Morning Petrospective – August 1, 2011
either party was able to cobble together enough votes to pass anything Thursday night, and that left each group scrambling to find the votes in its respective chamber (Republicans in the House, Democrats in the Senate) to pass something before the deadline on Tuesday. And the bills each side was working on were both seen as being untenable in terms of being able to pass the other house. That left markets in a state of disarray. Oil prices were lower, as traders sold equities and the euro. Traders ignored intense heat moving east and Tropical Storm Don, which threatened to shut oil and gas output under Texas.
Friday’s release of the second quarter GDP figures also helped push oil quotes lower. Just one day after Thursday’s very optimistic unemployment numbers, US GDP for the April-through-June period was up just 1.3%; economists had predicted growth of 1.8%. Coming on a day that many felt was cutting it too close with the debt limit, this persuaded many longs to liquidate assets across the board – except in gold. Equities and oil prices suffered because of the GDP figure.
The dollar plummeted after the GDP numbers, leaving traders with yet another disconnected market. That might really have been the big story for the week. Vehicles that traditionally moved together moved in different directions, then linked up again and then went their separate ways. Equities and oil, the euro and oil, gold and oil, the dollar and gold, and a number of other relationships worked, then stopped working, and then worked again, leaving traders to scratch their heads over and over during the week.
On Friday night, the House of Representatives passed one version of a bill designed to raise the debt ceiling, but the Senate voted it down on Saturday. Then, the Senate passed a bill, also designed to raise the debt limit, on Saturday, which the House quickly voted down that same afternoon. House Speaker Boehner said it was “time for them to tell us … how they’re going to get us out of the cul-de-sac that they’ve driven our country into.” And Senate Majority Leader Reid said, “We’ve heard very little from the Republicans.” President Obama said, “Congress must find common ground on a plan … from both parties. And it’s got to be a plan that I can sign by Tuesday.” What a mess. There is plenty of blame to go around, but the bottom line is that they just cannot agree, yet. From a purely market perspective, it is disappointing.
The Bureau of Ocean Energy Management, Regulation & Enforcement (BOEMRE, who knew?) reported on Saturday that 10.9% of oil output and 6.6% of natural gas production in the US Gulf was shut in after Tropical Storm Don made landfall. That is equal to 152,785 barrels a day of oil and 349.5 million cubic feet a day of gas. The US Gulf now accounts for 30% of American oil production and 7.4% of natural gas output, so 3.27% of US oil and nearly half a percentage of daily gas output was shut in on Saturday. Two drilling rigs were also idled, out of a total of 62 rigs operating in the US Gulf. Exxon announced on Saturday that it was cautiously assessing whether the storm had caused any damage to its platforms and rigs in the Gulf. Shell and Anadarko were reportedly already returning workers to operating rigs and platforms, a process that they reportedly began on Saturday morning (Shell) and Friday night (Anadarko). Anadarko expected to be back at full operating capacity by Saturday night.
FMX Newswire
FMX Newswire is an overnight news summary designed to meet the needs of professional energy traders. The content is to-the point, professional grade and not widely reported in the mainstream media. All sources are professional respected firms and newspapers.
Bentek Energy
- Power Burn Analytic Report – Power Burn Flat Over the Weekend at 30 Bcf/d.
- Nuclear Plant Status Analytic Report – Outages Up Over The Weekend.
- Texas Observer – TX Offshore Production Doubles After Tropical Storm Don Fizzles.
- Gulf Coast Production Analytic Report – Tropical Storm Don Fizzled Out, Texas Offshore Production Recovers.
Platts
- A five-day maintenance of the Forties pipeline to remove an unexploded mine from World War II started Monday as planned, says operator BP.
- A Bulgarian court has reversed the decision suspending Lukoil's storage license at the Neftochim oil refinery.
- Taiwan's Formosa has issued a force majeure on all oil product exports from its 540,000 b/d refinery at Mailiao after a fire Saturday.
- Sinopec Zhoushan July bonded bunker fuel sales hit new high of 210 kt.
Bloomberg
- Crude Climbs After Obama Says Congressional Leaders Agree Debt-Limit Deal.
- Funds Lift Bullish Commodity Bets to Six-Week High as Silver Holdings Jump.
- Japan Has ‘Slim’ Chance of Splitting Power Utilities as Blackouts Loom.
- Pemex Says Death Toll Climbs to Three in Tula Fire; Investigation Underway.
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