dc_h
Active Member
I think they idea will be that they will sell the tranches with some set dividend. It may be junk status in 2020, but if they sell it in 2016, it will be AAA rated. If they give out a 3-5% payout, there will be buyers.
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The Blue Owl
Endangerous Herbivore
Well, Prince Mohammad does not have the luxury of time to wait for his father to die. Moreover, his father has great confidence in him and has given him tremendous powers to make changes. So he may well be in the strongest position to get things done.
Oil Falls on Signs of Rising Supplies
Bearish signals: rising inventory in Cushing, rising production.
Bearish signals: rising inventory in Cushing, rising production.
TheTalkingMule
Distributed Energy Enthusiast
TheTalkingMule
Distributed Energy Enthusiast
Exxon-Mobil downgraded from AAA to AA+ for the first time since 1930.
Weekly Petroleum Status Report
Sometimes you've got to read the report yourself and disregard what the market is saying. The market says oil is up 3%, but the EIA Weekly says US crude inventory is up 2.0 mmB and total petro products inventory is up 5.2 mmB. This is supposed to be a high demand season, but refiners overshot a little last week. So no refiners are dialing back a little and importing 4.46 mmB less than last week.
What I sense is a hyped up market that wanted to see inventory draws last week, but is ignoring inventory builds this week. And so the price sits at a plump $45.2/b.
Sometimes you've got to read the report yourself and disregard what the market is saying. The market says oil is up 3%, but the EIA Weekly says US crude inventory is up 2.0 mmB and total petro products inventory is up 5.2 mmB. This is supposed to be a high demand season, but refiners overshot a little last week. So no refiners are dialing back a little and importing 4.46 mmB less than last week.
What I sense is a hyped up market that wanted to see inventory draws last week, but is ignoring inventory builds this week. And so the price sits at a plump $45.2/b.
TheTalkingMule
Distributed Energy Enthusiast
Is this oil market reading global economic signs that other folks aren't seeing? China seems to have stabilized, Brazil has inched back from the abyss, currency wars have stalled. With Hillary looking ready to waltz into the Oval Office perhaps this is all in anticipation of ramping demand? After all, Bill's tenure started with the world using 67 million barrels per day and ended with 77 million.
Perhaps even the stimulative effect of exponential renewables growth will lead to greater global oil consumption in the short term? I mean, is there any factor out there right now that's not in full stimulation mode? Some ex-Fed official on CNBC today referred to the global economy as being "on Ritalin".
Perhaps even the stimulative effect of exponential renewables growth will lead to greater global oil consumption in the short term? I mean, is there any factor out there right now that's not in full stimulation mode? Some ex-Fed official on CNBC today referred to the global economy as being "on Ritalin".
Oil Prices Jump To Six-Month High | OilPrice.com
It's momentum, baby! Oil hits $46/b.
How high do folks think this will go before heading back down?
It's momentum, baby! Oil hits $46/b.
How high do folks think this will go before heading back down?
jesselivenomore
Member
I am not sure if this has been discussed in this thread, but there is more that goes into oil prices than just supply and demand. Since oil is priced in US dollars, interest rates and where they are headed have a direct impact. The dollar had a major rally throughout 2014 due to the perception that the US was transitioning from QE to a tightening cycle, while other central banks were doing the opposite and just starting their own QE. This perception is recently changing as it now seems the US will be stuck with prolonged low interest rates. If true this would drive the dollar back down.
Today's move in oil is largely attributed to the dollar's decline in reaction to the BOJ non-move. The dollar is close to major support levels, so there is hope for a bounce. But a breach of around 93 in the dollar index would signal the start of a trend back down, which would be supportive to all dollar denominated commodities.
Today's move in oil is largely attributed to the dollar's decline in reaction to the BOJ non-move. The dollar is close to major support levels, so there is hope for a bounce. But a breach of around 93 in the dollar index would signal the start of a trend back down, which would be supportive to all dollar denominated commodities.
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RobStark
Well-Known Member
Oil's Magic Number Becomes $50 a Barrel for Promise of Recovery
At an average price of $53 per barrel of oil means the world’s 50 biggest publicly traded companies in the industry can stop bleeding cash, according to oilfield consultant Wood Mackenzie Ltd. Nabors, which owns the world’s largest fleet of onshore drilling rigs, said it has already been talking with several large customers about plans to boost work in the second half of the year if prices rise "comfortably" above $50.
At an average price of $53 per barrel of oil means the world’s 50 biggest publicly traded companies in the industry can stop bleeding cash, according to oilfield consultant Wood Mackenzie Ltd. Nabors, which owns the world’s largest fleet of onshore drilling rigs, said it has already been talking with several large customers about plans to boost work in the second half of the year if prices rise "comfortably" above $50.
Thanks, Jesse. Another angle on this is that as long as the market is in oversupply, the price is supported by the willingness of investors to store oil. Lower interest rates reduce the cost to carry, which allows the futures cure to flatten out. Indeed we see contango softening. Another implications of a weaker dollar is that it impacts where it is cheapest to store oil. So recently imports to the US have declined and the build in US inventory has softened. So either demand is up globally or other countries are building their inventories. China is actively building a strategic oil reserve. While a strategic reserve is primarily for national dense purposes, this does not negate that China can take advance of both cheap oil and a softening USD to build their reserve. A third effect is that oil producers operating in dollar denominated economies, notably US domestic oil producers can use a weaker dollar to get back to expanding supply. So while a weaker dollar can certainly support a stronger oil price, it does little to resolve the fundamental imbalance in the oil market. Indeed, it may make matters worse lengthening the oversupply situation.
On the Tesla side of the oil hedge, I am happy to see a weakening dollar and low interest rates. This should improve revenue and export sales. So to whatever extent that the correlation of oil and Tesla's share price may be driven by the value of the dollar, the hedge holds value, though other hedge instruments may offer a more specific basis.
In any case, it is very good to keep thinking through these issues, both on the way up and on the potential for things to reverse course.
A deeper economic trend to consider is how renewable are impacting trade. For example, India is finding that it can get new solar PPAs denominated in Indian rupees for less cost that new coal plants. Moreover, this protects the country from price volatility for coal and currency decline. Specifically, last year the importation of coal increase their trade deficit by about $4.6B which was contributing to the deflation of the rupee. So the rupee denominated solar PPAs will strengthen the value of the rupee will reducing the cost of energy. This situation raises important questions about how the rise of renewable will impact the balance of trade and currency value. China, for example, needs to export less if it can reduce its need to import fuels. Thus, it becomes less necessary to devalue the yuan, and the country can live more comfortably as a consumer economy. So as fewer tons of dollar denominated fuels are imported into trade partners, what happens to US exports and the value of the dollar? This could be a very beneficial trend for Tesla which has products worth exporting.
http://www.ferc.gov/legal/staff-reports/2016/mar-infrastructure.pdf
FERC has just released its March Energy Infrastructure Report.
In March no new natural gas (or coal or oil) capacity was added. Solar topped the list adding 75 MW, while wind and biomass added 72 and 33 MW respextively. Granted wind and biomass have higher capacity factors, so more energy is likely to be produced from this incremental wind and biomass capacity, but usual wind capacity is much higher than solar.
Looking at capacity installed from Jan to March, we get:
Even biomass and water power are installing more than natural gas. These sources provide dispatchable renewable energy.
Note that 7.3 MW added in march was a municipal solid waste biomass plant in Kaua'i, HI. This nicely complements SolarCity's new plant with 13 MW solar and 52 MWh Powerpacks. So on a daily basis that's maybe 36 MWh of biomass and 52 MWh of stored energy. Biomass can also store up fuel to cover seasonal demand issues. So Kaua'i is shaping up to be a role model of a renewable small scale (island) grid. Note that if they simply used bio diesel in their gensets, the island grid would be 100% renewable. So Kaua'i is the postcard from the future.
So what does this have to do with oil. It is threatening that natural gas is nearly shut out of the new capacity market in the US. This sort of thing happened five years ago with coal. It peaked at 344.99 GW operational capacity in Jan 2011, and is now down to 301.64 GW. And now huge coal producers like Peabody are bankrupt. The division between gas and oil producers is not so neat. Many wells produce both, and oil and gas compete in many downstream markets. So as gas loses demand in the electricity markets, oil producers take a hit. They wells they drill become less valuable and oil gets price competition from gas. Moreover, exporting natural gas is becoming increasingly uneconomical. (Solar in Japan is cheaper that the cost of liquifying and shipping US LNG.) The longer term consequence is that natural gas production will need to decline in the US, if producers hope to be profitable.
In terms of the capacity race this year, what we flush down the toilets (literally, MSW) may beat gas. This is sorry commentary on a once proud industry.
FERC has just released its March Energy Infrastructure Report.
In March no new natural gas (or coal or oil) capacity was added. Solar topped the list adding 75 MW, while wind and biomass added 72 and 33 MW respextively. Granted wind and biomass have higher capacity factors, so more energy is likely to be produced from this incremental wind and biomass capacity, but usual wind capacity is much higher than solar.
Looking at capacity installed from Jan to March, we get:
- Wind 707 MW, down from 861 MW from prior year.
- Utility Solar 522 MW, up from 404 MW.
- Biomass 33 MW, up from 16 MW.
- Water 29 MW, up from 6 MW.
- Natural Gas 18 MW, way down from 458 MW.
Even biomass and water power are installing more than natural gas. These sources provide dispatchable renewable energy.
Note that 7.3 MW added in march was a municipal solid waste biomass plant in Kaua'i, HI. This nicely complements SolarCity's new plant with 13 MW solar and 52 MWh Powerpacks. So on a daily basis that's maybe 36 MWh of biomass and 52 MWh of stored energy. Biomass can also store up fuel to cover seasonal demand issues. So Kaua'i is shaping up to be a role model of a renewable small scale (island) grid. Note that if they simply used bio diesel in their gensets, the island grid would be 100% renewable. So Kaua'i is the postcard from the future.
So what does this have to do with oil. It is threatening that natural gas is nearly shut out of the new capacity market in the US. This sort of thing happened five years ago with coal. It peaked at 344.99 GW operational capacity in Jan 2011, and is now down to 301.64 GW. And now huge coal producers like Peabody are bankrupt. The division between gas and oil producers is not so neat. Many wells produce both, and oil and gas compete in many downstream markets. So as gas loses demand in the electricity markets, oil producers take a hit. They wells they drill become less valuable and oil gets price competition from gas. Moreover, exporting natural gas is becoming increasingly uneconomical. (Solar in Japan is cheaper that the cost of liquifying and shipping US LNG.) The longer term consequence is that natural gas production will need to decline in the US, if producers hope to be profitable.
In terms of the capacity race this year, what we flush down the toilets (literally, MSW) may beat gas. This is sorry commentary on a once proud industry.
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MitchJi
Trying to learn kindness, patience & forgiveness
ibcs
Can you clarify exactly what biomass is"? I'm curious because I'd like to know how that impacts soil, two reasons:
1. 4 per 1000: a New Program for Carbon Sequestration in Agriculture
2. Biofuel production is agricultural strip mining.
Can you clarify exactly what biomass is"? I'm curious because I'd like to know how that impacts soil, two reasons:
1. 4 per 1000: a New Program for Carbon Sequestration in Agriculture
2. Biofuel production is agricultural strip mining.
Why Canada’s Oil Industry May Never Be the Same | OilPrice.com
This is a thoughtful reflection on the future of oil in Canada.
Note the role of cheap credit in forming the oil asset bubble and the longer term consequences of tight credit. The Canadian oil industry is one of the highest cost producers which makes it very dependent on financing. Without easy capital, the industry will whither.
Also note the table showing how share of rig count is going up in the Middle East from about 11% a few years ago to 23% today. This shows where the industry is heading for cheap oil. The competition seems to be more about production volume than price. If you consider the value of downstream oil assets, that's where the money is, but this value is dependent on maintaining utilization. An oil pipeline, for example, that only pumps half its historic volume has lost at least half of its value. So capital will flow to where the oil is cheapest to produce and this will sustain downstream asset values in those regions. I think this is why the strategy has turned toward defending market share.
This is a thoughtful reflection on the future of oil in Canada.
Note the role of cheap credit in forming the oil asset bubble and the longer term consequences of tight credit. The Canadian oil industry is one of the highest cost producers which makes it very dependent on financing. Without easy capital, the industry will whither.
Also note the table showing how share of rig count is going up in the Middle East from about 11% a few years ago to 23% today. This shows where the industry is heading for cheap oil. The competition seems to be more about production volume than price. If you consider the value of downstream oil assets, that's where the money is, but this value is dependent on maintaining utilization. An oil pipeline, for example, that only pumps half its historic volume has lost at least half of its value. So capital will flow to where the oil is cheapest to produce and this will sustain downstream asset values in those regions. I think this is why the strategy has turned toward defending market share.
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