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Home > Energy Week > Episode 90 - China trade deal | Aramco update | Shale slowdown | Dean Foreman
Podcast: Energy Week
Episode:

Episode 90 - China trade deal | Aramco update | Shale slowdown | Dean Foreman
Category: Government & Organizations
Duration: 00:59:07
Publish Date: 2019-12-17 10:55:51
Description: Aramco IPO update

Oil prices near three-month highs on US-China trade deal
https://www.cnbc.com/2019/12/16/oil-markets-us-china-trade-deal-in-focus.html

US and China reached a trade agreement, but some key details are still unclear
https://www.cnbc.com/2019/12/16/us-and-china-reached-a-trade-agreement-but-key-details-still-unclear.html

U.S. top trade negotiator praises deal, China remains cautious
https://www.reuters.com/article/us-usa-trade-china/us-top-trade-negotiator-praises-deal-china-remains-cautious-idUSKBN1YJ0GL

How are markets taking it? Markets are liking it.
WTI is up just over $60 finally
Market has been waiting on the trade deal - so now that its done the market is waiting to see when the economic indicators will start to show positive news.
When do we see the impact in agriculture?

Shale Slowdown Takes Economic Toll
https://www.wsj.com/articles/shale-slowdown-takes-economic-toll-11576405800
- shocker! (Not)
- rents declining in Midland, hotel prices declining
- despite record amounts of crude production
- But, if we don’t keep drilling, oil won’t keep producing
- ancillary jobs get lost in economic indicators
- rent prices might be better indicator of what’s going to happen with economy.

Investors Doubt OPEC Cuts Can Boost Oil Prices
https://www.wsj.com/articles/investors-doubt-opec-cuts-can-boost-oil-prices-11576501200
- presuming compliance
- Will only have 1 or maybe 2 months of compliance data for OPEC when meet again in March.

Preview of API Monthly Statistical Report with Dr. Dean Foreman
- The greatest petroleum demand for months of November at 21 million barrels of oil per day
- Demise of oil and gas is way overstated. Huge increase in jet fuel and in refining and petrochemicals
- reflective of underlying strengths in US economy and dependence on liquid fuels in US and the lifestyle
- Prices are also down. Win for industry and win for consumers.
- Are the DUCs keeping production up? Backlog is one source, as we get new infrastructure that is bringing new production on the market. But also productivity is solidly rising. And decline rates of legacy production have continued not to be nearly as much as people thought in general. Barnett Shale is perfect example.
- US production = DUCs + productivity + less decline rate than expected
- More DUCs coming online in Anadarko region than in Permian.
- How far can we go with production continuing to grow but drilling down? Lots of expectation that production is going to decline, but EIA forecasts that production will continue to grow for next 3 quarters. Is there someone wrong with the EIA modeling? Or is it reality?
- Down 670 DUCs according to EIA.
- Where do the productivity increases come from? Digitalization, realtime learning, better targeting, improving recovery factors relative to resources. Increasing lateral lengths has had a huge impact. A well isn’t just a well anymore. Fewer holes in the ground with greater productivity potential. Costs also go down with this.
- So much of the innovation comes from oil and gas service sector - many have become commodities s, almost as fast as they come out.

- How long will it take for trade deal to filter into economic indicators? Should take several months.
- De-escalation on industrial side but agriculture is most effected.
- Trade deal really should help agri-business, according to the farmers.
- Good sign that despite record petroleum product production we still have stocks.
- Seasonality in regional divergence of gasoline. More growth in rural than in urban. Change in agriculture.
- Conventional gasoline is almost twice the volume of reformulated gasoline!
- Strong states getting stronger. On demand side its a regional story. Eastern seaboard is strongest area of growth. Midwest down, California down but Rocky Mountain is up.
- IMO2020 compliance explains some of the seasonal variance in residual fuel oil

API Monthly report - https://www.api.org/products-and-services/statistics/apis-economic-industry-outlook
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