Discover and read the best of Twitter Threads about #OOTT

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THREAD: Since March 9, when oil prices started plunging, my team and I have been compiling data on the budget cuts announced by N.American E&Ps.
They have cut more than 28% of their 2020 capex. See below for list:
Compiled by @arooneyma @shanti_2594 and @Arundhati_05
These include only the ones that have given hard numbers. Some others have said they will cut, but did not provide specific details.
Oil major @exxonmobil $XOM on Monday said it will make "significant" cuts to spending, but did not provide details. Rival @Chevron $CVX said it was looking at ways to trim spending that could lead to lower near-term oil production
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Read 4 tweets
The collapse in oil prices isn't likely to be a big problem for the global #climate -- but the attempt to recover from an economic crisis might. Some notes on my column today: #OOTT…
The economics 101 view of falling oil prices is that it will inevitably mean stronger demand for crude, which will probably be bad news for alternatives -- principally, electric vehicles.

But you really need to get past economics 101 to see what's going on here!
After all, oil prices have very little to do with the attractiveness of electric vehicles.

For one thing, taxes and producer profits mean that the crude price is less than half of the pump price of motor fuel, as @harrybenham_1 points out:
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A few quick thoughts on the oil price war:

1) Coronavirus is key. It is causing demand to drop dramatically - effectively shutting down the big Asian economies, cancelling flights and causing people to stay home.

At the same time we have the collapse of "OPEC+"
2) The split between Russia and Saudi Arabia has been coming for a while. The Saudis advocated more cuts, Russia didn't want to make them.

Each side today has more interest in trying to maintain its own market share than in propping up the global price of oil.
3) Why does market share matter? Because production costs for Russia and especially Saudi Arabia are still lower than the price of oil.

If you can maintain your share of a diminished market, you keep some revenue and push the pain onto other producers.
Read 11 tweets
A must read today on #oil from @IEA

Due #COVID they present 3 scenarios 2020 oil demand
Base case (demand picks up later in year): -90 kb/d
Low case (global measures fail to contain virus): -730 kb/d
High case (quickly contained): +480 kb/d

2/ global oil demand in 2020 falls to a trickle @IEA
3/ US production set to plateau even with their base case of $60 Brent. Further spending cuts are expected for 2020, with capital discipline remaining a priority.

This is way above the current levels of $30-$35 #oil with #OPEC failing to reach an agreement #OOTT
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What Saudi Arabia is trying to do with the oil market, at a time when coronavirus is crippling crude demand, is weirdly like what your body tries to do with a fever. #OOTT
A fever is an act of self-harm: Raise the temperature of your body to the edge of biological survivability with the intention of killing off the infection spreading through your cells before you yourself succumb.
That's what's going on here: Saudi is flooding the market with supply, hoping that low prices will kill off its rivals first and force them to cut production, leaving it with an enhanced position in a tighter oil market.
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1/ Her kjem ei lita tråd om olje.

Brutalt på arabiske børsar i dag. Kuwait stoppa etter 10% nedgong. Ligg an til betydelig fall i oljeprisen i natt. Dette er alvorleg for Noreg. #OOTT
2/ Bakgrunn:
OPEC+ har den siste tida heldt produksjonen på 2.1m fat/dag under "referansenivå". For ordens skyld: Verda brukar om lag 100m fat/dag. Noreg produserar om lag 1.6m fat/dag. OPEC+ produserar ca. 41m fat/dag.…
3/ For ordens skuld: Ubrukt kapasitet av billeg olje overgår norsk produksjon. Gjennomsnittleg produksjonskost for eit fat olje frå Saudi Aramco er på $2.8/fat. Dette er olje som fram til no er holdt tilbake av økonomiske, og ikkje miljømessige hensyn.
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1. Thread

How do you sell more oil?

In the short term it is not by killing the flat price

You do it by Dropping differentials and make refinery margins higher, therefore refineries buy more. Product Cracks fall due to oversupply stimulating demand.

2. Why has flat price have no real effect on refinery buying?

It is because Product prices are typically calculated by a benchmark oil price +/- crack.

Therefore as the price of oil drops so does the product price. Refinery really gains nothing from it.
3. But differential is different. It is basically the quality value of the crude versus the benchmark.

In theory it should be + or - to the benchmark depending on the margin it produces versus the benchmark in an Atmospheric
Distillation column.
Read 11 tweets
🚨BREAKING 🚨Saudi Arabia is launching the oil market equivalent of a declaration of war: plan for a big production hike, and offering huge discount for its crude | #OOTT #OPEC #SaudiArabia with @A_DiPaola17…
How large are the price cuts to the Saudi official selling prices? Huge, really, really huge. In Europe, Aramco has made the largest month-on-month cut for Arab Light in at least 20 years: a hefty $8 to -$10.25 a barrel | #OOTT
The shock-and-awe Saudi strategy could be an attempt to impose maximum pain in the quickest possible way to Russia, in an effort to bring them back to the negotiating table, and then reverse the production surge and start cutting output if a deal is achieved | #OOTT
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Thread on #Libya oil shut in: The agenda for Sunday's scheduled UN meeting with Libyan stakeholders in Cairo will now include oil terminals, which were not part of this week's 5+5 security meeting in Geneva. #OOTT #OPEC
I do not expect an agreement to materialize over the weekend, but there will be discussions of eastern Libyan stakeholders' demands that would need to be met to reopen the terminals.
Diplomatic pressure over the past 48 hours has raised expectations that a deal could happen soon, but there has been no apparent breakthrough so far.
Read 10 tweets
1. According to Bloomberg oil demand in China to drop 3mbpd. That is 90 1mb cargoes or 45 VLCCs a month the Chinese have to cancel or re-sell to balance their supply/demand.

2. What have we seen so far from China. 5mb of crude up for resale or 166kbpd over a month. And that is crude that won’t be processed until May or even June.
3. Cargoes arriving now in Chinese ports have been on the water for 4-6 weeks. They were loaded before the Coronavirus panic even had started. They were bought even earlier than that in October. Ship tracking now won’t tell you anything about crude demand.
Read 7 tweets
Between meetings Davos last week and with epidemiologist friends this week I now have enough information on the #coronarvirus outbreak to be seriously concerned.
My primary skills from years of hedge funding and macro is pulling out what matters and here is what matters 1/
Lots of us have now looked at r0s and pretty maps and know enough about the outbreak for dinner/water cooler talk, but the reality is that every outbreak has its own flavour and we don't really have enough data points to fit as the world changes between each one
The numbers and graphs are eyebrow raising as the number of cases apparently has matched all of SARS and the death toll is rising rapidly.
Factors such as the long incubation period (vs 2-3 days for H1N1 and SARS) and asymptomatic spreading also make a logical reason for concern
Read 13 tweets
🇨🇳 #China (1) | The question is no longer if, but how hard, the #coronavirus will damage Chinese economy (and its trading partners) in 1Q20.
🇨🇳 #China (2) | A blockage of 16 cities (~50 million people) coupled with the extension of the Lunar New Year holiday and prohibition for Cos to return to work soon implies that 1Q will fall below 6% for the first time since QoQ figures are recorded.
🇨🇳 #China (3) | The impact will probably broaden from retail sales, tourism/transportation...

Read 93 tweets
1. Devil advocate questions about the Coronavirus thread

Most people believe that China is under reporting the seriousness of the Coronavirus. But what if they are over reporting the seriousness?

2. Outside of China there have been over 30 cases reported. With a 4% case-fatality rate that should mean at least one person died nor have any become critical.
3. The Uk has tested 9 people that have come from Wuhan and all are negative. But they are looking for 2000 more. Surely one of those will be in a bad way by now?
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1) As the market freaks out over short-term demand destruction from the coronavirus (SARS dented demand by 0.26MM Bbl/d in '03) , I'm focusing on what will matter after the panic ends: US growth deceleration, peaking of global offshore production, and Canadian egress solutions:
2) 2020 will be the first year in several where US production growth does not fully satisfy global demand growth...this is an extremely important development. Why? #OOTT
3) Non-OPEC+ production has been totally reliant on the US for growth over the past 5 years...without the US non-OPEC+ production would have fallen by 600,000Bbl/d while demand has grown by ~7.5MM Bbl/d. Global offshore production peaks in 2020...the trend will continue... #OOTT
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La CRE va a suspender de manera definitiva todo control de precios de combustibles de @Pemex según un borrador en control de @OPIS fechado enero 16. El regulador argumenta que esto va a nivelar la cancha de juego para la estatal | @WeTweetEnergyMx #Mexico #OOTT
@Pemex @OPIS @WeTweetEnergyMx Abro hilo sobre los argumentos que da la CRE para esta decisión y sus consecuencias. Según la CRE, el creciente control de empresas privadas del sector gasolinero pone en riesgo la colocación y comercialización de producto nacional de parte de @Pemex 1/6
Este acuerdo ha sido muy esperado desde que la CRE voto en Diciembre suspender la regulación asimétrica de precios de Pemex sin dar argumentos ni especificar los pasos a seguir, sumergiendo al sector de combustible en incertidumbre 2/6
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1. Thread.

The crude export numbers from the US last week were pretty amazing. 4.46mbpd, was much bigger than it had ever been. But was it really that surprising to see it the last week of the year? Answer probably not. Why?

2. Because at the end of the year liquids in Tanks are taxed by certain states due to their change in value, I.e. the appreciation of an asset. This tax is determined on a LIFO (last in first out), therefore it is compared to the price at the end of last year effectively.
3. In years where prices have appreciated you typically see an end of year draw down and years where the price has fallen you will see inventory builds.
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We know people are going to say it's the EIA DPR, but here are some incredible charts illustrating the US shale slowdown story.

Estimated 2020 using ~12.2k well completions.
Read 8 tweets
In September 2019, the United States exported 89,000 barrels per day (b/d) more petroleum (crude oil and petroleum products) than it imported, the first month this happened since monthly records began in 1973. #OOTT #TWIP
The United States is a net exporter of petroleum!
*me in my office when data was released...
Now - before everyone gets giddy let's put things into the proper context.
Read 10 tweets
SEB did some nice work on shale. Let me share. US Shale oil DUC inventory is now drawing at fastest pace in history, both in relative and abolute terms. Monthly decline will likely rise to more than 300 wells per month in December 2020. That is what capital starvation does. #OOTT
Shale oil production is still rising. Do note though how production declined on a dime at end of 2014. This was & remains due to very strong first and second year decline rate of up to 75%. So when completion rates start to decline, production will too within months. #OOTT
And completion rates turn down fast. In Oct 2019, 1373 wells were completed. If 98 wells or 7% less wells are completed in Dec vs Oct (which is likely), shale will have ZERO growth. This is what the blue bars below show. It is the steady state of completions needed to stay still.
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1. Thread
For those stuck in the office and not stuffing their face with Turkey and arguing with their family over politics.

The biggest disappointment in the US has been refinery throughput this year in general. The question of what has caused it is an open question

2. In the latest EIA weekly, crude throughput was 1.2mbpd less than last year while gross throughput was over 0.9mbpd less than last year. That indicates that US refiners are using more other feedstocks than last year, mainly straight run fuel oil.
3. But utilization has been poor in 2019 compared to 2018 Suggests a number of possibilities
- Unintended shutdowns due to fires etc.
- The crude slate has lightened too much
-Potentially bigger autumn maintenance season than normal to take advantage of IMO
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#Iran’s #oil Minister, Zangeneh: “the new discovery had added 22 billion barrels of crude oil to previous estimates of the field.”
- The newly-discovered oilfield in Khuzesan was named Namavaran, adding the field had an oil in place estimate of 53 billion barrels.#OOTT #OPEC
- The field was estimated to hold53 billion barrels of crude oil in place and there is a possibility of its southward continuation.

- exploration activities began in2016 and given that 31 b barrels were previously discovered,22 billion barrels were added to previous estimations.
- Assuming 10% recovery rate in the field, 2.2 billion barrels of crude oil have been added to the country’s crude oil production capacity.

-This is the second largest oilfield discovered in Iran following Asmari Oil Layer in Gachsaran with 54 billion barrels of oil in place.
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WEDNESDAY MORNING IN ENERGY: Where I'm mostly just going to leverage the #Kentucky election to talk about Justified to try to get some eyeballs, mostly because lots going on! #OOTT #energy
So today is where we've got a big day in Brazil - where they're auctioning off offshore rights on a whole load of acreage. #OOTT

Definitely need to follow @NoriegaMarta @mariannaparraga @G_Slattery on this one.…
If all the areas receive a bid, Brazil’s government will net 106.5 billion reais ($26.7 billion) in signing bonuses - and that will plug holes in the country's leaky budget.

Brazil is one of few non-OPEC countries boosting production, meanwhile. #OOTT
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مطلب امروزم با تيتر "پازل استراتژيك نفتي" در صفحه اول روزنامه اعتماد منتشر شده است. مي توانيد در لينك زير بخوانيد. در #رشته_توییت زير هم قابل خواندن است:…پازل-استراتژيك-نفتي

١-با يك نگاه مي‌توان نوشت:«ببينيد وضعيت صنعت نفت ايران به كجا رسيده است كه وزير نفت آن درمراسم امضاي قرارداد ساخت پمپ! آن هم با ارزش كمتر از 50 ميليون يورو! شركت مي‌كند.وزيري كه پيش از اين در مراسم امضاي قراردادهاي پروژه‌هاي مهم كه ارزش چند صدميليون يورو يا ميليارد دلاري داشت،..
٢-...شركت مي‌كرد.» قرارداد ساخت و خدمات پشتيباني الكتروپمپ‌هاي «طرح انتقال نفت خام گوره- جاسك» امروز بين شركت «مهندسي و توسعه نفت» (متن) به عنوان كارفرما و شركت‌هاي «پمپ‌هاي صنعتي ايران»، «پمپيران» و «پتكو» مجموعا به ارزش 48 ميليون يورو امضا مي‌شود...
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