Guest “hopefully not a premature victory lap” by David Middleton
I totally missed this news item last Thursday:
Oil surges 24% for best day on record after Trump tells CNBC Saudis, Russia reach agreement
PUBLISHED THU, APR 2 20207:47 AM EDT UPDATED THU, APR 2 20202:56 PM EDTFred Imbert
Pippa StevensOil prices skyrocketed on Thursday after President Donald Trump told CNBC Saudis and Russia will ease pressure on oil, ending a price war that has contributed to crude’s massive plunge.
West Texas Intermediate crude futures surged 24.67% to settle at $25.32 per barrel, for its largest single-day percentage gain in history. Given WTI’s 59% decline this year a smaller gain, of course, now accounts for a much larger percentage move. International benchmark Brent crude jumped 17.8%, or $4.40, to trade at $29.14 per barrel.
Trump told CNBC’s Joe Kernen Thursday that he spoke to President Putin yesterday and Saudi Crown Prince Thursday and expects them to announce an oil production cut of 10 million barrels and could be up to 15 million.
[…]
“It will be very welcomed by the industry in the short run,” Dallas Fed President Robert Kaplan said on CNBC’s “Squawk on the Street.” “As long as the coronavirus continues, there’s just a substantial amount of excess capacity being generated every day … It will be particularly helpful as we come out of this virus and will speed the time hopefully where the supply-demand for oil can get back into balance.”
Oil production is typically discussed in terms of barrels per day, but Trump made no reference to the time frame of the cuts. Additionally, it was not clear how the cuts would be distributed across oil-producing countries.
RBC commodity strategist Helima Croft said the U.S. could have to give up something in return.
[…]
Saudi Arabia on Thursday, via its official press agency, called for an “urgent” meeting between OPEC and its allies.
“Today, the Kingdom calls for an urgent meeting for OPEC+ group and other countries, with aim of reaching a fair agreement to restore the desired balance of oil markets,” the Saudi Press Agency said.
Despite oil’s nearly 25% gain, the contract did close off its highest level of the day as traders questioned whether a cut of the magnitude Trump is suggesting was even plausible, especially if the U.S. doesn’t participate. The administration would not, in fact, ask domestic producers to cut production, according to a Reuters report.
OPEC countries led by Saudi Arabia proposed last month a production cut of 1.5 million barrels per day as demand waned. However, OPEC ally Russia rejected the cut, sparking a price war between the two powerhouse producers.
[…]
CNBC
At ~$30/bbl, “the administration would not, in fact,” have to “ask domestic producers to cut production”… $30/bbl will cut production until prices recover.
A deal is far from certain and oil prices have fallen back a bit due to the uncertainty…
We’ll have to see what comes out of the “urgent” OPEC meeting. Until then it’s… Frac on dudes!
Day 21 of America Held Hostage by ChiCom-19
After three fracking weeks of this, I’m actually getting accustomed to my new commute… from one side of the house to the other.
Let’s see the local numbers…
Dallas County on Sunday reported 97 new confirmed cases of the new coronavirus.
The county has reported a total of 1,112 cases and 18 deaths. There have been more than 2,200 cases of COVID-19 confirmed in North Texas.
Of the cases that have required hospitalization, 71% have been patients over 60 or people who have had at least one known high-risk chronic health condition, according to the county.
NBC5 DFW
Something like 90+% of Texas ChiCom-19 victims are in two counties: Dallas and Harris (Houston). As of yesterday…
| Dallas County | CHICOM-19 | |
| Population | Cases | Deaths |
| 2,637,772 | 1112 | 18 |
| % of population with | 0.0422% | 0.00068% |
| % with, rounded | 0.0% | 0.00% |
| % without | 99.9578% | 99.9993% |
| % without, rounded | 100.0% | 100.00% |
Dean Wormer, what does 0.0422% round to?
How close is Dallas County to topping the Dean Wormer line?
- 0.01% of 2,637,772 is 2,638
- 1,318 will round to 0.1%
How does ChiCom-19 compare to the regular flu?
Clearly, April will be worse than March, so…
How well-prepared is Texas to handle this?
Gov. Abbott provides update on Texas’ hospital capacity
by Christian Flores Friday, April 3rd 2020AUSTIN, Texas — As coronavirus cases continue to climb in Texas and around the country, Gov. Greg Abbott assures Texans there are enough hospital beds across the state, and state leaders are continuing to work on plans to expand availability.
Currently, out of the 47,585 hospital beds across the state, 19,696 – or 41 percent – are still available, with 2,107 ICU beds open and 8,741 ventilators free. Last Sunday, Abbott said 98 percent of beds were available.
In Austin, 53 percent of hospital beds are available. That number sits at 46 percent in San Antonio, and 33 percent each for Dallas and Houston.
“We are fully prepared for the hospital needs of Texans as we continue to respond to the coronavirus in the state of Texas. We have the capacity to add even more beds as are needed in regions that may increase in patient needs. Our capacity should prevent us from facing the situation that New York is having to deal with today,” Abbott said.
[…]
Right now, the state is operating under a five-level plan for medical surge facilities.
Former state Rep. Dr. John Zerwas, who is part of the temporary supply chain strike force, broke down each level Friday.
Currently, the state is at Level 5 – the lowest level – meaning health and state leaders will continue supporting the hospital system to maintain current capacity.
If current hospital capacity is not enough, Texas would move to Level 4. Here, the state would allow hospitals to open more beds under a double occupancy waiver.
[…]
Level 3 would allow hospitals to use non-traditional care areas, like operation rooms, to serve as treatment areas.
Between Levels 4 and 3, the state estimates it could provide more than 10,000 more hospital beds.
Level 2 would be the first to leave the walls of hospitals. Here, facilities like freestanding ERs and certain nursing homes could be used to house and treat patients.
Finally, the state could move to Level 1, which would stand up alternate care sites in remote areas using hospital and government support. This would call for the conversion of buildings like hotels, convention centers, and recently closed hospitals into treatment centers.
[…]
Since March 18, Abbott says the state has increased hospital bed availability by more than 140 percent. The governor points to his March 22 executive order postponing elective surgeries as a reason for this expansion.
[…]
Despite these efforts, Abbott hammered home how important it is for Texans to stay home as much as possible, to prevent having to test the availability of resources in hospitals.
[…]
CBS Austin
Texas is staying well-ahead of the curve with Gov. Greg Abbott at the helm, although Rick Perry would have probably handled it even better.
Unfortunately, Dallas County’s chief executive is an idiot who talks like Forrest Gump and looks like Fire Marshall Bill.
Dallas Temporary Hospital Could Be Removed If Unused, Abbott Says
Dallas County Judge Clay Jenkins says he always intended to use the facility being built at the Kay Bailey Hutchison Convention CenterBy Chris Blake and Candace Sweat • Published April 5, 2020
A miscommunication may have led to a letter from the office of Texas Gov. Greg Abbott discussing the possible removal of a temporary hospital from the Kay Bailey Hutchison Convention Center in downtown Dallas, County Judge Clay Jenkins says.
The letter, sent by Abbott’s Chief of Staff Luis Saenz, says the governor was told Jenkins did not plan to use the convention center for medical needs related to COVID-19.
Federal assistance could be lost if Jenkins did not make his intentions for the facility known by Monday, the letter said. Saenz wrote if the resources were not used in Dallas County, the federal government could move them to a location where they were needed.
[…]
The letter from Saenz gave Jenkins until 5 p.m. Monday to “accept” the facility at the convention center.
[…]
A spokesperson with Abbott’s office said there was no confusion about what they believe Jenkins said, and that a voicemail from a Department of Defense official explains the message relayed to Abbott.
[…]
In the voicemail, Maj. Gen. Mike Stone says he spoke to Jenkins and ended the conversation with the understanding that Jenkins did not intend to use the convention center for medical purposes.
Stone then placed a call to Kidd to relay the message.
Finally, the message was sent to the Abbott’s office, at which point the spokesperson said Abbott felt the need to send the letter.
[…]
The statement Dallas Mayor Eric Johnson released before Jenkins’ press conference is below.
“I share the Governor’s concerns, and I was stunned and deeply disappointed to hear about Dallas County’s position on the pop-up hospital at the City’s Kay Bailey Hutchison Convention Center.
“This hospital is an important asset that we have worked proactively, collaboratively, and tirelessly with our federal and state partners to obtain for our region. I am alarmed that these medical resources are now at risk as we begin preparing for an anticipated surge in COVID-19 cases. I am committed to continuing to work with our partners to open this facility as quickly as we can to help serve our community’s needs.
“The City of Dallas has acted swiftly and aggressively to slow the spread of COVID-19. We cannot afford inaction now.”
NBC5 DFW
I’d love to chalk this up to politics, but both the highly competent Dallas Mayor Eric Johnson and grotesquely incompetent Dallas County Commissioner Clay Jenkins are liberal Democrats, as is County Commissioner John Wiley Price, the only commissioner to vote against extending the hostage crisis through the end of April.
In the 39 years I have lived in Dallas County, this is the first time I have ever agreed with Mr. Price:
Time for the US to max out its’ oil reserve capacity.
“Coronavirus price crash could see US stockpile 1B barrels of oil: energy secretary”
https://www.foxbusiness.com/markets/trump-oil-prices-strategic-petroleum-reserve
The House (i.e. the Dems) has already refused to fund expanding capacity.
Until funding issues are resolved, DOE is leasing space in the SPR to oil producers.
https://www.energy.gov/articles/us-department-energy-make-strategic-petroleum-reserve-storage-capacity-available-struggling
Thanks for this update, David
Good Morning David
Some Quotes from today’s Oil-Wrestle:
“With regards to media reports that OPEC+ will require the United States to make cuts in order to come to an agreement: The EIA report today demonstrates that there are already projected cuts of 2 (million bpd), without any intervention from the federal government,” the U.S. Energy Department said. That is not enough for OPEC+ however, and certainly not Russia, which on Wednesday made clear that market-driven declines in oil production shouldn’t be considered as cuts intended to stabilize the market, Kremlin spokesman Dmitry Peskov tells reporters on conference call.
“These are completely different cuts. You are comparing the overall demand drop with cuts to stabilize global markets. It’s like comparing length and width,” Peskov says in response to a question of whether Russia would accept for the U.S. to have only a market-driven drop in output as part of a deal to stabilize oil market. “These are different concepts, they cannot be equated. Tomorrow there will be an exchange of views among specialists.”
Seems we are still sailing towards the binary choice of a) US shale concessions (sorry, can’t see Trump doing that, let alone in an election year) or b) US-imposed import restrictions. Or maybe the Saudis fold. Who knows?
But the point is that, strategically, import duties would suit Russia just fine, thank you very much. Clears the politcal way for entrenching Nordstream and Turkstream with the EU and undermines the petrodollar along the way. Death by a thousand cuts, n’est pas?
Best
Great job David…..as always…..MAGA
No typos? 😷
Nope…..Nada
Hi David – I posted this on 22Mar2020:
https://wattsupwiththat.com/2020/03/21/texas-railroad-commissioner-fights-back-against-soviet-assault-on-us-oil-industry/#comment-2944323
Last Thursday Russia blinked. They precipitated this oil price crash by refusing to cooperate with the Saudis, so they knew the exact timing, probably shorted the shares of energy companies in the west, made a fortune, and now want to get their oil revenues back to normal.
They probably also bought back in at the bottom of the market and will make another fortune as shares goes back up.
When you know what is going to happen and when, you can make a lot of low-risk money.
Regards, Allan
Posted Thursday March 19, 2020
https://wattsupwiththat.com/2020/03/17/an-effective-treatment-for-coronavirus-covid-19-has-been-found-in-a-common-anti-malarial-drug/#comment-2941340
KREMLIN SAYS RUSSIA “WOULD LIKE TO SEE CRUDE PRICES HIGHER”
By Dina Khrennikova, Ilya Arkhipov and Olga Tanas on 3/18/2020
https://www.worldoil.com//news/2020/3/18/kremlin-says-russia-would-like-to-see-crude-prices-higher
[excerpt]
“We’re very closely monitoring the situation on global oil markets, analyzing the situation, trying to make forecasts for the near- and mid-term future,” Peskov said. “Russia will form its position on any potential new cooperation with OPEC depending on the outcome of the analysis”, he said.
I ran an oil project in the Former Soviet Union that was later sold to the Chinese for US$4.2 billion. Let me translate the above Russian political statement into English:
“Ve are losing our a$$es and ve vill do anyzing to get higher oil prizez!!!”
In short, Russia just blinked. They precipitated this oil price crash by refusing to cooperate with the Saudis, so they knew the exact timing, probably shorted the shares of energy companies in the west, made a fortune, and now want to get their oil revenues back to normal.
What part of SHALE IS NOT ECONOMIC is hard to understand? The sector has reported losses since 2010 and has been cash-flow negative when oil was over $75 and the drilling was in areas that were more prolific. Shale is a huge scam that depended on being able to borrow while producing at a loss. The game is over even if the dead cat does bounce a bit.
Couldn’t agree with you more Van – don’t know why people throw money down black holes.
But a Green hole is OK?
Black hole/green hole – same thing. All the money that’s been wasted on these pie-in-the-sky “energy” projects would have bought a lot of nuclear power generation.
It’s not a scam. Operationally, costs have been coming down, though not enough for the current environment. Certainly, pain the foreseeable future, as there will be in many sectors.
With regard to the model, recall that Amazon barely made a cent per share over its first two decades.
Mr. Vesivski: A scam on who? Private investors who lose money while keeping US oil and gas prices low? Is there a gov’t subsidy we don’t know about? Near as I can tell, it’s scamming Russia, Venezuela and other bad actors. Price at pump stayed low through the Obama recovery (am I laughing) and Trump recovery, who is scammed?
David,
I read earlier today that since Trump was not given the funds to fill our strategic reserves he’ll instead lease out 30 million barrels worth of storage capacity. That should let them keep pumping while cutting back what’s on the market for at least a short while.
It’s one of the things the president can actually do with “a pen and a phone”…
https://www.energy.gov/articles/us-department-energy-make-strategic-petroleum-reserve-storage-capacity-available-struggling
Sounds like a win-win. Reserves get filled, and the US gets paid for it to happen.
Since when is higher energy prices something to celebrate? If high energy prices was good for economic growth then we’d all love renewables.
Couldn’t agree with you more WR – don’t understand why higher oil prices should trigger a “victory lap” mentality.
It’s a mater of degree…as small increase, above fracking breakeven point, which is not a high price, keeps frackers in business and producing. A big increase does not benefit the consumer…a relatively small increase keeps US independent of foreign oil and exporting oil and gas…
Is that so hard? the purpose of the Saudi/Russia feud is partly to break fracking, force frackers out of business.
If we really wanted to stop them from dumping and other non-free market activities we would treat every member of OPEC like we treat electronic companies that sell under cost or fix prices. We would fine them and ban them from doing business with USA if they don’t pay up. Or at least increase tariffs. Ban oil imports from OPEC nations now that we can produce enough. Break their unfair manipulation.
You don’t want to kill the goose that laid golden eggs.
There’s an optimum range that is good for both producers and consumers. It’s what value creation is all about.
In the Great Depression, it became unprofitable for some farmers to deliver food to market at a similar time when economics were out of whack. At the same time, people in the cities were starving.
Just recently, for a similar reasons, dairy farmers have been dumping milk. These types of situations don’t do anyone any good.
You are very wrong here. Roosevelt had set minimal prices that were so high nobody could afford them. Therefore farmers could not sell their production. The destruction of food was then actually done by the government, but leftists will never tell you the real story.
https://www.cato.org/publications/commentary/how-fdr-promoted-pricegouging
WR2
April 6, 2020 at 3:14 pm
Since when is higher energy prices something to celebrate?
——————
When it happens to be closer to the real stable value than lower prices,
when reflects and uphold more stability than the lower prices… I think.
But do not let me spoil it for your mind, just my thought, could wrong…
cheers
Since when is higher energy prices something to celebrate?
It’s no cause to celebrate if energy prices are too high (bad for the consumer) or too low (bad for the businesses and their workers who produce the energy). There is a middle ground you know, where prices are low enough for consumers to benefit yet high enough for businesses to survive to reliably produce that energy. So yes, it’s a cause to celebrate when prices move towards that middle ground.
Media kept hyping Texas and Florida as the future hotspots after NY. Itching to get after those Republican governors who left the beaches open and spring break go-on too long.
Instead it has almost exclusively been blue states taking the biggest hits…along with ski resorts that had been left open.
“ChiCom-19” rolls off the tongue like it should be stenciled on the front of a Tee-shirt with a picture of “Xi the Poo” on shirt back. Garment care label would say wash in 100% pure Uighur.
When crazy takes over our governments, sanity in various corners becomes strange bedfellows.
The last few times I have come to this site, I am rerouted to numerous other sites that require a complete shutdown of the browser to escape. Anyone else having this problem?
Yes
Haven’t had that problem lately. Had it a couple months back though.
Yep, it’s back. Tries to hijack me almost every time I arrive.
It is amazing how the left complained that Trump was a fascist when he took office. The real fascists are all those governors closing down businesses. 🙁
What’s really amazing/funny is how the left complained that Trump was a power hungry fascist, and then complained that Trump was refusing to fascistically seize power at the first opportunity to do so.
I would like to see the USA have strong oil production as a matter of national security.
One thing the virus has taught us is that we must be able to have and produce our own medical supplies and drugs.
It is the same for oil. It is a crucial commodity. Nobody knows what will happen down the road so we must be prepared.
Same with us in Canada
I’m well aware we are a higher cost producer but if the option is to close it all down and leave ourselves at the mercy of OPEC and Russia that is a non-starter, I think based on the amount of oil out in the world (remember “peak oil” fantasies?) means we have to go to some sort of continental market but I don’t know how that will work
Yep.
I have little doubt that Red China could manufacture F-35 Lightning II strike fighters at a lower cost than Lockheed Martin can… Not a reason to be dependent on Red China for any element of US national security.
Yes people are going to get richer by paying more for Oil ?
Tax-Loving Conservatives
Gary North – June 08, 2012
Alexander Hamilton was a crusader for higher taxes and a larger national government in the 1790s.
In 1791, he persuaded George Washington and then Congress to transfer to a group of private investors the right to set up a central bank that was not answerable to Congress or anyone else in government. The Bank of the United States had the right to create fiat money out of nothing, lend it to the government, and keep the interest paid by the government. This was the supreme institution of crony capitalism in America from 1791 to its expiration in 1811.
He was also a big supporter of tariffs. Tariffs raised the money the government needed to pay interest to the Bank of the United States, which was independent of the government of the United States. Tariffs were taxes favored by big-government conservatives. They still are.
Hamilton was the early Republic’s supreme philosopher of crony capitalism. His intellectual heirs are defenders of this strategy. This is why Hamilton is a favorite of both the Right and the Left. Biographies of Hamilton sell very well. He articulated our era’s version of capitalism: the bastard child of the Keynesian interventionist state. (Hamilton was the most influential bastard in American history.) Keynesianism is a philosophy of creative government spending and endless government debt. So is Hamiltonianism.
Making a nation richer by taxing customers more than before is a strange idea: “Tax and grow rich.” It sounds like Keynesianism because it is Keynesianism.
https://www.garynorth.com/public/9618.cfm
“Soviet”? LMAO. Uh dude that ended in the late 1980s / early 1990s. Nice of you to keep up. LOL.
Please try to finish out the 20th century because the rest of us are ending the second decade of the 21st. Must be the anti-Panasonic line “Just slightly behind the times”.
I’m just respecting
Stalin’sPutin’s wishes…“Putin says he wishes the Soviet Union had not collapsed. Many Russians agree.”
https://www.washingtonpost.com/news/worldviews/wp/2018/03/03/putin-says-he-wishes-he-could-change-the-collapse-of-the-soviet-union-many-russians-agree/
I wouldn’t hold my breath for Russia to agree to cuts unless the sanctions on Nordstream2 are lifted.
Not even holding my breath on Trumps claim of a deal – ‘last thursday’
“Trump told CNBC’s Joe Kernen Thursday that he spoke to President Putin yesterday and Saudi Crown Prince Thursday and expects them to announce an oil production cut of 10 million barrels and could be up to 15 million.”
In understand Trump doesnt want to cut US production by a similar amount. Trump has claimed many deals over time on many things that just dont happen. Especially when hes only ‘talking about the US position’ on how others should act…yeah right
Maybe you’ll believe the Soviet Union…
https://finance.yahoo.com/news/russia-saudi-very-close-oil-111033269.html
President Trump has no authority to cut US oil production, not even from Federal leases. Some state regulatory agencies, like the Texas Railroad Commission, do have the authority to curtail production. The president does have the authority to open up the 70-80 million bbl of available capacity in the SPR for domestic producers to use as storage. He also has the authority to ban imports from the Soviets, Saudis and other OPEC+ nations and/or impose tariffs on their oil. He is doing the former and made it clear that he will do the latter, if there’s no deal.
That said, with global demand temporarily reduced by about 33%, an OPEC+ deal would likely only stabilize prices in the $30’s, until demand recovers. The average bteakeven price for currently producing wells is around $28/ bbl. Most oil companies can cut spending enough to remain cash flow positive at $30/bbl, particularly companies that have strong hedge positions (about 1/3 of 2020 US production is hedged in the high $50’s). In order to do this, oil companies have already started slashing capital budgets. US drilling will nearly grind to a halt, production from “shale”/tight oil will quickly decline and production from conventional reservoirs, like the Gulf of Mexico, will more slowly decline. Many, if not most, companies have already revised production guidance downward. When demand recovers, prices will rise back up into the $50-70/bbl range and US oil production will rise again.
Fortunately, it appears that the ChiCom-19 models have overestimated the impact of the disease by a factor of 3-4x, just like climate models. So, “the light at the end of the” panic “tunnel” is a lot closer than the models predicted.
https://www.zerohedge.com/energy/oil-deal-verge-collapse-russia-balks-proposed-us-production-cut
Well that didn’t last long. LOL. Oh well we’ll do what we always do, wait and see. Take care everyone.
David, I’m following your lead from the second half of your article. Figures released today by the Province of Ontario (Canada) show 4,726 cases of the Wuhan virus since counting started. Of that case total, 1,802 are resolved and 153 have died. So, 2,771 cases are currently active with 614 hospitalized.
https://www.ontario.ca/page/2019-novel-coronavirus#section-0
Ontario has a population of just over 13.4 million. That means (roughly) 0.00035% of the population have or did have the virus, and 0.000011% (153) are dead from the virus. So, 99.99965% of Ontarians are virus-free. The rounded percentages, while subject to change, of course, look like the Dallas County numbers. I don’t have Ontario’s numbers for influenza.
OOPS! I shouldn’t attempt math without a proper cup of coffee beforehand. Rechecking my numbers, the correct percentages are:
– 0.035% of the population have or did have the virus
– 0.0011% are dead from the virus
– 99.956% of Ontarians are virus free
The rounded values are still correct.
word depress is having numerous errors on
varies websites. today is day two of these
posting problems.
Two things:
* Rocks don’t go bankrupt.
* Humans don’t forget new technologies.
Humans with little or no experience don’t understand or know how to use the technologies. It’s very difficult to replace experience.
Your math sucks.
Your math sucks.