Crude Observations

Thanks Turkey

Here I sit on yet another Friday, albeit quite a bit later than I normally do to write this missive but there are extenuating circumstances – I’m looking at you Air Canada and YYC airport ground crews! So yes, it is late (kind of deliberately so actually, as you will see later) and for that I am mildly apologetic, but everything worked out in the end and Air Canada and a very chatty and surprisingly well-informed cab ride later we are safely ensconced in a Phoenix cocoon and I am soon out the door to pick up some non-fattening platters of Mexican food to feed the masses.


Yes, yes. I know. It is Thanksgiving (Canadian version for my American followers). Why aren’t I getting ready to hero-cook an overly large bird for a smattering of family and friends? Truth is – I don’t know. We decided we wanted a quick break from Calgary’s full-on early winter and, to a lesser extent, the Canadian election.


So here we are. And we’ll still see friends. It’s not like it’s the first time we have high tailed it out of dodge for Thanksgiving and I’m sure it won’t be the last.


That said, before I trot out the door on my mission, I have a blog to write. I have had a few minutes to gather my thoughts and consequently contemplate my existence and the rather fractious state of the world. And in that cornucopia of discombobulation and studied navel gazing, I have come to the conclusion that while things are bad, weird and just plain bizarre, they could be a lot worse and for that I am thankful. Wait. Thankful. Thanksgiving. Hmm, what damage can I do with that setup?


Look, I know this is a recycled and hackneyed listicle, but it is a Canadian Thanksgiving tradition in many families to torture the kids (who just want to mainline cranberry sauce) and go around the dinner table before actually eating anything and require everyone to say what they are thankful for.


In that spirit, I thought I should do the same and write about some of the things I am thankful for (and some I’m not). It could also be that unlike the dinner table some will have genuine sentiment but most will no doubt be decidedly tongue in cheek, if not foot in mouth.


Overall, as I look back on the past year or so of natural disasters, global aggression, increasing levels of terrorism in the “first world”, senseless violence perpetrated on innocent civilians and bystanders, Donald Trump, economic catastrophes unfolding around the world, I’m pretty darn thankful to live in sleepy old boring Canada. Don’t get me wrong, we have our issues here and the weather sucks, but when one of the biggest stories of the past week was the debate over a Liberal campaign promise to provide subsidized camping to poor families and the scandal of a conservative leader not being forthright about the exact geographical prominence of his undergrad degree and his dual citizenship status (horrors! Being renounced anyway) then I think we have it pretty good.


I am thankful that notwithstanding massive amounts of sabre-rattling around the globe the only real war being waged is the Twitter war between Donald Trump and well, pretty much everyone these days if you want to be really accurate.


I am thankful that here in Canada we can have mostly civilized debates during an election campaign that highlight both the seriousness and talent of the various candidates but can also feature some genuine moments of comedic value. We are probably one of the few countries where five parties are actively lobbying to form a new national government and a sixth party wants to break away from the national government to form its own smaller and less interesting national government in a sovereign nation. And no, I’m not talking about Jason Kenney.


I am thankful that there are two parties in Canada who are well enough positioned to form the next government who aren’t so vastly different as they would like us to believe. I know that politics inspiures great partisan conflict but really – aside from the carbon tax, how different are the fiscal platforms of the Conservatives and Liberals.


I am thankful that the Calgary economy seems to have finally stabilized after absorbing the massive shocks of the energy downturn and that the downtown office market has steadied itself.


I am thankful for stable and sane government. As bad as the various municipal, provincial and federal governments are and as much as the leaders make me want to rage like a crazed, barking madman, it is not hard to find evidence of much worse situations around the world.


I am thankful for Donald Trump, because the nuthouse he is running is a non-stop source of entertainment and hilarity. I’m not thankful for anti-trade rhetoric, dog whistle appeals to racist dogma, the near constant state of conflict, the mysoginy, the crass self-enriching corruption and the prospect of a scorched earth retreat into an impeachment hell, but hey – everyone’s got a few flaws, right? As long as the entertainment continues, who cares!


I am thankful to Sirius XM for the Beatles Channel. Seriously. I love the Beatles. Can’t get enough. I don’t care who knows it. I am also thankful my daughter Lucy won’t let me turn off the car while a Beatles song is playing (I told her it’s an actual rule).


I am thankful for $50 (ish) oil and a slowly recovering energy sector. Mostly because the energy sector is where I make me moneys, but also because a recovering energy market is good for everyone in Canada.


I ma thankful for the commitment on the part of the Liberals to see the TransMountain Expansion get under way. It will cost them seats in the Lower Mainland and, possibly, a second term leading Canada, but it is the right thing to do for Alberta and Canada.


I am thankful to see pricing power start to recover in the energy services world, where profits and margin have been hard to come by in recent years. I will be even more thankful when the Kenney government finally sells the crude by rail contracts the Notley government signed and can finally remove curtailments so that E&P’s can start spending money again.


I am thankful to see that Russia, Saudi Arabia and the rest of the OPEC+ crew doing their best to lead the world out of this persistent oil glut. 20% of the world’s oil supply making nice with each other – one a US rival and the other the American’s top ally in the Middle East – what could possibly go wrong?


I am thankful for at the very least a steady and cheap natural gas pricing environment. Why – aren’t higher prices desirable? Yes and no. Higher prices are always good, but let’s keep them below $3.00 for a little while longer. This will allow more and more power and export-oriented infrastructure to be built in the United States such that when the supply crunch comes, as it inevitably will, Canadian gas will be there to fill the gap. It’s coming, we just don’t know it yet. Plus in the meantime we get massive projects like LNG Canada, the single largest (and least talked about) infrastructure project in Canada’s history. Which also needs to cheap gas to continue justifying itself.


I am actually a bit thankful for oil prices stuck in the mid-$50’s. The longer we stay at this level, the more restrained US LTO production will be, which can’t be anything but good for Canada.


On a local basis, I am thankful that the Canadian federal election (spoiler alert – Trudeau wins) are soon going to be over. Seriously, do you know how much Twitter compost and ill-informed Facebook garbage I have to go through a day? It’s flipping exhausting.


I am thankful for zombies. I mean who isn’t. And I’m including the ones in government in that as well.


I am thankful for NFL football, if only because the god-awful Bills are 4-1, which makes a guy named Sportsball very happy indeed.


I am thankful that my government thinks that I am a fat cat and a tax cheat. Why? Because it makes me feel important that dedicated, unconflicted and high-minded servants of the people like Bill Morneau and Justin Trudeau can take enough time out of counting their trust fund millions to take an active role in ensuring that I pay my “fair share” of taxes while still protecting the “middle class” whoever and wherever they are. Where else in the world can you get such personal attention from the government? It makes me feel important. And the corporate reorg that I had to do wasn’t complicated or costly at all.


I am thankful for my network of professionals – my Twitterverse – the people who keep me informed and grounded, the sources I go to for informed dialogue and reasoned discussion.


I am thankful for you, my readers, for supporting me through the years despite my many missteps and cranky missives that I am sure push a lot of buttons. I make statements that I am sure many disagree with and are unpopular, but I stand by them. I try not to be partisan, but rather realistic and if my forecasts upset people, it’s because I am trying to challenge the accepted views.


On the readership front, I am especially thankful for those of you who take the time to reach out after a blog to comment, correct or just converse. There aren’t many, but you know who you are – keep it coming!


Mostly and above all else, I am thankful for my family, both my immediate nuclear family as well as my extended family – in-laws and out-laws and all. I am thankful to have a wife who tolerates me and children who consistently and constantly fascinate and astound me.


There, not so bad right? I tried hard to be nasty, but the sun is shining, it’s warm, it’s a long weekend and I’m in an insufferably good mood.


Happy (Canadian) Thanksgiving, eh?

Prices as at October 11, 2019

  • Oil prices are UP!
    • Storage posted an increase week over week
    • Production fell
    • Rig Counts: Alberta +11; US down week over week
    • Natural gas storage down relative to 5-year avg, but remains higher than this point last year
  • WTI Crude: $54.71 ($52.91)
  • Western Canada Select: $40.02 ($39.46)
  • AECO Spot: $1.593 ($1.373)
  • NYMEX Gas: 2.214 ($2.337)
  • US/Canadian Dollar: $0.7589 ($0.7509)



  • As at October 4, 2019, US crude oil supplies were at 425.6 million barrels, an increase of 2.9 million barrels from the previous week and 15.6 million barrels above last year.
    • The number of days oil supply in storage is 26.2 compared to 24.6 last year at this time.
    • Production rose 0.2 million barrels for the week at 12.600 million barrels per day. Production last year at the same time was 11.200 million barrels per day.
    • Imports fell to 6.224 million barrels from 6.291 million barrels per day compared to 7.397 million barrels per day last year.
    • Exports from the US rose to 3.401 million barrels per day from 2.867 million barrels per day last week compared to 2.576 million barrels per day a year ago
    • Canadian exports to the US were 3.405 million barrels a day
    • Refinery inputs fell during the during the week to 15,646 million barrels per day
  • As at October 4, 2019, US natural gas in storage was 3.415 billion cubic feet (Bcf), which is about the 5-year average and about 16% higher than last year’s level, following an implied net injection of 98 Bcf during the report week
    • Overall U.S. natural gas consumption was down 3% during the report week.
    • Production was flat for the week. Imports from Canada fell by 3% from the week before. Exports to Mexico increased 0% for the week
    • LNG exports totaled 41 Bcf
  • As of October 11, 2019, the Canadian rig count was up 2 at 146 (AB – 97; BC – 10; SK – 34; MB – 3; Other – 2). Rig count for the same period last year was 213.
  • US Onshore Oil rig count at October 11, 2019 is at 712, up 2 from the week prior.
    • Peak rig count was October 10, 2014 at 1,609
  • Natural gas rigs drilling in the United States was down 2 at 142.
    • Peak rig count before the downturn was November 11, 2014 at 356 (note the actual peak gas rig count was 1,606 on August 29, 2008)
  • Offshore rig count was down 1 at 23.
    • Offshore peak rig count at January 1, 2015 was 55

US split of Oil vs Gas rigs is 83%/17%, in Canada the split is 69%/31%


Trump Watch: Peachy!

Kenney Watch (new!): Budget coming any day now

Trudeau Watch (for balance): Opted for no face makeup during two debates

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