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936horn

By 936horn
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Pescado_Rojo
Pescado_Rojo

I bet you could score a Lafayette 10 for a mani/pedi gift card and a pound of boudin right now.  I was sitting in a Starbucks by the med center in Laffy once, and a brand new white Escalade, lift

Rimbo
Rimbo

If you're Trump right now, you're watching Fox News, eating a cheeseburger, and getting mad about the lyin' media and preparing your next tweet about how some lupus treatment should be given to your s

fattyflattie
fattyflattie

My time finally came last Friday AM. I have survived around a dozen, give or take 1-2, since ‘08.  I was consulting for a project set to go in ‘22, but with all the uncertainty, it sounds like they’ve

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NotActuallyALonghorn

NotActuallyALonghorn 4976

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On 11/20/2021 at 9:09 AM, Porterhouse said:

The Face of Inflation: An Energy…Mistake

by Peter Zeihan
 
On November 18 news leaked out of Taiwan, Japan, South Korea, China and India that the Americans have approached pretty much every country that matters about a joint, simultaneous release of oil from each country that maintains emergency reserves. The goal being to tamp down rising oil prices. The subtext is that the Biden administration’s efforts to get OPEC and its oil-exporting partners to produce more crude have proven unsuccessful.
 
Normally, I’d just dismiss this as media banter and rumor mongering. Stuff like this drops out of the ether every time oil prices rise. This time is probably different; Simultaneous indications from multiple countries that lack a track record of energy-related drama suggests the news is for real.
 
I guess the primary reason I would have normally dismissed the idea of oil releases is because…it is a really, really stupid idea.
 
First off, oil demand is inelastic. When prices go up or down by 10%, 20%, 50% it is rare for demand to budge at all. Only when prices go up (or down) by an extreme amount and stay there for months do we get fundamental shifts to demand. Which means any short-term price drop won’t impact the underlying market fundamentals one whit.
 
Second, even if every country on the planet with oil sitting in tanks or salt caverns agreed to follow Biden’s lead, they could not maintain the effort for nearly long enough to shift the demand picture. Most countries don’t have more than two months of import cover. Turns out that most find storing something like crude oil -- a material that’s corrosive and toxic -- to be difficult and expensive.
 
Third, what makes oil prices go down isn’t so much increases in flow but increases inproduction and above all storage. It is having extra oil on hand that weakens prices. Releasing crude from storage isn’t production. Releasing crude from storage reduces storage. It actually makes the market tighter.
 
Which means, fourth, as soon any releases end, demand fundamentals will not simply take prices right back to where they were, they will take prices higher because there is now less storage as a buffer.
 
And so, reserves are not tapped lightly. Historically speaking, the United States has only released oil from its reserves to impact pricing when there has been an actual productiondisruption. For example, in 1991 when Iraq invaded Kuwait, or in 2005 when Iraq descended into civil war and Venezuela got serious about its journey to self-destruction. Nothing like that is happening currently.
 
These aren’t particularly sophisticated economic talking points. “Oil 201” if you will. And that is what has me concerned. Transport Secretary Pete Buttigieg knows this. Energy Secretary Jennifer Granholm knows this. Commerce Secretary Gina Raimondo knows this. National Security Advisor Jake Sullivan knows this. The chances of this quartet of the smartest people on TeamBiden not advising the president of such a basic economic function are zero.
 
Which tells me that one of two things has happened.
 
Option1: There’s some sort of massive misunderstanding going on here and the information that’s leaking out of Asia is in some way wrong. If so, this’ll blow over very quickly and we’ll all go back to our lives.
 
Option2: Biden’s instinctive populism has overwhelmed his willingness to listen to basic facts, and he is pursuing a populist, Trumpesque economic policy in the belief that his diktats can direct the markets.
If it is Option2 then, well, crap. If the goal is to decrease oil prices, there’s an easier, faster, diplomatically cheaper, more economically viable and more environmentally friendly way to do it:
 
The United States is the world’s largest oil producer because of the shale revolution. Using a mix of new production techniques developed in the past two decades, U.S. oil producers can bring new production to market in just six weeks. Even Saudi Arabia’s reserve capacity takes a minimum of three months to bring on-line. Shale output has far lower carbon output as part of its production than the global average, and because U.S. shale is produced in the United States rather than a different hemisphere, the shipping footprint is similarly lower. (Also, production taxes!) Politically, it would indeed be awkward for green-friendly Biden to approach the U.S. oil sector about producing more oil, but IMO not nearly as awkward as it has been for him to approach de facto Saudi Arabian leader Muhammad "Hacksaw" bin Salman…which he has already done. (Only to be turned down flat.)
 
I have been nursing some concerns about the Biden administration’s economic policies for some time. I’ve reserved judgement because most of his plans require Congressional action, and until Congress actually passes something of substance it is all just political theater. The oil-release action is in a different category because it can be done by executive order.
 
As a rule, I like to give presidents plenty of time before I declare them lost causes, and therefore part of the problem rather than part of the solution. With Obama it took until year five, with the specific straw being when Obama started barring people who brought him news he ideologically disagreed with from even entering the Oval Office. That action turned the entire Executive Branch into a tone-deaf echo chamber. With Trump it happened in year three when he decided he was “done” with coronavirus. That action is largely responsible for the death of a half million Americans. After seeing the quality of the people in Biden’s cabinet, it never occurred to me that it might happen before year two.
 
But here we may be. Arguing that Option2 is what is truly in play, is another energy-related action from Biden administration this week: an order that the Federal Trade Commission investigate American oil producers, refiners and gasoline distributors for price fixing. Fixing in the wildly unconcentrated American oil complex is functionally impossible. Leaving aside the hundreds of differently motivated oil producers and hundreds of regionalized gasoline distributors and tens of thousands of gasoline retailers, there are 135 operating oil refineries in the United States, and they tend towards cutthroat competition. Collusion among them would be hilariously unwieldy and only one tattletale hold-out would result in billions in fines for the other 134. Biden should know this too. Buttigieg and Granholm and Raimondo and Sullivan certainly do. This isn’t policymaking. This is populist blamestorming in the Trumpian style, using the tools of the state to target your political opponents.
 
But I digress.
 
What’s happening with the oil markets, what is driving prices higher, what is apparently prompting Biden to push for a mass release, are symptoms of an issue far larger and more substantive than mere presidential mismanagement. What’s happening is financial mismanagement on a global scale. Its effects are magnifying with time and will be with us long after Biden is gone. What we are seeing now, with oil prices well on their way to $90 a barrel, is just the tip of the iceberg.
 
But it will not be felt everywhere.

If you are gonna quote a page, you need to include a tldr if you actually want people to pay attention. Rep deserved if your tldr is actually concise and boiles the subject down to its constituents.

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58 minutes ago, NotActuallyALonghorn said:

If you are gonna quote a page, you need to include a tldr if you actually want people to pay attention. Rep deserved if your tldr is actually concise and boiles the subject down to its constituents.

No thanks to your unsolicited advice. People will pay attention because of the content. 

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Guest Lobo

Guest Lobo

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19 hours ago, billfromlaketravis said:

I saw about a dozen new Corvettes driving around Midland this morning. 
 

We’re back baby! 

Are you in Midland?  I just assumed you lived near Lake Travis.  

Half of Odessa is in Austin this week it seems.  

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Dutchrudder

Dutchrudder 11141

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Might be a dumb question, but why is there Sour Crude in the SPR to begin with? Isn't the point of the SPR to have oil ready for immediate use in case of a significant emergency? In the event of another Hurricane Katrina hitting the Gulf Coast, having sour crude available to bridge a supply gap is kind of pointless if many of the refineries needed to process it are offline.

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billfromlaketravis

billfromlaketravis 11519

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26 minutes ago, 52-80 said:

Jen Granholm, literally the same press conference:

 

"We have seen oil prices fall nearly 10% which again is testament to the President's leadership...."

vs

"So to be really clear obviously the president does not control the price of gasoline"

 

Granholm’s bio : https://en.m.wikipedia.org/wiki/Jennifer_Granholm

Spoiler alert, she’s never worked in energy.

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52-80

52-80 19175

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Posted
3 minutes ago, Fudge Nuggets said:

But luckily for you, you can blame the POTUS for either when they don't move your way. 

Every single post I've made in this thread expresses the notion that the POTUS/WH/admin has no influence on either of those product. 

Luckily for you, you can't read.

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52-80

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this graph isnt meant to be taken seriously. 

the point im trying to make is the futility and absurdity of the politicians cherry picking moments from the complex market dynamics for their narrative. 

doesnt matter if its the Red cabinet or the Blue cabinet, when they come into office for 1 week and claim the stock market price as their own victory.  its inane. 

 

image.thumb.png.d19339d06ddf7d34b90f7bd3643a9b02.pngo

 

 

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Guest Lobo

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csb/ a friend and LP of mine was pitching a deal with some of his family's vast holdings in the Burgos Basin in Nuevo Leon.  This was in Houston in 2015.  Two of the folks there were Perry and his son, along with a few others.  He invited me to sit in since I was in town anyway.  Anyway, he gets to the map portion and Perry comments (I'm paraphrasing), "That's interesting how the Eagle Ford formation just stops at the shallow Rio Grande, as does the Burgos on the other side."  Mario mmm-hmm'd quietly and moved on with the presentation.  

To this day, nobody knows if Perry was kidding or being serious.  /csb 

(to be fair, although he may have rehearsed a few lines for the introduction of the meeting, Perry's Spanish was not that awful)

Moral of the story...Secretaries of Energy are usually useless figureheads...this one doesn't seem much different.  Moniz is the last one I can think of that even had training/education/experience in the actual Energy Industries (non-political ones anyway).  

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52-80

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21 minutes ago, Lobo said:

Moral of the story...Secretaries of Energy are usually useless figureheads...this one doesn't seem much different.  Moniz is the last one I can think of that even had training/education/experience in the actual Energy Industries (non-political ones anyway).  

Hazel was a lawyer for some electric company and Chu was atleast a scientist at heart.  The rest...yeah... just warm bodies.  Like Jon fucking kerry presiding over climate policies.

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1 hour ago, Lobo said:

csb/ a friend and LP of mine was pitching a deal with some of his family's vast holdings in the Burgos Basin in Nuevo Leon.  This was in Houston in 2015.  Two of the folks there were Perry and his son, along with a few others.  He invited me to sit in since I was in town anyway.  Anyway, he gets to the map portion and Perry comments (I'm paraphrasing), "That's interesting how the Eagle Ford formation just stops at the shallow Rio Grande, as does the Burgos on the other side."  Mario mmm-hmm'd quietly and moved on with the presentation.  

To this day, nobody knows if Perry was kidding or being serious.  /csb 

(to be fair, although he may have rehearsed a few lines for the introduction of the meeting, Perry's Spanish was not that awful)

Moral of the story...Secretaries of Energy are usually useless figureheads...this one doesn't seem much different.  Moniz is the last one I can think of that even had training/education/experience in the actual Energy Industries (non-political ones anyway).  

I know Griffin. He is a cock daddy, arrogant SOB of the highest order, and fiercely loyal to people that poke fun at his dad, which I’ve witnessed numerous times (to great delight). But he’s no dummy. 

Knowing what I know about career politicians, and Perry in particular, Perry was dead serious. I met with Dewhurst, who has forgotten more about energy than Perry ever will know. Very similar dumbshit comments. Politicians are accustomed to uttering whatever stream of consciousness bullshit that pops in their heads and having the vast majority of people around them lap it up. They’re not around any critical thinkers who would dare speak up and correct them publicly. 

After Dewhurst left my office, I told my guys we are never doing business with that assclown, and then we laughed about how he floated around our office like Lo Pan. 

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1 hour ago, 52-80 said:

jesus christ big murder on the WTI front today. over 10% drop

On one hand I executed oil hedges Wednesday afternoon.  On the other, my concern was getting the highest ceiling possible on a collar, and the smallest call spread possible on a 3-way. So I have a $50 put on each trade. I thought the biggest risk was a blowout - not a drop. I still don’t think it matters, but I certainly would’ve gone with a $55/$60 put had I known this particular Black Friday was gonna be African Variant Black Friday. 

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DCA_HORN

DCA_HORN 725

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4 hours ago, Porterhouse said:

On one hand I executed oil hedges Wednesday afternoon.  On the other, my concern was getting the highest ceiling possible on a collar, and the smallest call spread possible on a 3-way. So I have a $50 put on each trade. I thought the biggest risk was a blowout - not a drop. I still don’t think it matters, but I certainly would’ve gone with a $55/$60 put had I known this particular Black Friday was gonna be African Variant Black Friday. 

Who sold you on 3 way collars? 

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22 minutes ago, DCA_HORN said:

Who sold you on 3 way collars? 

Me. It’s a 50-84.70-92.20. Looks silly that I’d be thinking this way in light of today’s market performance, but my biggest fear was a blowout way above where we were. The way the trade is structured, there is no blood between $50 and $84.70.  My loss would be limited to $7.50/bbl. I participate in 100% above $92.20. 

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Storm the Field

Storm the Field 5295

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Posted

Hell of a whipsaw this morning. 

OPEC+ announced they were forging ahead with next month's planned increase of 400K barrels/day. WTI tanked down to nearly $62 almost immediately, but got back to yesterday's close of $65.50 not long after and now slightly in the green at $66. 

Couple of theories I've seen:

1. They're bluffing and can't actually increase production. Several countries in the cartel are already failing to hit their daily quotas.

2. Reverse psychology. Announcing a pause or reversal of the increase schedule would signal they're genuinely concerned about demand destruction due to Omicron. Sticking with the plan indicates the opposite. 

3. Mollifies the US short-term and makes any additional SPR talk unlikely. 

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52-80

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31 minutes ago, Storm the Field said:

Hell of a whipsaw this morning. 

OPEC+ announced they were forging ahead with next month's planned increase of 400K barrels/day. WTI tanked down to nearly $62 almost immediately, but got back to yesterday's close of $65.50 not long after and now slightly in the green at $66. 

Couple of theories I've seen:

1. They're bluffing and can't actually increase production. Several countries in the cartel are already failing to hit their daily quotas.

2. Reverse psychology. Announcing a pause or reversal of the increase schedule would signal they're genuinely concerned about demand destruction due to Omicron. Sticking with the plan indicates the opposite. 

3. Mollifies the US short-term and makes any additional SPR talk unlikely. 

1. Can't think of an incentive to do that.  If it's known they're in short supply, it's good for prices, which is good for them...

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Storm the Field

Storm the Field 5295

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Just now, 52-80 said:

1. Can't think of an incentive to do that.  If it's known they're in short supply, it's good for prices, which is good for them...

They like high prices, yes, but what they like even more is market share. Their golden number is whatever price makes them the most money without encouraging US production.

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44 minutes ago, Storm the Field said:

Hell of a whipsaw this morning. 

OPEC+ announced they were forging ahead with next month's planned increase of 400K barrels/day. WTI tanked down to nearly $62 almost immediately, but got back to yesterday's close of $65.50 not long after and now slightly in the green at $66. 

Couple of theories I've seen:

1. They're bluffing and can't actually increase production. Several countries in the cartel are already failing to hit their daily quotas.

2. Reverse psychology. Announcing a pause or reversal of the increase schedule would signal they're genuinely concerned about demand destruction due to Omicron. Sticking with the plan indicates the opposite. 

3. Mollifies the US short-term and makes any additional SPR talk unlikely. 

1 and 2 are both correct. 3 is not a consideration. Biden and Trump will never dictate what OPEC does, nor should they. 

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13 minutes ago, 52-80 said:

1. Can't think of an incentive to do that.  If it's known they're in short supply, it's good for prices, which is good for them...

They may not be overtly bluffing, but they cannot, at all, ever fulfill their quotas. It’s common knowledge. 

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swraith

swraith 347

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It is normal when the weather across the U.S. is this warm.  Heating demand just isn't there.  Henry Hub had large risk premiums priced into this winter's forward curve and when cold weather doesn't show up, prices have to drop precipitously to clear the market.

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5 hours ago, 52-80 said:

not fucking normal

 

2 hours ago, swraith said:

It is normal when the weather across the U.S. is this warm.  Heating demand just isn't there.  Henry Hub had large risk premiums priced into this winter's forward curve and when cold weather doesn't show up, prices have to drop precipitously to clear the market.

Yeah it was expected with a warm winter. My gas hedges look pretty swanky right now.  My trader told me he thought by positions were solid, and there was a tremendous amount of downside with a warm winter. What he said was obvious in retrospect, but at the time I couldn’t envision such a warm winter. I was more worried about a blowout far and above $6. Seems ludicrous now, and the floor price of my collar has now been breached. I’m now wondering how I can restructure my trade to obtain a higher floor, because my ceiling of $12+ is so in the money and effectively never going to hit. 

Likewise, my oil trade should never hit except in the out years where I might pay some. I need to call my guy. 

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52-80

52-80 19175

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Front month future going from 6.2 to 3.7 in something like 25 trading days is pretty stomach churning, especially going with the seasonal trend, even if weather turns out different than expected

I was tempted to take a stab at it but already have a position in CL

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