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Every week, EnerCom’s Oil & Gas 360® will deliver media stories, company updates, and research commentary covering the crude oil spectrum. The theme for this week: The Sun Never Sets on a Crude Oil World.
CRUDE OIL INVENTORY/’000 bbls (Week Ended 12/21/12)

Current: 371,059
Actual Build/(Withdrawal): (586)
Economist Average Estimate: (1,555)
Previous: 371,645

Click here for the chart with five year averages.
CRUDE OIL IN THE MEDIA*OPEC 162nd Meeting concludes – OPEC

The Conference reviewed the Secretary General’s report, the report of the Economic Commission Board (ECB), the report of the Ministerial Monitoring Sub-Committee (MMSC) – whose Members the Conference again commended for their continued and appreciated efforts on behalf of the Organization – and various administrative matters. The Conference exchanged views on, inter alia: developments in multilateral environment matters, including the outcome of COP18/CMP8 held in Doha, Qatar, earlier this month; the status of the Organization’s ongoing energy dialogue with the European Union (EU); its continued cooperative work for the G-20; and its dialogue with the Russian Federation. The Conference congratulated the Government and people of Qatar on the successful hosting of COP18/CMP8, noting with satisfaction that the event’s positive conclusion paved the way for a new course of action for designing the future climate change regime. In this connection, Ministers applauded the work being done in this important area by climate change negotiators from around the world. The Conference also reviewed the oil market outlook, as presented by the Secretary General, in particular the supply/demand projections for 2013. – Read More

*Iran Says ‘Irresponsible’ GCC Raises Regional Tensions – Bloomberg

Iranian Foreign Ministry spokesman Ramin Mehmanparast said the six-nation Gulf Cooperation Council was risking a regional crisis with its unfounded criticisms and heightened military focus. The GCC this week announced it will coordinate air, land, and marine forces under one structure, Bahrain’s Foreign Minister Sheikh Khalid Bin Ahmed Al-Khalifa said after a meeting of heads of state in Manama. Sheikh Khalid also called Iran’s nuclear program a “very serious” threat. – Read More

*Pay in Oil Fields, Not College, Is Luring Montana Youth – CNBC

For most high school seniors, a college degree is the surest path to a decent job and a stable future. But here in oil country, some teenagers are choosing the oil fields over universities, forgoing higher education for jobs with salaries that can start at $50,000 a year.

It is a lucrative but risky decision for any 18-year-old to make, one that could foreclose on his future if the frenzied pace of oil and gas drilling from here to North Dakota to Texas falters and work dries up. But with unemployment at more than 12 percent nationwide for young adults and college tuition soaring, students here on the snow-glazed plains of eastern Montana said they were ready to take their chances. – Read More

*Oklahoma still an oil, gas state – NewsOK

Oklahoma is continuing to live up to its reputation as an oil and natural gas state in 2012. Drilling activity has increased this year as producers found opportunities to search for oil after natural gas prices hit decade-low levels in the spring. “Our 2012 activity level in Oklahoma has averaged about seven rigs for the year, and we have made a major shift out of gas-prone areas into our new SCOOP area, which we feel will become a large, repeatable, oil-prone resource play,” Continental Resources Inc. President Rick Bott said.

In October, Continental unveiled the South Central Oklahoma Oil Province, a field it has dubbed the SCOOP. The play, which covers most of four counties, is a portion of the Woodford Shale located below fields tapped decades ago by some of the biggest names in Oklahoma’s oil-rich history. – Read More

*Denbury Completes Second Phase of Bakken Sale and Asset Exchange – Denbury

Denbury Resources Inc. (NYSE:DNR) (“Denbury” or the “Company”) today announced the closing of the second and final phase of its previously announced Bakken sale and asset exchange with Exxon Mobil Corporation and its wholly-owned subsidiary XTO Energy Inc. (collectively, “ExxonMobil”). In the first closing, ExxonMobil retained $350 million cash and Denbury retained a 17.5% interest in the Bakken area assets to enable an exchange of the retained Bakken assets for roughly one-third of ExxonMobil’s CO2 reserves in LaBarge Field in Wyoming. In this second phase closing, ExxonMobil exchanged the contemplated interest in the CO2 reserves and residual cash balances, after preliminary closing adjustments, for Denbury’s retained interest in the Bakken area assets. Denbury has now transferred all of its Bakken area assets to ExxonMobil for approximately $1.3 billion of cash (which includes preliminary closing adjustments) along with ExxonMobil’s operating interests in Webster Field in Texas and Hartzog Draw Field in Wyoming and a portion of its CO2 reserves in Wyoming. – Read More

*Crude Oil Options Rise as Futures Reach a Two-Month High – Bloomberg

Crude oil options volatility advanced with the underlying futures as U.S. lawmakers planned to resume budget talks to avert spending cuts and tax gains that threaten to weaken the economy.

Implied volatility for at-the-money options expiring in February, a measure of expected price swings in futures and a gauge of options price, was 25.46 percent at 3:15 p.m. on the New York Mercantile Exchange, up from 24.95 on Dec. 24. – Read More

RESEARCH COMMENTARY

*Global Hunter Securities, LLC (12/27/12)

The EIA last week published its data summaries for October 2012 fuel deliveries by prime suppliers. Total fuel shipments declined very moderately on a year-over-year basis, or 0.36% from October 2011. The decrease was led by a 1.35% decrease in total deliveries of motor gasoline (all formulations) and offset by strength in jet fuel demand and consumer-grade propane, which posted YoY increases of 4.8% and 6.6%, respectively. Brent crude oil prices averaged $111.71 per barrel against an average of $89.49 for West Texas light sweet crude (based on spot price averages). We consider those prices lofty enough to discourage a very marginal amount of consumption. Since October’s prices came on top of September’s even higher prices, we tend to believe two months of high costs apparently pushed back on gasoline and diesel demand. This phenomenon has typically revealed itself through premium mogas. In October, premium mogas deliveries posted a decline of 2.76% on a YoY basis while regular conventional mogas deliveries increased by 0.5% on the year during October. The alternating growth trends between premium and regular have often been suggestive of price-induced demand pressures, in our view. Looking ahead, November’s data would very likely reveal some of the demand impacts from Superstorm Sandy across all forms of fuels. Therefore, November would be slightly unusual; indeed, even December’s data could be slightly indicative of a post-Sandy series of efforts to resupply certain markets that were affected by the storm, in our view.

*Macquarie (12/27/12)

Both Brent and WTI barrels saw sharp gains in yesterday’s trading, in a market that saw significantly lower than average volumes traded leading to thin liquidity. Brent traded $2.27 higher to settle at $111.07. This was the highest close for Brent since November 30th. WTI also pushed higher in Wednesday’s trading by $2.37 to settle at $90.98, giving way to a slight tightening of the WTI/Brent arb on the day. WTI for February delivery this morning is roughly $.25 stronger with Brent trading roughly $.20 lower for February delivery, continuing the recent trend of strength in the WTI/Brent arb.

President Barack Obama will return early from vacation and hold budget talks, aimed at averting the fiscal cliff of automatic tax increases and government spending cuts. Wednesday’s market showed optimism that a resolution is possible prior to the December 31st deadline that Timothy Geithner as stated. This optimism was paired with below average temperature forecasts in both the 1-5 day and 5-10 weather forecasts. Colder temperatures in the near term has provided increased domestic demand for the WTI due to Heating Oil demand.

Oil may see resistance in the near term based on recent technical’s. WTI has seen significant strength so far in the month of December and settle on Wednesday very close to the 100 Day MA. Resistance levels were witnessed in September and October at levels similar to the current 200 Day MA as well.

*Barclays Capital Inc. (12/26/12)

E&P Spending to Reach Record Levels: Global E&P spending is set to reach a new record of $644 billion in 2013, up 7% from 2012 levels. CAPEX growth in 2013 should be almost entirely driven by the international markets, where we estimate budgets will jump 9% as the international and offshore cycles continue to build momentum and commodity prices remain at attractive levels. Sustained high oil prices, the sanctioning of major projects, and the delivery of a large number of offshore rigs in 2012 and 2013 are driving the increases. In contrast to international, North American spending is forecast to pause, with flattish YoY spending intentions in both the U.S. and Canada in 2013. This follows several years of strong growth.

Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies.  As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. The company or companies covered in this note did not review the note prior to publication.

 


Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.