http://www.cleveland19.com/2018/12/23/guyana-condemns-hostile-act-by-venezuela-local-waters/

  10. 10
    brodway Says:

    re: 7

    very nice timeline….i guess when prices were "too high" for Trump, he started to put persistent "pressure tweets" for Saudis to lower prices. The opportunity presented itself to force their hand just as they were washing away Kashogi's blood of those hands. 

    that certainly was an alert i should have paid attention to….in hindsight that is

  11. 11
    brodway Says:

    re: 9

    seems that geopolitical risks have not created any upside price pressure of late. my feeling is that this is in part due to the increasing US shale inventory that was earlier noted. people ain't scared anymore 🙂

  12. 12
    brodway Says:

    Baylor…

    i was just pointing out the TRGP dramatic increase in dividend. i do own ET and will probably add more funds there once i lick off the wounds 

  13. 13
    zman Says:

    re 11 – risk premium relevance should be more elevated at times of tight OPEC spare capacity.  A lot of items get ignored however when we have a reversal of magnitude in the CFTC non commercial net long position like we've had.  So they ignore them at times when they really shouldn't … until they don't. 

  14. 14
    brodway Says:

    re: 13

    all true, but this volatility is causing a lot of motion sickness

  15. 15
    zman Says:

    re 14 – no doubt.   Little change tonight.  Brent and WTI popped and dropped once already. 

    https://www.dailyfx.com/crude-oil

     

     

  16. 16
    brodway Says:

    more interesting is that S&P futures are flat to slightly higher on gov't shutdown. sell the rumor buy the news?

  17. 17
    zman Says:

    re 16 – yeah, no lump of coal for Mnuchin. 

  18. 18
    Baylor Says:

    re 12 i hear ya.  Wasn't sure if you were saying you liked TRGP more than ET

    How much do you think ET will benefit from the coming NGL revolution?

    Also, NGL the stock has been pummeled like everything else.  Wonder how much of an opportunity that is presenting with what is about to happen there in the coming year or two.

  19. 19
    Baylor Says:

    oops LNG

  20. 20
    Baylor Says:

    XOP perilously close to going below the 2014 oil collapse levels.  Opportunity of a lifetime?

     

  21. 21
    Baylor Says:

    CLR approaching levels (gnats ass) it’s bounced from twice in the last 3 years and doubled

     

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