Title : Busy, Busy Thursday Morning -- January 31, 2019
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Busy, Busy Thursday Morning -- January 31, 2019
Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or what you think you may have read here.Biggest story I've read in the past 48 hours: the 6th largest company (by revenue?) in the US -- McKesson -- will move its San Francisco headquarters to the Dallas-Ft Worth Area.
COP: huge earnings report. On the radio: "COP hit is out of the ballpark."
Facebook: surges; headline said the company "smashed" forecasts.
GE: huge miss on earnings -- but shares surging, according to the headline; apparently GE shares are up 20% year-to-date
CVX: will build a million-bopd pipeline in the Permian; at least I think that's what I saw
M/C: huge earnings report according to the headline
CVX: will buy Brazilian refinery along US coast
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The Oil Shock That Never Was
From Bloomberg:
Three years ago, influential figures in the oil industry were sounding a clear warning: prices were too low, investment was collapsing and by the end of the decade the world would face a shortage.
In reality, the market today is looking at several more years of plenty, so much so that OPEC is beginning its third year of production cuts just to prevent a surplus.
“We’re in an age of abundance,” said Ed Morse, head of commodities research at Citigroup Inc. in New York. “A supply crunch is not likely at all.”Wow, I remember all the discussions on the blog and elsewhere: doom and gloom -- major oil companies were not spending enough on CAPEX and we were going to run out of oil by 2018 ... or 2019 ... or 2020.
So what happened?
Oil’s biggest slump in a generation earlier this decade forced companies to slash spending, leading to a flurry of warnings that there wouldn’t be enough growth in oil supplies to meet rising demand and also offset production lost from aging fields.
Investment in oil and gas production collapsed by about $350 billion, or more than 40 percent, from 2014 to 2016 -- the sharpest contraction since the 1980s -- after crude fell from over $120 a barrel to less than $30, according to the International Energy Agency.
The number of new projects approved in 2017 dwindled to the lowest in 70 years, the Paris-based agency said.And here is it ... In November 2015, the IEA cautioned that supply growth outside OPEC would grind to a halt by 2020.
Three months later the EIA was ringing “alarm bells” for a coming crisis. Total SA Chief Executive Officer Patrick Pouyanne foresaw a shortfall of as much as 10 million barrels a day, about the volume Saudi Arabia was pumping at the time. The concerns were echoed across the industry, from Royal Dutch Shell Plc executives to hedge fund veteran Andy Hall.More at the link. But, wow, what a story.
Instead, supply has turned out to be plentiful. The U.S. is estimated to produce about 12 million barrels a day of crude this year, a level it was earlier forecast to reach only in 2042. Russia has raised output to a record and Iraq’s is near unprecedented levels. Brazil is set to pump at the fastest pace in at least 15 years in 2019, according to the IEA.
Bank of America Corp. estimates three-quarters of non-shale projects over the next five years will be profitable at just $40 oil, bringing new crude from the North Sea to Guyana even if prices stay low.
My takeaway? The EIA, a government agency, doesn't understand free market capitalism.
As far as the Bloomberg story: it hardly mentions the "shale." If you go to the story, count the number of time shale appears (non-shale does not count).
"Fracking" -- not mentioned once in this two-page story.
Thus Article Busy, Busy Thursday Morning -- January 31, 2019
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