Morning Reads for Monday, September 16, 2019

It may be Monday, but it feels like SEPTEMBER Monday morning where I am. It’ll be 100 degrees in a few hours, but whatever.

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Mr. Bear
Mr. Bear

RE: The Saudi Arabian refinery attack. Okay, I’m just a bit mystified here. The recent drone attack was on a refinery, which is a facility that converts raw petroleum into saleable products. This drone attack has cut that refinery’s capacity by 50%. In my feeble bear brain, this should mean that the refined product prices should be going up because there is less supply. Yet, it is the raw material, petroleum, which is enjoying a price increase. Presumably there will be a downstream increase in refined product pricing, but there still is raw material in the pipeline. One would assume… Read more »

armanidog
armanidog

Pure speculation. A chance to increase prices. “In a statement carried by the Saudi Press Agency (SPA), Prince Abdulaziz said the attacks “resulted in a temporary suspension of production at Abqaiq and Khurais plants”. He said that part of the reduction would be compensated for by drawing on Aramco’s oil stocks. The situation was under control at both facilities, Aramco CEO Amin Nasser said, adding that no casualties had been reported in the attacks.” https://www.bbc.com/news/world-middle-east-49703143 OPEC was going to cut supply anyway to boost prices. “ABU DHABI (Reuters) – OPEC agreed on Thursday to trim oil output by asking over-producing… Read more »

Mr. Bear
Mr. Bear

The statements don’t match the circumstances. Consider: “He said that part of the reduction would be compensated for by drawing on Aramco’s oil stocks.“. He’s presumably talking about using their raw petroleum reserves, which does not reflect the reality that the physical capacity of the refinery has been reduced and will take time to replace. I suppose that they’re stockpiling gasoline and other fuels, but the price which is currently soaring is for raw petroleum. I don’t deny the speculative aspects that are in operation here. And, higher West Texas Intermediate gives the frackers more opportunity to actually make a… Read more »

Gregs
Gregs

https://www.bloomberg.com/news/articles/2019-09-15/oil-prices-jump-19-after-attack-cuts-saudi-arabian-supplies

The spike in oil is due to the markets factoring in the risks associated with a destabilized middle east. This is political premium the world will pay for a erratic foreign policy.

armanidog
armanidog

The Saudi statement is pure PR, i.e. “Everything is fine”. Last Thursday OPEC said they were going to cut production-so they were already planning on lower output. If you read about the shale oil business, they cut infrastructure spending last year to increase investor returns. There was no reason to raise prices, it was an opportunity to increase “investor returns”. I just filled up today and it was 1.34/gallon. I imagine next week it will be back in the 1.20’s. “As international energy policy expert Professor Nick Butler explains, “the direct impact of the attacks could be short-lived. The market… Read more »

Ellynn
Ellynn

Oil is also a fungible commodity. (I’ll let you look that up yourself.) Besides gas and LNG going up, I except plastics, pharmaceuticals, paraffin wax for food shipping and agricultural fertilizers to go up too. Most likely some metal and glass ceramics (fiberoptic and fire rated glass) will increase in price or lead time, since they use petcoke for the anode bake furnaces in their production.

Dave Bearse
Dave Bearse

The GOP eked out a win in the NC-9 special election, increasing its margin by one point relative to 2018 midterms. The Economist suggests that everyone voted for the candidate of the party they voted for in 2018.

But the GOP typically has better turnout in special elections. And the thing is, Trump won NC-9 by 12%, and the GOP NC-9 candidate won it by 17% in 2016. There are currently 32 GOP seats in Congress than Trump won by less than 12%.

https://www.economist.com/united-states/2019/09/12/what-a-republican-victory-in-north-carolina-means-for-2020

augusta52
augusta52

Maybe a flight to International Falls would have been in order today—68 degrees. If there is any place to escape 90s this time of year, that is one sure place!

chamblee54
chamblee54

Here is your monday morning reader. Links, tweets, historic pictures, and a poem.

Chatsprint
Chatsprint

The fine law enforcement apparatus of Chattooga county weighs in….

Mark Schader, the sheriff of neighboring Chattooga County, posted a Facebook picture of himself and three other armed-to-the-teeth law enforcement officials with this caption: “Doing our part to help our friends in Lumpkin County (Dahlonega) with the antifa protests,” read the post, which was later taken down.

Dahlonega held a Trump rally organized by a known group of white supremacists, yet a Georgia sheriff deemed it appropriate to only name call the counter protesters.
Stay classy Chattooga county.