Energy Week

Iran moves missiles to Iraq:
https://www.reuters.com/article/us-iran-iraq-missiles-exclusive/exclusive-iran-moves-missiles-to-iraq-in-warning-to-enemies-idUSKCN1LG0WB?il=0

potential for actual conflagration in the Middle East that could threaten flow of oil from these missiles

also Iran "rejects" this -- report
https://www.reuters.com/article/us-iran-iraq-missiles/iran-rejects-reuters-report-that-tehran-has-moved-missiles-to-iraq-idUSKCN1LH3OF

Iraq's oil exports up in August
https://www.spglobal.com/platts/en/market-insights/latest-news/oil/090318-iraqs-aug-southern-crude-oil-exports-hit-new-record-high-of-3853-million-bd

KRG exports up 40% from July but this may be due to stored oil

Coal power hangs on
https://www.wsj.com/articles/why-coals-power-persists-1535976000

Didn't realize that coal is actually going as well as this article says! Coal's market is really outside the US, especially in Asia, India
China just contracted to build new coal power plant in Egypt
Lack of nuclear power - how to keep a large grid going for long periods of time. Should you use coal in an emerging market?
Coal is still cheap, reliable, efficient - it's just dirty

Iran sanctions and India
https://www.reuters.com/article/us-india-iran-oil-exclusive/exclusive-india-allows-state-refiners-to-use-iran-tankers-insurance-for-oil-imports-idUSKCN1LJ1F9

India and China use Iranian tankers and Iranian insurance to continue to buy Iranian oil, but does Iran have enough tankers to do handle that volume of crude in the long run?
Also, will Saudi Arabia, Russia or Iraq lower their oil prices or offer similar deals on insurance to make their oil more attractive than Iran's?

Just how good is Iranian insurance?

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Iran Sanctions
https://www.wsj.com/articles/irans-oil-exports-dropping-faster-than-expected-before-u-s-sanctions-1535483145?

Compare this to expectations back in May - analysts expected only between 300,000 and 500,000 barrels per day to come off the market but we are already seeing a reduction of 800,000 barrels per day in exports from Iran.


NAFTA and energy
http://thehill.com/policy/energy-environment/403841-big-oil-calls-proposed-nafta-agreement-with-mexico-encouraging

https://www.reuters.com/article/us-trade-nafta-mexico/mexicos-next-leader-says-nafta-deal-preserves-energy-sovereignty-idUSKCN1LC2BP

https://www.upi.com/amp/US-energy-sector-eager-for-Mexican-trade-specifics/2711535447715/?__twitter_impression=true

API is enthusiastic about the way negotiations are going between the US and Mexico but the question remains - will Mexico walk back its privatization in the energy industry? Seems like as long as Mexico's "sovereignty" is preserved, companies working in Mexican energy will be allowed to remain.

Will the negations between Mexico and the US on energy equalize the relationship?

Fracking turns to Wyoming
https://www.reuters.com/article/us-usa-shale-wyoming/wyoming-oil-basin-deals-rise-as-companies-look-past-permian-idUSKCN1LD2EE

Wyoming Powder Basin - so much cheaper than Permian but infrastructure is seriously lacking.
How lucrative is the market in Wyoming given the lack of infrastructure there?

Aramco IPO
https://www.reuters.com/article/us-saudi-aramco-ipo-king-exclusive/exclusive-saudi-king-tipped-the-scale-against-aramco-ipo-plans-idUSKCN1LC1MX

https://www.ft.com/content/0a0ae5d6-a9d7-11e8-94bd-cba20d67390c

Both of these stories contain information that is probably false - specifically with regards to the Aramco oil concession.

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Hurricane season now expected to be less active than "normal"
https://www.cnn.com/2018/08/09/us/noaa-hurricane-season-forecast-wxc/index.html
What does this mean for oil and gas prices?
Last year the hurricanes in the Gulf of Mexico impacted ports, producers in Texas and in the Gulf, refineries in the Gulf - the lack of hurricanes can impact predictions in terms of price, stores, bottlenecks, etc.


China and Iran
https://www.reuters.com/article/us-iran-oil/china-defies-u-s-pressure-as-eu-parts-ways-with-iranian-oil-idUSKCN1L51GB

https://www.cnbc.com/2018/08/20/china-shifts-to-iranian-tankers-to-keep-oil-flowing-amid-us-sanctions-report.html

European Union can't keep its companies doing business with Iran, though China is working to keep Iranian oil flowing to its refineries.

Crude type matters when it comes to the value of Iranian oil in sanction.

Tankers going to China with Iranian crude are now Iranian tankers, insured by Iran

Venezuela & "Petro" cryptocurrency
https://www.cnbc.com/2018/08/20/venezuela-is-pegging-its-economic-recovery-to-a-cryptocurrency--thats-widely-considered-a-scam.html

Maduro's idea is to tie the "petro" to a barrel of oil - eventually wants to peg wages, prices, pensions, to petro that would equal $60 or 3,600 sovereign bolivars

PdVSA & ConocoPhillips settlement
https://www.reuters.com/article/us-conocophillips-pdvsa/conocophillips-settles-with-venezuelas-pdvsa-to-recover-2-billion-idUSKCN1L517X
Does ConocoPhillips expect to actually get the $2 billion? PdVSA says they will pay $500 million within 90 days of signing and the rest over 4.5 years.
Perhaps Conoco hopes to collect years later or will take Caribbean assets.


Oil price predictions:
http://www.theedgemarkets.com/article/crude-oil-could-hit-us100-barrel-yearend-—-ihs-markit

IHS says oil may hit $100 by beginning of 2019 but will then drop back to $60 by end of 2019

If oil goes up as quickly as predicted, may come back down just has fast.

Less cushion in the oil market now means greater obsession with certain geopolitical events.

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Saudi, Inc.: The Arabian Kingdom's Pursuit of Profit and Power - https://amzn.to/2vMZLz8
Careers in the Oil & Gas Industry: A Guidebook of Practical Advice - https://amzn.to/2Bfj2hS


https://www.tesla.com/blog/update-taking-tesla-private?redirect=no
Is Tesla going private? Elon Musk says that the Saudi PIF may be funding a Tesla privatization at $420 a share but is everything on the up and up?

https://www.reuters.com/article/us-iran-khamenei-economy/irans-khamenei-rejects-trump-offer-of-talks-chides-government-over-economy-idUSKBN1KY0U1
Will there be talks between the US and Iran now that Khamenei has said "no talks with the US"
Impact of all the tariffs/economic wars being fought - does the US have too many balls in the air right now between China, the EU, Turkey, Iran, NAFTA?

https://seekingalpha.com/article/4198303-oil-iea-omr-confirms-june-storage-draw-q2-global-balances-weak
HFI research was bullish on oil before most other people
Notable H2 2018 refinery throughput higher, also Chinese demand - financial liquidity, new taxes on independent Chinese refineries, higher runs from state refiners

Interview with API Chief Economist Dr. Dean Foreman - https://www.api.org/
What makes API statistic different from others?
- administration industry surveys that survey about 85% of industry
- weekly statistical bulletin issues inventory report that can move the market
- API also puts weekly bulletins together into monthly estimates that can track trends, etc.
Notable aspects of upcoming Monthly report:
- remarkable progress on US crude oil exports
- US net imports lowest since 1950!
- strongest month for jet fuel demand on record
- reflects economic activity rather than airlines hedging
- oil prices heading to $90/barrel? Its a fool's game to try and predict prices for ahead
- Financials, fundamentals and geopolitics all play into oil prices
- EIA STEO shows makes basically in balance at this point
- Geopolitical issues matter less when huge stock cushion which we aren't really seeing now.

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Iran sanctions round 1:
https://www.cnbc.com/2018/08/03/trumps-1st-round-of-iran-sanctions-sends-message-this-is-not-a-test.html

https://www.spglobal.com/platts/en/market-insights/latest-news/oil/080618-us-still-aims-to-slash-iran-oil-exports-while-considering-case-by-case-waivers-official?

https://www.argusmedia.com/en/news/1730212-us-claims-success-on-iran-sanctions-policy

How much will actually come off the market? Could be anywhere from 600,000 bpd to 1.5 million bpd.
Smuggling will be an issue - possible avenues through Iraq and Turkey.

OPEC production update and Saudi oil production controversy:
https://www.spglobal.com/platts/en/market-insights/latest-news/oil/080318-opec-july-crude-oil-output-surges-340000-bd-from-june-to-3266-mil-bd-platts-survey

https://www.argusmedia.com/en/news/1729615-surprise-saudi-decline-depresses-opec-output

Why is there a discrepancy between the Saudi production numbers reported by Platts and reported by Saudi Arabia?

Tesla fallout:
https://www.cnbc.com/2018/08/02/wall-street-believes-this-could-be-teslas-inflection-point.html

Elon Musk wears Oakley sunglasses and apparently there is nothing he can say that won't push Tesla shares up.

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contact the show: 318-599-9192


Shares of Elon Musk's Tesla could sink 30 percent in next 12 months, UBS analyst says
https://www.usatoday.com/story/money/2018/07/30/tesla-shares-could-fall-30-percent-next-year-ubs-says/862674002/
Tesla changed Model 3 ordering rules by removing the $1,000 down payment to reserve a car.
Now, reservation holders and new customers alike must pay a $2,500 deposit to move orders forward.
Currently, Tesla is only offering models ranging in price from $49,000 to $80,000.

Rick Perry: ‘True energy independence is finally within our grasp’
https://www.cnbc.com/2018/07/29/energy-secretary-perry-true-energy-independence-is-finally-within-ou.html
Talking up LNG, which is great, but real reason the US is a net natural gas exporter is more natural gas being exported to Mexico.
Energy independence vs. energy security
North American energy security (hemispheric including Canada and Mexico) much more realistic

Slouching Tiger: Why Exxon Isn’t Worth Its Premium
https://www.wsj.com/articles/slouching-tiger-why-exxon-isnt-worth-its-premium-1532948580
Perhaps Exxon shares are being devalued because its investment in larger scale projects is being used against it and it is being compared to Chevron, which had higher earning this quarter

Aramco IPO update: Is is ever going to happen? Consensus is that its on hold and that Aramco will buy shares in Sabic, a Saudi state run petrochemicals company instead.

Interview with Dr. Lawrence Fedewa:
- President Trump's negotiating strategy and how it is playing out with Iran
- China on the horizon: its economy and currency situation are not nearly as strong as they would like us to think

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contact the show: 318-599-9192

On Tesla:
https://www.cnbc.com/2018/07/23/tesla-shares-drop-after-carmaker-reportedly-asking-for-partial-cash-re.htm
Tesla reportedly asking for money from suppliers that it has paid since 2016 back so it can look better on its balance sheet before its Q2 earnings call.

For laughs:
https://www.washingtonexaminer.com/policy/energy/expert-makes-the-case-for-400-per-barrel-oil
Oil will be somewhere between $0 and $1 million! Forecasting crazy numbers will get you on the front on Drudge Report but might

On Iran:
https://www.cnbc.com/2018/07/23/oil-prices-could-hit-200-a-barrel-if-us-and-iran-go-to-war.html
Actual likelihood that Strait of Hormuz can be blocked is very very small.

On Halliburton:
http://www.worldoil.com/news/2018/7/23/halliburton-tumbles-as-fracking-giant-sees-second-half-slowdown
This reflects the normal ebb and flow of the market. Pipeline issues could be resolved but sometime in 2019. Don't want to commit to projects until secure in prices and profitability.
Talking to people on the ground, its a company by company deal - some have said will be facing slow downs some not facing them at all. Depends on what agreements they had in place and what the service agreements are on the pipelines.
Rig count will be interesting to watch - count may stay stable but rigs would be moved from permian to eagle ford temporarily.
https://www.chron.com/business/energy/article/Schlumberger-reports-430-million-quarterly-profit-13090933.php

Q&A from listeners:
Question about future of inland and offshore barge transportation - Jones Act creates incredible costs for commerce in places like Puerto Rico and others. More on this next week!

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Welcome back and thank you to DrillingInfo, our sponsor! globalenergymedia.com/courthouse

Iran Sanctions:
- Recap of events: US wants to zero out all Iranian oil exports (potentially 2.5 million bpd of oil). Is that even possible?
- See new analysis from Ellen Wald and David Mortlock at Atlantic Council: http://www.atlanticcouncil.org/blogs/energysource/the-risks-of-the-trump-administration-s-whiplash-policy-on-iranian-oil
- Saudi Arabia source of spare capacity, but Russia also increasing production
- OPEC implications:
https://www.reuters.com/article/us-oil-opec-iran/iran-to-saudi-opec-deal-does-not-give-the-right-to-pump-oil-above-target-idUSKBN1K60X9
- US Softens (maybe) position on Iran sanctions
https://www.reuters.com/article/us-usa-iran-mnuchin/mnuchin-says-u-s-will-consider-some-waivers-on-iran-sanctions-idUSKBN1K61HT
https://www.cnn.com/2018/07/16/politics/us-signals-it-would-consider-exemptions-on-iranian-oil/index.html
- Cryptocurrency possibilities for Iran

Oil Falls as Traders Anticipate Higher Supply
https://www.wsj.com/articles/oil-falls-ahead-of-trump-putin-summit-1531736412
- market moves aren't just based on supply and demand, but speculation is built into price moves

Peak oil demand forecast for 2036
https://www.ft.com/content/a12af4be-85cf-11e8-96dd-fa565ec55929
- Skeptical of these kinds of claims, especially since uses for petroleum keep increasing and when prices go down we spur economic growth that then increases demand

Surprise question for Ellen: Will Elon Musk still be the CEO of Tesla this time next year?

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Pioneer Resources CEO announced likely shut in of wells in next 3-4 months due to transportation infrastructure constraints. Some other companies experiencing similar conditions but other companies are not. Perhaps a signal of high confidence in company long term from CEO?

OPEC/Non-OPEC - breakdown of events, ultimately to add between 600,000 and 1 million barrels per day to market. Saudi Arabia already increasing production in June (10.8 million bpd) plan to increase to 11 million bpd in July.

See Ellen's analysis on Forbes:
https://www.forbes.com/sites/ellenrwald/2018/06/22/oil-prices-climb-on-news-of-opec-agreement/#6a7c70ab65f7
https://www.forbes.com/sites/ellenrwald/2018/06/22/iran-holds-out-as-opec-oil-meeting-gets-underway/#2acb9d541f8e

Interview with Patrick DeHaan aka @GasBuddyGuy, head of petroleum analysis at Gas Buddy

https://www.gasbuddy.com

Gas Buddy started in 2000 as a price tracking website. Use volunteer price spotters (crowd sourcing) along with data from gasoline stations.

predicting price spikes: come communities are relatively predictable but in some areas gasoline prices can vary a great deal between morning and evening.

foundation of all gasoline prices is price of crude oil but variation in location, taxes, etc.

OPEC meeting was a huge disappointment to gasoline prices although noted that refined products haven't spiked nearly as much as oil prices have (only up 2% compared to 5% jump in oil prices)

practical uses for gas buddy app beyond gasoline prices - especially useful during hurricanes and other natural disasters to locate gasoline stations with power and supplies. also useful in locating safe/clean gas stations while road tripping.

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Harold Hamm pulls out of OPEC Seminar: https://www.reuters.com/article/us-oil-opec-contl-resources/continental-resources-ceo-harold-hamm-pulls-out-of-opec-meeting-idUSKBN1JE1VW
Several of the CEOs of American energy companies have decided not to attend the pre-OPEC meeting seminar organized by OPEC. Could this be to send a message to OPEC about the cartel's relevance (or non-relevance) to US energy producers? Hamm has met with OPEC oil ministers before in Houston. Other CEOs will still attend - Pioneer and Hess. Russian oil minister Alexander Novak also pulled out of his appearance and will not join OPEC in Vienna until later in the week.

OPEC meeting Previews
https://www.platts.com/latest-news/oil/london/saudi-arabia-russia-say-oil-market-cooperation-21086527

https://www.cnbc.com/2018/06/16/russia-saudi-arabia-get-chummy-ahead-of-opec-may-affect-oil-prices.html

https://www.reuters.com/article/us-usa-trump-oil/trump-iran-spar-over-oil-prices-ahead-of-opec-meeting-idUSKBN1J91ID

Watch for the Saudi/Russian bromance. Al Falih and Novak are looking to push through a production increase but Iran and Iraq claim to be dead set against it.
Saudi - Russian relationship is key here - the two oil ministers even met to prepare tactics while Putin and Mohammad bin Salman watched the Saudi-Russia soccer match together (spoiler alert - Russia won 5-0!!!)

Overview of OPEC's activities since November 2016 when the group (along with Russia and others) agreed to a cut production by 1.8 million barrels per day.

Ellen's forecast: Probable agreement to increase production a total of between 300,000 bpd and 600,000 bpd with possibly 1 million bpd increase as high end.

WTI/Brent spread is 10$ - How will this be impacted by an OPEC production increase?

Will China try to use US oil exports as a bargaining chip in ongoing trade "negotiations"/trade war?
https://www.reuters.com/article/us-usa-trade-china-oil-graphic/chinas-tariffs-on-u-s-oil-would-disrupt-1-billion-monthly-business-idUSKBN1JE0CD

India informs its refiners that they will no longer be able to pay for Iranian oil in euros:
http://www.asianage.com/business/in-other-news/150618/iran-oil-payment-route-to-be-blocked-from-november-3.html?__twitter_impression=true

Ellen on Axios: https://www.axios.com/newsletters/axios-generate-6326df6a-3c6a-441b-ac1a-f794e178c0fd.html
also on Thomson Reuters: https://blogs.thomsonreuters.com/financial-risk/trading/opec-and-the-future-of-oil-production-cuts/

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit energyweek.substack.com