Future strategy to survive discovering 1 out of every 20 bbls of oil we now use.

[SharperDingaan]

The article simply highlights that US crude output is vulnerable.

And the more the chump doubles down on tariffs, the greater everyone else's incentive becomes.

 

Sanctions can be very easily circumvented, especially between complicit parties; and Europe doesn't hold the chumps view on Iran.

Its easy to take market share from the US, & maintain no net change in supply. Buyers simply buy from other than the US, and Iran, Russia, & SA all have additional capacity. US crude has readily available substitutes.

 

It really adds up to giving up the tariffs BS.

You can bully all you want, but you cant fight the whole school-yard at the same time.

 

SD

 

 

 

 

 

 

[Zorrofan]

Sanctions can be very easily circumvented, especially between complicit parties; and Europe doesn't hold the chumps view on Iran.

Its easy to take market share from the US, & maintain no net change in supply. Buyers simply buy from other than the US, and Iran, Russia, & SA all have additional capacity. US crude has readily available substitutes.

 

SD,

 

Lets say that Iran, Russia and SA do have excess capacity. How much excess capacity they have is open to debate but not likely all that much. There is still the issue of declining production from Venezuela, fighting in Libya, global decline rates estimated at 3 million BPD and the lack of investment in new production at the mega project scale for the past three years. Unless demand plunges the world will need US shale oil and then some. 

 

cheers

Zorro

[SharperDingaan]

The intent of something like this is to EVIDENCE that oil CAN be tarrifed, and that US production CAN BE easily substituted.

The level, & quantity, of noise is really to distract from the fact that it (may/has) actually occurred.

 

The objective is a ratchet of pain to support the removal of tarrifs, that just hurt everyone.

See sense, and the whole thing could vanish tomorrow.

 

SD

 

 

[Cardboard]

One chump in this thread and it is not Trump.

 

Must be a voter for Wynne.

 

All the arguments are void of any logic.

 

Cardboard

[SharperDingaan]

One chump in this thread and it is not Trump.

 

Must be a voter for Wynne.

 

All the arguments are void of any logic.

 

Cardboard

 

You're welcome.

 

But I'm not the one with the derailed tanker train on the rail link to Stroud.

Real smart running these things through floodwater plains when the river is flooding.

http://www.cbc.ca/news/canada/edmonton/train-from-alberta-leaks-oil-iowa-1.4719569

 

"Officials at the scene agreed that floodwater from the swollen Little Rock River played a part in causing the cars to leave the tracks, but said they weren't yet sure whether the waters compromised the track, physically pushed the cars off it or played a part in some other way. The river rose rapidly Wednesday after 13 to 18 centimetres of rain fell Wednesday and a further downpour on Thursday."

 

I get that Albertas industry thinks the whole world is against it, but it sure continues to insist on NOT doing itself any favours.

And just to wind you up - I went with Ford. 'Cause we're in the POT business now, & I would prefer the province be run by those with business experience in this fine product!

 

SD

 

 

 

 

 

[Cardboard]

Now it is Alberta's fault because a train has derailed while your were blaming the industry and province and calling for them to equip themselves with a fleet of railcars to store/carry crude...

 

Sue BNSF as they are the ones responsible and not the other way around. A few billion $ fine would teach Buffett a lesson on supporting those who block much, much safer pipelines.

 

Cardboard

 

 

[Cardboard]

360,000 barrels/day offline until end of July:

 

https://ca.reuters.com/article/businessNews/idCAKBN1JI2S1-OCABS

 

Cardboard

[Cardboard]

Saudis in panic mode:

 

If these anonymous sources are correct, which as a warning is often complete lies, then the Saudis are truly panicking to prevent an oil spike following Libya and Canada's latest outage:

 

https://www.cnbc.com/2018/06/26/oil-prices-uncertainty-over-libyan-crude-exports-in-focus.html

 

To pump at their max rate of 10.8 million barrels/day is pre-2016 deal to cut. That also means that other players (including Russia) are near completely unable to help with the 1 million barrels/day agreed increase.

 

The oil market came down following these reports and is now at the day high. The market is finally seeing the truth: spare capacity no more.

 

Saudis would have to go beyond their record production level to bring any worldwide spare capacity which has never been tested before and 10.8 million barrels/day was only done for a few months to crush shale which was the stupid strategy from the previous guy. Read running flat out!

 

Moreover, they have not invested at all in new drilling or facilities for that so called "spare capacity" since then with large budget deficits and their long term vision.

 

This summer is looking hotter than normal and it is probably also the case for the Middle East and their need for power, we are already at record consumption level and growing. Things should get quite interesting...

 

Cardboard

[Cardboard]

And Trump doing his best not to hurt the mid-term election: read start of Iranian cuts in November. Why not now?

 

https://www.cnbc.com/2018/06/26/oil-buyers-must-cut-all-iranian-crude-imports-by-november-state-dept-.html

 

Cardboard

 

[SharperDingaan]

It's nice to have tightening supply, but that Iranian crude is not going to go away.

Unlike VZ and Libya it's available to all, & at a time when incremental supply is hard to come by. This is what middle-men are for.

The only way that oil stays out of the market is if the loading terminals experience an accident, & there is no retaliation.

 

SD

 

[Cardboard]

It would be nice if you could check your information before stating all kinds of things online. Maybe that you don't mind misleading your nieces and nephews overseas but, I do care about my fellow CoBF investors.

 

For example, to have a look at shipments of Iranian oil pre-Iran deal in 2015 and after.

 

To understand that vessels who cannot be insured, do not carry such oil (U.S. and European insurance firms will not insure Iranian shipments due to sanctions).

 

To also make a distinction between different grades of oil: light, medium, heavy, sour, etc. and that refineries cannot alter significantly the mix of what they process.

 

To also understand that there was a meeting last week. That Iran is mad and that Russia and Saudi Arabia are not ramping up production just for the sake of it but, realizing that there will be less Iranian oil going to world markets.

 

Cardboard

[tombgrt]

Another lesson: don't diversify on lesser ideas. Was basically saying GXE was the far better deal here and yet I managed to shift some profits in the dogs. Stupid!

 

PPR now only 1/8th of my GXE position because of price action in last few months but still sucks. Same for IPO and ZAR (which are even smaller positions). When is market going to shift sentiment around on these? Volume so low it only takes one buyer to set the price. ATU at least did well.

 

 

[SharperDingaan]

Iran was producing 4.47M boe/day Feb, 2018. The Iran Nuclear Deal Framework was based on the April 2015 framework, and announced July 14, 2015. March 2015, Iran was producing 3.3M boe/day. Iranian production has risen 35% since the deal was announced.

https://ycharts.com/indicators/iran_crude_oil_production

https://en.wikipedia.org/wiki/Iran_nuclear_deal_framework

 

The National Iranian Tanker Company is a subsidiary of the National Iranian Oil Company, and the biggest tanker company in both the Middle-East and the world. As at 2013, 74 tankers, of which 50 were VLCC’s. A VLCC typically loads 2B boe.

https://en.wikipedia.org/wiki/National_Iranian_Tanker_Company

https://en.wikipedia.org/wiki/Oil_tanker#Chuan_Yeu_(VLCC_and_ULCC)

 

Self-insurance means that a business liable for some risk, chooses to "carry the risk" itself and not take out insurance through an insurance company. A common practice around the world including the US. https://en.wikipedia.org/wiki/Self-insurance

 

"China gets condensate from Iran. The light oil can be cracked in a processing plant called a splitter to make petroleum products and petrochemicals or blended with heavier crude for use in refineries. Showing the competition U.S. exports face, Iran exports about 55 percent of its roughly 250,000 bpd of South Pars condensate output to two Chinese buyers. Since U.S. and European Union sanctions were eased late last year in exchange for Iran curbing nuclear activities, Tehran's exports have risen about 30 percent to 1.25 million to 1.3 million bpd, much of this as South Pars shipments to China".

http://www.businessinsider.com/the-us-faces-an-awkward-rival-in-the-crude-oil-export-market-2014-7

 

Hence, we have a state-owned oil company (NIOC), a state-owned tanker fleet (NITC), and state ability to self-insure, easily capable of transporting 1.25M boe/d of condensate to a willing China; where the processing plants already exist. There are established business arrangements, and the condensate is a direct alternative to US production.

 

US sanctions would simply free up Iranian condensate production that could now be cut from US exports to China. The suggested 300,000 boe/d that China was buying from the US, now being bought from Iran instead, Iran exporting the same quantity that it was, and everybody happy except the US - where people are now out of a job. China gets to safely add oil to its US tarrifs, and this is called 'winning' in the White House.

 

I think I’ve made my case, now I’ll accept your gracious Mea culpa.

 

Thankyou

 

SD

 

[Cardboard]

Mea culpa for what?

 

You stated yourself the climb since the deal and now we should not expect an ounce less!!!

 

"Iran was producing 4.47M boe/day Feb, 2018. The Iran Nuclear Deal Framework was based on the April 2015 framework, and announced July 14, 2015. March 2015, Iran was producing 3.3M boe/day. Iranian production has risen 35% since the deal was announced."

 

Cardboard

[Cardboard]

"When is market going to shift sentiment around on these? Volume so low it only takes one buyer to set the price. ATU at least did well. "

 

I know Tombgrt, it has been extremely frustrating. Even big dogs such as CPG and CVE are having a hard time moving up.

 

I believe it boils down to the market believing that $65 U.S. WTI is the floor vs the top. Then cash flow estimates will be considered more like reality, NPV at strip will mean something and valuation should follow.

 

It was only a few months ago that we were trading at $50 U.S. WTI and many were calling for the $40's. So it seems that it will take a while for people to digest. So many have been burned.

 

Just recently as some got into larger caps to allocate some money to the energy sector, they got burned with the move back down to $65 U.S. WTI. These newcomers are now trying to figure out if they were wrong and what to do next?

 

Cardboard

[Cardboard]

"API data reportedly show a more than 9 million-barrel drop in U.S. crude supply.

 

The American Petroleum Institute reported Tuesday that U.S. crude supplies dropped by 9.2 million barrels for the week ended June 22, according to sources. The API data, however, showed a rise of nearly 1.2 million barrels in gasoline stockpiles, while inventories of distillates rose by 1.8 million barrels, sources said. Supply data from the Energy Information Administration will be released Wednesday morning. Analysts polled by S&P Global Platts expect the EIA to report a fall of 2.3 million barrels in crude supplies. They also forecast supply increases of 160,000 barrels for gasoline, and 500,000 barrels for distillates. August crude was at $70.80 a barrel in electronic trading, up from the on the New York Mercantile Exchange."

 

Genscape apparently reported a pretty big draw from Cushing on Monday and this would seem to corroborate.

 

Moreover, with the large Syncrude outage, expect Canadian inventory of heavy to decline significantly through July.

 

Cardboard

[SharperDingaan]

Hard to be gracious huh?

 

We're all entitled to our own opinions, we collectively post to get better results, and the more diverse those opinions the better.

We simply have different views on both Trump, and Alberta's crude oil management, so be it.

 

However to quote Chinese President Xi Jinping, 'In our culture, we punch back'

https://www.cnbc.com/2018/06/25/xi-reportedly-answers-trumps-tariffs-we-punch-back.html

 

The world is such a great place!

 

SD

 

 

 

 

[tombgrt]

I initially was of the opinion that Iran would be able to redirect most exports too but fwiw, even Amrita Sen sees Iran losing 1.5-1.7 mbd! She is no dummy and has been spot on for some time now. Always has some of the best laid out arguments.

[SafetyinNumbers]

$ATU.V bull case on Hydra Capital blog

 

http://hydracapital.ca/hydra-blog.html

[tombgrt]

Now I know why the stock jumped 18% two days ago.

[SharperDingaan]

I have little doubt that Iranian production will be curtailed under sanctions.

Deduct 1.7 M boe/d from the 4.47M boe/d they were pumping as at Feb 2018 and you get to 2.8M boed/d. Immediately prior to the 2015 Nuclear Deal they were doing 3.3M boe/d. There is a strong possibility that the 0.5M boe/day (15%) drop over the 3 years period since the deal, is primarily attributable to just everyday depletion.

 

However 4.47M boe/d of Iranian crude IS being sold, their crude has a market even though it is primarily sour oil.

Hence if there are going to be reductions existing buyers have to agree to enforce US sanctions. We know the US view is not widely shared, Iran has the ability to independently deliver cargo, and that at the state level - sanctions are very easy to evade.

 

Todays trade war doesn't encourage cooperatation.

Even if the US were to place gun-boats outside Iranian loading facilities, its questionable as to whether its enforceable.

But it will provide great media images, sure to boost oil prices.

 

In short a big reduction in legal sales of Iranian crude - offset by an increase in illegal sales.

Could well be a net reduction, but not so sure it's going to be as big as thought.

 

SD

 

 

 

[tombgrt]

Holy shit that draw!

 

 

[Joe689]

Equities anyone?  anyone?  Bueller.    This will be like this all summer.  This should be the tip of rush into energy.  been saying that for a year lol

[tombgrt]

Equities anyone?  anyone?  Bueller.    This will be like this all summer.  This should be the tip of rush into energy.  been saying that for a year lol

 

Nah, let's endlessly debate whether Brk is 12% of 17% undervalued as there clearly are no undervalued stocks around. :X

 

People claiming beating the market is impossible lately but if they have to jump in some ugly ponds for once (after being spoiled for years), they steer clear. Same with EM equities two years back.Then last year these stocks jumped 30%. Bank stocks couple years back too. At least with those many did well. Greece, .... . Ah well...

[Uccmal]

Equities anyone?  anyone?  Bueller.    This will be like this all summer.  This should be the tip of rush into energy.  been saying that for a year lol

 

Nah, let's endlessly debate whether Brk is 12% of 17% undervalued as there clearly are no undervalued stocks around. :X

 

People claiming beating the market is impossible lately but if they have to jump in some ugly ponds for once (after being spoiled for years), they steer clear. Same with EM equities two years back.Then last year these stocks jumped 30%. Bank stocks couple years back too. At least with those many did well. Greece, .... . Ah well...

 

There is a distinct lack of humility creeping into this thread.....  :-)