Monday, December 16, 2013

Oil: "I’m Waiting For the Crude – The Impact of the Seaway Pipeline Expansion" (What to watch for before going long)

From RBN Energy:
Throughout the three year-long disruption of the US crude oil distribution system caused by rising domestic and Canadian production trying to find a path through the Midwest, the Seaway pipeline reversal project has been a market bellwether of progress to unwind the congestion. In 2Q 2014 the final phase will come online - opening up an additional 450 Mb/d capacity between Cushing and Houston. As the Seaway project has been built out, the crude surplus in the Midwest appears to have moved to the Gulf Coast. Today we detail the impact of Seaway Phase 3 on Gulf Coast crude supplies....MORE
And what will be the sign?

From Izabella Kaminska at FT Alphaville:

The North Dakota millionaires rocking oil markets
As the analysts note, the North Dakota production surge — which was under appreciated by the industry even as recently as this time last year — is beginning to have “profound” effects on the oil markets:
The latest figures from the North Dakota Industrial Commission reveal another record production in the state of 942,000 b/d in October (see chart). This represents only a slight increase compared to the previous month (+1%) despite almost 200 additional wells and can partly be attributed to weather issues during the month. According to the same source, output should continue its upward trend over the coming period, yet the decline in oil prices is rendering drilling in some areas uneconomical. Nevertheless, the abundance of US shale oil is continuing to have a profound effect on markets. Last week, the US Energy Secretary noted that the US crude export ban may be outdated and could potentially be revised....
...If Opec disarray leads to a price collapse (and another epic contango) that could provide an opportunity for anyone who is capable of bridging today’s oversupply with tomorrow’s ongoing demand, and/or has the ability to carry surplus crude cheaply until the moment the export ban is lifted....