Not a great deal of ‘intel’ out there right now, but here’s what I could find after conversations & observations this morning…
CRUDE BEARS: Still more long term bearishness in crude buoyed by news of the Saudi’s pumping like it’s 2005.
“Citigroup Inc. said it’s “rescinding” expectations for higher prices amid progress toward an agreement over Iran’s nuclear program. Saudi Arabia exported more crude in September than in any month since November 2005, according to data from the Joint Organizations Data Initiative. Hedge funds became the least bullish on West Texas Intermediate in five months as U.S. inventories expanded In the U.S., the world’s biggest oil consumer, crude stockpiles rose to 388.1 million barrels in the seven days ended Nov. 8 as output surged to the highest rate since January 1989, the Energy Information Administration said last week. The EIA is the Energy Department’s statistical arm.
“Supply has been more than enough to cover demand, particularly in the U.S.,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “That, plus a diminished Middle East risk premium, has seen the supply situation being a dominant factor.”
There really aren’t any fundamentals out there which point towards a support in WTI crude pricing…if we saw positive global economic news, that would certain be a boost but as of right now things look bearish there, too. As I’ve mentioned, propane seems to have detached from crude and barring weather indicators, so this is more of a longer term ‘heads up’.
HATTIESBURG WOES: The wet barrel crunch we spoke about this spring and summer has finally reared its head in two regions, to some extent in the Northeast but certainly in Hattiesburg. We have clients in the Northeast who have paid Belvieu +$.60 and we also know that Belvieu +$.1100 or more has been DONE in Hattiesburg. We’re calling the differential near that right now. I think we’ll see this differential back off over the next few weeks and if we get back down under $.0700, it would be time to look at picking up some loads before demand actually kicks in and pushes things higher again. It just feels like this is going to be a winter where that differential yo-yo’s.
SHALE REVOLUTION: An interesting read if you have the time…China, Russia and others are poised to capitalize on American fracking techniques and experience their own shale revolution.
The energy future looks pretty solid for the globe over the next 20-plus years, related to fossil fuels.