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I'd call Iowa 90% normal. I live in a touristy little town on the Illinois border and the visitor traffic isn't back to 90%. Just across the river dining rooms appear mostly closed. I think some restaurants are going to try to get by with the lower expenses as long as they can. At least they survived for now. Many did not. The strip mall next to my HD store is more than 50% vacant though. I don't know the final outcome but the deck was reshuffled for sure.
California has to have crazy high gasoline taxes. That doesn't sell well in most states. We don't have the wages to pay double (or more) for every basic need. CA is very important to our economy but I don't pay much attention to your pricing. Gas is $2.78 where I live. $3.25 in IL, probably closer to $2.50 in MO. Illinoisans wear all the bridges out giving their money to border states.
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I thought this was a good post from the energy board I follow.
Quote:Last time when WTI rose to $75-76 in 2018 US crude inventories touched 392mm bbl at the end of the high demand season.
WTI is at $73 now, but inventories are well behind - at 466mm, will drop to ~458mm tomorrow.
The reason - multiple factors affect oil prices, inventories is important, but it's the only one among them.
The 2nd even more important - w/w and specifically US production as the main growth driver.
In 2018 US production was at 12.5 mm bpd and at the highest growth speed of ~1.5mm bpd per year while currently - flat and 1.5 mm bpd lower. Production is not expected to rise materially in coming 2 quarters. Even in 2022 it is not expected to rise faster than perhaps 800K-1.0 mm bpd AND adding that amount by the end of 2022 only, or 1.5 years from today.
W/W production is under control of OPEC+ that adds at a very measured pace after demand recovery verification.
The 3rd - projected demand trajectory. In a typical year a high demand season ends in early September following by slower consumption and lower refinery throughput due to seasonal maintenance. However this year is different, at least the market thinks it is different.
Oil traders believe that the after-covid demand recovery will continue in the Fall and possibly Winter and Spring, and will sequentially increase demand despite seasonality and refinery maintenance.
Some Summer travel demand will fall in September, but fully compensated and increased by extra commuting (back to office), lower unemployment (higher factory and large commercial utilization) and certainly jet fuel demand recovery due to business travel.
Such demand and production trajectory impact oil futures more than current inventories that are projected to fall sequentially more and well beyond September.
I tend to expect US crude inventories to continue draining reasonably fast and eventually break down the 2018 low of 392mm bbl.
However this is not a sure thing as supply is not at full yet. A lot will depend on OPEC+ policy, and also on Iranian deal that currently has less clarity.
If no-nuke deal AND the measured OPEC+ production release at "not to exceed" to continue, AND demand rises, I tend to believe we will finally remove all excesses from w/w inventories we have built since the start of 2015. Specifically US inventories to fall to ~360mm bbl which was just above the mid point in 2010-2014, actually in the 310-380mm bbl range.
I'm fully aware about the Tailor effect and new pipeline/tank build, but my firm view is that 12-13mm bpd US production requires materially lower inventories than 6 mm bpd production 7-10 years ago. Some producing and exporting infrastructure is needed, but 50%+ imported infrastructure is not needed, 80% less in padd 3.
Even Cushing can be painlessly drained by 75% down to 20 mm bpd only...or lower as we have almost instantaneous production with no need so much storage..
Bottom line:
You have to look forward, not backward.
Oil prices are impacted by total supply (production and inventories) and demand. More important - supply and demand forward trajectory, not in static.
If you want to estimate a certain inventory level corresponding to a certain oil prices - all factors must be applied.
At currently not stable conditions (demand recovery while supply curtailment) oil traders look further and further.
After demand is fully recovered and is set for a natural growth AND production is fully recovered, oil traders will look differently I guess.
romm
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(06-22-2021, 11:04 PM)EricL Wrote: I thought this was a good post from the energy board I follow.
Quote:Last time when WTI rose to $75-76 in 2018 US crude inventories touched 392mm bbl at the end of the high demand season.
WTI is at $73 now, but inventories are well behind - at 466mm, will drop to ~458mm tomorrow.
The reason - multiple factors affect oil prices, inventories is important, but it's the only one among them.
The 2nd even more important - w/w and specifically US production as the main growth driver.
In 2018 US production was at 12.5 mm bpd and at the highest growth speed of ~1.5mm bpd per year while currently - flat and 1.5 mm bpd lower. Production is not expected to rise materially in coming 2 quarters. Even in 2022 it is not expected to rise faster than perhaps 800K-1.0 mm bpd AND adding that amount by the end of 2022 only, or 1.5 years from today.
W/W production is under control of OPEC+ that adds at a very measured pace after demand recovery verification.
The 3rd - projected demand trajectory. In a typical year a high demand season ends in early September following by slower consumption and lower refinery throughput due to seasonal maintenance. However this year is different, at least the market thinks it is different.
Oil traders believe that the after-covid demand recovery will continue in the Fall and possibly Winter and Spring, and will sequentially increase demand despite seasonality and refinery maintenance.
Some Summer travel demand will fall in September, but fully compensated and increased by extra commuting (back to office), lower unemployment (higher factory and large commercial utilization) and certainly jet fuel demand recovery due to business travel.
Such demand and production trajectory impact oil futures more than current inventories that are projected to fall sequentially more and well beyond September.
I tend to expect US crude inventories to continue draining reasonably fast and eventually break down the 2018 low of 392mm bbl.
However this is not a sure thing as supply is not at full yet. A lot will depend on OPEC+ policy, and also on Iranian deal that currently has less clarity.
If no-nuke deal AND the measured OPEC+ production release at "not to exceed" to continue, AND demand rises, I tend to believe we will finally remove all excesses from w/w inventories we have built since the start of 2015. Specifically US inventories to fall to ~360mm bbl which was just above the mid point in 2010-2014, actually in the 310-380mm bbl range.
I'm fully aware about the Tailor effect and new pipeline/tank build, but my firm view is that 12-13mm bpd US production requires materially lower inventories than 6 mm bpd production 7-10 years ago. Some producing and exporting infrastructure is needed, but 50%+ imported infrastructure is not needed, 80% less in padd 3.
Even Cushing can be painlessly drained by 75% down to 20 mm bpd only...or lower as we have almost instantaneous production with no need so much storage..
Bottom line:
You have to look forward, not backward.
Oil prices are impacted by total supply (production and inventories) and demand. More important - supply and demand forward trajectory, not in static.
If you want to estimate a certain inventory level corresponding to a certain oil prices - all factors must be applied.
At currently not stable conditions (demand recovery while supply curtailment) oil traders look further and further.
After demand is fully recovered and is set for a natural growth AND production is fully recovered, oil traders will look differently I guess.
romm
Should we buy more oil Eric?
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Back to the other energy me for a minute. The perma-bulls have never failed to cost me money if I followed them anywhere near the higher end of the oil range. I feel comfortable at 70 but we are getting closer to the place where I am careful with new adds in any form. I can think of three or five so reasons why oil might not be able to achieve super boom cycle pricing and hold it for long. I can easily find bulls that rationalize every one of those reasons away, just like they have since the 1990s.
At some point the risk/reward will be reason for caution. And a lot depends on whether you are truly investing or just trying to trade a peak.
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(06-23-2021, 06:54 AM)fenders53 Wrote: Back to the other energy me for a minute. The perma-bulls have never failed to cost me money if I followed them anywhere near the higher end of the oil range. I feel comfortable at 70 but we are getting closer to the place where I am careful with new adds in any form. I can think of three or five so reasons why oil might not be able to achieve super boom cycle pricing and hold it for long. I can easily find bulls that rationalize every one of those reasons away, just like they have since the 1990s.
At some point the risk/reward will be reason for caution. And a lot depends on whether you are truly investing or just trying to trade a peak.
Not a peak at all especially when all these oil stocks are still way off their all time highs. Oil still has a long way to go from 70 to 90. So to me they still represent a lot of value here. Best barging in the market right now. Go chase the tech names and RUN's of the world with no earnings 
Your always so negative on everything and never see the light at the end of the tunnel
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06-23-2021, 07:22 AM
(This post was last modified: 06-23-2021, 07:24 AM by fenders53.)
(06-23-2021, 07:10 AM)stockguru Wrote: (06-23-2021, 06:54 AM)fenders53 Wrote: Back to the other energy me for a minute. The perma-bulls have never failed to cost me money if I followed them anywhere near the higher end of the oil range. I feel comfortable at 70 but we are getting closer to the place where I am careful with new adds in any form. I can think of three or five so reasons why oil might not be able to achieve super boom cycle pricing and hold it for long. I can easily find bulls that rationalize every one of those reasons away, just like they have since the 1990s.
At some point the risk/reward will be reason for caution. And a lot depends on whether you are truly investing or just trying to trade a peak.
Not a peak at all especially when all these oil stocks are still way off their all time highs. Oil still has a long way to go from 70 to 90. So to me they still represent a lot of value here. Best barging in the market right now. Go chase the tech names and RUN's of the world with no earnings
Your always so negative on everything and never see the light at the end of the tunnel
................... and mostly retired at age 54. Pretty crazy huh?
I still own plenty of oil and so does everyone else regularly posting this thread. I may own even more than Eric the Bull  ,but it doesn't matter even a little for the purposes of our conversation.
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vbin Wrote:
Quote:Should we buy more oil Eric?
I think oil is fairly priced or perhaps even a bit overpriced at current storage levels. The market is looking forward though as storage is dropping and is expected to continue doing so, which is why price is rising.
As you know, crude price are quite volatile, and sensitive to the world economy. Another flareup in COVID shutting things down or a financial meltdown that causes another recession would push oil right back down to the $40's.
The coming quarters should be good for producers, as they should be bringing in plenty of cash flow at $70 oil. There will be a lag for some before dividends start getting boosted and shares get repurchased since there are balance sheets to repair, but if oil can stay $70+, I think those that hold should do well.
I have as much weighting (9%) as I'm comfortable with in my dividend portfolio, so I don't plan to add much more. I'm just sitting tight and watching things play out after a long, painful, wait.
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(06-23-2021, 08:40 AM)EricL Wrote: vbin Wrote:
Quote:Should we buy more oil Eric?
I think oil is fairly priced or perhaps even a bit overpriced at current storage levels. The market is looking forward though as storage is dropping and is expected to continue doing so, which is why price is rising.
As you know, crude price are quite volatile, and sensitive to the world economy. Another flareup in COVID shutting things down or a financial meltdown that causes another recession would push oil right back down to the $40's.
The coming quarters should be good for producers, as they should be bringing in plenty of cash flow at $70 oil. There will be a lag for some before dividends start getting boosted and shares get repurchased since there are balance sheets to repair, but if oil can stay $70+, I think those that hold should do well.
I have as much weighting (9%) as I'm comfortable with in my dividend portfolio, so I don't plan to add much more. I'm just sitting tight and watching things play out after a long, painful, wait.
I failed to believe you that supply would be successfully managed. At this time I think the big boys have learned, and the banks will keep the fool wildcatters from wrecking their own game. (at least this year). OPEC+ is keeping their cool too. They'll mess it up a little at some point but I don't think 2020 SA/Russia thing will ever happen again. That was the worst idea ever and they paid a price.
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WTI pushed past $74 this morning.
Apparently someone believes the supply/demand numbers I've been discussing...
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(06-23-2021, 09:03 AM)EricL Wrote: WTI pushed past $74 this morning.
Apparently someone believes the supply/demand numbers I've been discussing...
I was shocked oil dipped on a FED years from now maybe rate move. Just got caught up in the commodity correction for moment. Back to our regularly scheduled oil summer move I think.
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(06-23-2021, 09:09 AM)fenders53 Wrote: (06-23-2021, 09:03 AM)EricL Wrote: WTI pushed past $74 this morning.
Apparently someone believes the supply/demand numbers I've been discussing...
I was shocked oil dipped on a FED years from now maybe rate move. Just got caught up in the commodity correction for moment. Back to our regularly scheduled oil summer move I think.
API storage numbers were bullish yesterday afternoon, and we get EIA numbers this morning.
If those are big draws, this rally will keep on moving.
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EOG's latest investor presentation from June 3rd showed that each $1 increase in crude price leads to another $102 million in net income.
The special dividend was already paid for at ~$45 crude prices and they showed another $1.9B in cash flow on top of that at $60 WTI.
WTI is now at $74.
Buybacks next?
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