Baker Hughes N.A Rotary Rig Count 31-Dec-09

North American active land-based rigs.

"U.S. Rig Count is up 11 from last week at 1189; down 434 year over year.
Canadian Rig Count is down 59 from last week at 209; down 21 year over year.
The US Offshore rig count is 39, up 3 from last week; down 29 year over year."
Source: Baker Hughes, Inc.

In the News

Sprott Says S&P 500 Index Will Plunge Below March Low

Dec. 29 (Bloomberg) The Standard & Poor’s 500 Index will collapse below its March lows as an expected rebound in economic growth fails to materialize, according to hedge fund manager Eric Sprott.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=akUcvHutU8i0

EIA Weekly NatGas Storage Report 25-Dec-09

Summary

"Working gas in storage was 3,276 Bcf as of Friday, December 25, 2009, according to EIA estimates. This represents a net decline of 124 Bcf from the previous week. Stocks were 379 Bcf higher than last year at this time and 391 Bcf above the 5-year average of 2,885 Bcf. In the East Region, stocks were 150 Bcf above the 5-year average following net withdrawals of 90 Bcf. Stocks in the Producing Region were 176 Bcf above the 5-year average of 868 Bcf after a net withdrawal of 23 Bcf. Stocks in the West Region were 65 Bcf above the 5-year average after a net drawdown of 11 Bcf. At 3,276 Bcf, total working gas is above the 5-year historical range."

Source: U.S. Energy Information Administration

CFTC Commitment of Traders 22-Dec-09

Source: U.S. Commodity Futures Trading Commission

NYMEX Crude Oil & NatGas Close 30-Dec-09

/CL G0
Open: 78.80; High: 79.80; Low: 78.46; Close: 79.28;
Change: +0.41
/NG G0
Open: 5.840; High: 5.929; Low: 5.672; Close: 5.709;
Change: -0.131

Source: CME Group

Energy Headline of Interest

Saudis quit Caribbean oil storage
NEW YORK/HOUSTON/BEIJING (Reuters) - Saudi Arabia has quit a long-held lease for 5 million barrels of Caribbean oil storage near the key U.S. market and state giant PetroChina is poised to move in, industry sources say, a potentially major shift in global oil trade dynamics.
http://www.reuters.com/article/idUSTRE5BT2HR20091230

API Stocks 29-Dec-09

mmbbls
Crude +1.7 (vs. -2.0 fcst); Cushing -0.3
Gasoline -1.4 (vs. +0.5 fcst)
Distillates -3.5 (vs. -2.2 fcst)
Refinery Runs -62.0Kbbls/d

"For distillates you can focus on the bad weather. For crude, we still have a disturbing lack of incentive for refiners to produce. They seem to be allowing inventories to go down until they see better refining margins," said Phil Flynn, analyst at PFGBest Research in Chicago.
Source: Reuters

Monthly U.S. NatGas Supply/Demand Outlook

"EIA expects total natural gas consumption will decrease by 1.9 percent in 2009 and by an additional 0.4 percent in 2010. A steep decline in demand by the industrial sector, and smaller but significant declines in the residential and commercial sectors, have been partially offset by consumption growth in the electric power sector this year. Low natural gas prices relative to coal caused substantial switching to natural gas for baseload electric power generation throughout most of 2009. However, in recent weeks, natural-gas-fired generation has been closer to year-ago levels because of the seasonal increase in natural gas prices and the decrease in coal prices driven by historically high coal stocks. In addition, warmer-than-normal weather over the eastern United States during November depressed seasonal space-heating demand in the residential and commercial sectors. This weaker consumption is evident in natural gas working inventories, which increased by an estimated 9 billion cubic feet (Bcf) during November compared with the previous 5-year average decline of about 57 Bcf over the month.

A return to normal weather and expectations for economic growth are the primary drivers in EIA's forecast for consumption increases in the residential, commercial, and industrial sectors in 2010. However, EIA still expects total consumption to fall as higher natural gas prices contribute to some reversal of the coal-to-natural-gas switching that took place in the electric power sector during 2009.

EIA expects total marketed natural gas production will increase by 3.7 percent in 2009, followed by a decline of 3.1 percent in 2010. Minimal hurricane disruptions and significant growth in production from onshore shale basins have contributed to the increase in domestic supply this year, despite a nearly 60-percent decline in the working natural gas rig count from September 2008 to July 2009. According to Baker Hughes, the working natural gas rig count is currently 748, up 83 from the low of 665 this past July. Although marketed production in the Lower-48 non-Federal Gulf of Mexico has declined since peaking in February 2009, the recent dip in September production appears to be the result of shut-ins, maintenance, and pipeline constraints, as opposed to declining field productivity. Production volumes are expected to have recovered in October and November. Shorter completion times and enhanced well productivity in shale basins contributed to sustained higher production levels amidst a dramatically lower rig count in 2009."

Source: U.S. Energy Information Administration

NOAA Temperature Outlooks 27-Dec-09

6 to 10 Day:

8 to 14 Day:

Source: NOAA

Monthly Crude Oil Supply/Demand Outlooks

Global Petroleum Overview.
"As 2009 draws to a close and the Organization of the Petroleum Exporting Countries (OPEC) prepares to meet again at the end of the month, it faces a global oil market that has firmed up in response to production cuts that began to take effect in January 2009. Although OPEC compliance with the cuts has weakened and global oil inventories remain very high by historical standards, WTI oil prices averaged $78 per barrel in November, continuing their generally upward trend since February. Expectations of a continued global economic turnaround have buttressed oil markets, and this Outlook assumes world oil-consumption-weighted real GDP grows by 2.6 percent in 2010, following a decline of 0.7 percent in 2009. EIA's expectation is that OPEC crude oil output in 2010 will hold at roughly fourth-quarter 2009 levels of under 30 million barrels per day."

Source: U.S. Energy Information Administration.

HIGHLIGHTS
"Forecast global oil demand is virtually unchanged for 2009 at 84.9 mb/d but is revised up by 130 kb/d to 86.3 mb/d in 2010. Yearly growth (‐1.4 mb/d and +1.5 mb/d, respectively) remains driven by non‐OECD countries, but OECD prospects have slightly improved.

OECD industry stocks fell by 36 mb in October to 2,735 mb, 2.5% above 2008’s level. Middle distillates accounted for over 40% of the draw, yet global products in floating storage continued to rise in October and November. End‐October forward demand cover fell to 59.4 days, 2.5 days higher than a year ago.

Global oil supply rose by 200 kb/d in November. OPEC crude production increased by 135 kb/d to 29.1 mb/d, its highest level in a year. Largely as a result of lower non‐OPEC supply prospects for 2010, next year’s call on OPEC is raised by 0.5 mb/d to 29.0 mb/d, compared with 28.7 mb/d in 2009."

Source: International Energy Agency

Oil Market Highlights
"The year 2009 was one of the worst years for world oil demand. Consumption has recovered in the fourth quarter as a result of an improvement in economic activities worldwide, however, the forecast for global oil demand still shows a contraction of 1.4 mb/d in 2009, unchanged from the previous report. Following two years of sharp declines, world oil demand is expected to return to growth in 2010, with an increase of 0.8 mb/d following an upward revision of around 70 tb/d from the last assessment. Non-OECD countries will account for all of the increase. Downward risk factors that may put pressure on next year’s oil demand include the pace of the economic recovery in the OECD, especially in the US.

Non-OPEC oil supply is forecast to grow by 0.5 mb/d in 2009 following an upward revision of 0.1 mb/d from last month’s assessment. The main contributors to the revision are the USA, Canada, Russia, Azerbaijan and Kazakhstan. In 2010, non-OPEC oil supply is expected to increase by 0.3 mb/d over the current year, the bulk of which comes from Brazil, Azerbaijan, Kazakhstan, Colombia, and the USA. OPEC NGLs and non-conventional oils are expected to add 0.5 mb/d in 2010 following an increase of 0.4 mb/d in 2009. In November, OPEC crude production averaged 29.1 mb/d, according to secondary sources, an increase of 47 tb/d over the previous month.

The demand for OPEC crude in 2009 is estimated to average 28.6 mb/d, following a downward revision of 70 tb/d from the previous assessment to show a decline of 2.3 mb/d from last year. In 2010, demand for OPEC crude is expected to average 28.6 mb/d, an upward revision of around 100 tb/d from the previous month and representing a slight increase of 30 tb/d." Source: OPEC

Exponential Moving Averages (4,9,18)

EIA Weekly NatGas Storage Report 18-Dec-09

Working Gas in Underground Storage, Lower 48 (Bcf).

East:
1,869 (-99 vs. prior wk)
+9.8% vs. prior yr; +9.5% vs. 5yr avg
West:
464 (-14 vs. prior wk)
+8.7% vs. prior yr; +14.9% vs. 5yr avg
Producing:
1,067 (-53 vs. prior wk)
+17.0% vs. prior yr; +19.5% vs. 5yr avg
Total:
3,400 (-166 vs. prior wk)
+11.8% vs. prior yr; +13.1% vs. 5yr avg

Summary
"Working gas in storage was 3,400 Bcf as of Friday, December 18, 2009, according to EIA estimates. This represents a net decline of 166 Bcf from the previous week. Stocks were 359 Bcf higher than last year at this time and 395 Bcf above the 5-year average of 3,005 Bcf. In the East Region, stocks were 162 Bcf above the 5-year average following net withdrawals of 99 Bcf. Stocks in the Producing Region were 174 Bcf above the 5-year average of 893 Bcf after a net withdrawal of 53 Bcf. Stocks in the West Region were 60 Bcf above the 5-year average after a net drawdown of 14 Bcf. At 3,400 Bcf, total working gas is above the 5-year historical range."

Source: U.S. Energy Information Administration.

The NYMEX Henry Hub front month futures sold off 0.24/mmBtu from $5.92 to 5.68 on the release of the EIA storage numbers this AM, as the actual draw on stocks was lower than market expectations of a low-to-mid 170s draw. There was a weak bounce higher from 5.68, but the market then traded lower for the rest of the trading day to close at 5.643, -0.178 from Wed's close. Currently, ~$5.92 represents strong resistance, capping prices five out of the last six trading sessions.

According to the latest NOAA 8 to 14 Day Outlook, weather in the West US will be above normal; normal in the Central regions; and below average in the East.

Baker Hughes N.A. Rotary Rig Count 23-Dec-09

North American active land-based rigs.

US
Oil: 416 (+7 vs. prior week; +52 vs. prior year)
Gas: 751 (-22 vs. prior week; -596 vs. prior year)
Total*: 1,178 (-15 vs. prior week; -543 vs. prior year)
*Includes Misc rigs.

CA
Oil: 86 (-88 vs. prior week; -6 vs. prior year)
Gas: 182 (-12 vs. prior week; -5 vs. prior year)
Total: 268 (-100 vs. prior week; -11 vs. prior year)
Source: Baker Hughes, Inc.

EIA Weekly Petroleum Status Report 18-Dec-09

Stocks mmbbls.
Crude: 327.5 (-4.8); Cushing: 34.7 (+0.6)
Gasoline: 216.3 (-0.9)
Distillate: 161.3 (-3.0)
Total Crude + Products (ex SPR): 1,059.4 (-14.1)

Production mmbbls/d.
Refinery Gross Inputs: 14.2 (0.0)
Operating Percent: 80.04 (+0.09)
Gasoline: 9.0 (-0.1)
Distillate: 3.8 (+0.1)

Imports mmbbls/d
Crude: 7.7 (-0.1)
Gasoline 0.8 (-0.1)
Distillate: 0.3 (+0.1)
Total Net Crude + Products: 8.2 (-0.3)

Demand mmbbls/d.
Gasoline: 9.0 (+0.1)
Distillate: 4.0 (+0.2)
Total Products Supplied: 19.4 (-0.2)
Source: U.S. Energy Information Administration

A very bullish EIA report this AM with crude, gasoline and distillates inventory levels all declining significantly more than forecasted. API stock data released late Tuesday were more in line with actual EIA data than industry survey expectations.

Headline summary of data shows that relatively higher demand vs. flat production and lower imports drove the remarkably lower overall stocks. The crude oil stock value is interesting - crude production was flat vs. prior week, refinery inputs were also flat, and imports were down only marginally, so the question is: what drove the 4.8mmbbl decline?

If there is a bearish component to the data it is the rise in crude stocks at Cushing, which is approaching the record level set back in Q1 of this year. Interestingly, the WTI front-second spread is relatively narrow at ~$0.50, likely a result of the Jan10 contract rolling off the board earlier this week. Given the high stock level at Cushing, there is a risk that the contango at the front of the curve will widen significantly from current indication.

Price action on crude and products responded higher this AM: first, at the beginning of the open-cry session in response to the API data, and then strongly with the release of the EIA data. Product pricing across the first six months of the curve are leading the way higher, with crude following.

Equity markets are marginally higher this AM, while the USDX is lower. Unless petroleum markets are able to lead the overall markets higher, the S&P500 price action this AM is not supportive of the petroleum complex. That being said, technically there is room for crude prices to trade higher on near-term basis, given that the front month has broken above resistance at ~$75.

Six-day Candlestick Trend Week Ended 18-Dec-09

Last week saw front month WTI retrace higher and close just below the 50% level of the decrease from $79 to 69. Monday's price action lower represented the ninth day that WTI price fell, the doji candlestick formation on that day implied that selling fatigue was setting in and signalled a pause or reversal was likely. Indeed, short covering on Tuesday lifted prices and was followed through with strong buying activity on Wednesday based on a bullish EIA Weekly Petroleum Status Report. Thursday put in a bearish hanging man candlestick, which was the result of a strong USD putting a cap on commodity prices in general. Friday's bearish shooting star candlestick price action is quite remarkable given that there was news that Iran's military had crossed over into Iraq to seize a disputed oil well site. It goes without saying that geopolitical military activity in the Middle East normally has a bullish effect on oil traders. In the end, the market discounted the incursion as relatively minor, particularly given the strong bullish performance the USD put in last week.

Friday's close suggests that there will be a pause (resistance at ~75) or a reversal lower in WTI pricing in the trading days ahead, Feb10 becomes the front month contract on Tuesday. If the USD continues to rally strongly, the WTI reversal could be significant and it may be the start of a continuation of the $79 to 69 decline, targeting mid-60s as next support level.

Baker Hughes N.A. Rotary Rig Count 18-Dec-09

North American active land-based rigs.

US
Oil: 409 (+16 vs. prior week; +22 vs. prior year)
Gas: 773 (+16 vs. prior week; -593 vs. prior year)
Total: 1,193 (+32 vs. prior week; -571 vs. prior year)
CA
Oil: 174 (-5 vs. prior week; +46 vs. prior year)
Gas: 194 (+19 vs. prior week; -47 vs. prior year)
Total: 368 (+14 vs. prior week; -1 vs. prior year)
Source: Baker Hughes, Inc.

Week over week change in the US was driven primarily by increases in Districts 6 and 8 in Texas, while the weekly change in Canada was based on an increase in Alberta, offset partially by a decrease in Sask.

While the overall land based rig count in the US remains below the five year range, the oil rig count has effectively recovered to levels prior to the collapse in prices last year. In Canada, the total count has recovered to five year range low seasonal levels.

CFTC Commitment of Traders 15-Dec-09

Non-commercial futures & options positions (000's contracts).

Crude Oil
Long: 245.4 (+3.2); Short: 116.7 (+16.0); Net: 128.8 (-12.8)
Open Interest: 2,549.5 (+0.4)
Gasoline
Long: 61.5 (-3.2); Short: 18.3 (+0.2); Net: 43.2 (-3.5)
Open Interest: 262.1 (-5.1)
Heating Oil
Long: 43.8 (-1.5); Short: 21.9 (+2.4); Net: 21.9 (-3.9)
Open Interest: 348.6 (-7.9)
Natural Gas
Long: 130.4 (-0.6); Short: 200.1 (-6.8); Net: -69.7 (+6.2)
Open Interest: 932.8 (+34.6)
Source: U.S. Commodity Futures Trading Commission.

In line with price action over the past two weeks, speculators reduced net length in WTI, RBOB and no.2 HO markets. Long positions in WTI have seen a remarkable decline since early November, while short positions have remained relatively stable. Supply overhang and weakish product demand appear to be weighing on sentiment, which has weakened the price correlation seen most of the year to equities and the USD.

Natural gas net speculator positions have moved in the opposite direction to crude oil, primarily due to a reduction in short positions. Real winter weather and improving industrial demand have been very supportive of NYMEX prices and have resulted in inventory draws over the past two weeks well above expected values.

Welcome to the first La Croix Energy Capital posting.

As suggested in the title, this is my first posting to the La Croix Energy Capital Blog. The intent is to post current market information, news and commentary on global oil and gas markets.

I will be collecting fundamental and technical data and provide my interpretation and view on trends and how they may impact near-term markets.

To those who used to receive my weekly Energy Trading Market Summary (.ppt), this blog will replace that publication.

Petroleum commodities covered include crude oil, gasoline, distillates (diesel & heating oil), LPGs, and natural gas.

Sources of data collected include: NYMEX, ICE, CBOE, OPIS, CFTC, EIA, NOAA, IEA, OPEC, Baker Hughes.

I expect that there will be some transition delays as I migrate to this media format, but I look forward to posting here on a regular basis.