SPECIAL REPORT | February 14, 2013

The M13 WTI-Brent Spread: We expect a -$14/bbl June arb in a highly volatile environment

In this Special Report, we argue that a new era of the WTI -Brent spread has arrived, marked by the shift of the U.S. crude bottleneck from the Midcontinent to the U.S. Gulf Coast, and discuss its main characteristics. We then provide a detailed analysis of U.S. production forecasts, current and planned infrastructure in the Midcontinent and the U.S. Gulf Coast ( USGC ), and imports and refinery utilization rate data in order to estimate the level at which the June 2013 WTI -Brent arb is likel.....

SPECIAL REPORT | February 13, 2013

Associated Gas: How far could it take us?

Long considered an inconvenience (or worse) in oil drilling, associated gas can make or break a bullish natural gas market in the second half of 2013. In this Special Report , we will quantify our expectations of 2013 incremental associated gas volumes. We believe the biggest bullish risk for late 2013 comes not from supply demand balances in a business as usual scenario, but rather the shifting structure of fundamental risk. Demand risk has always centered around peak winter months, and with i.....

DATA INSIGHT | February 11, 2013

U.S. Oil Production in Detail: Breaking down production dynamics in the big three plays

In this Data Insight , we introduce our oil production models for the big three oil plays in the U.S. Calculated at the monthly level, output from each field that make up the Bakken, Eagle Ford, and Permian plays will be presented by quarter to minimize noise. Our models integrate decline curve analysis, drilling activity, efficiency gains and other information made available by producers and service companies currently active in these plays. These forecasts will be updated on a continuous basi.....

DATA INSIGHT | February 06, 2013

Missing in Action: The story behind the 770 kb/d missing from Texas RRC balances

In this Data Insight , we provide an explanation for the massive discrepancies in Texas oil production volumes as reported by different government agencies. Production volumes published by the federal Energy Information Administration show consistently higher output compared to those posted by the Texas Railroad Commission — the state agency that regulates the oil and gas industry. In October 2012, the discrepancy exceeded 770 kb/d. We tracked the mismatch to production coming from wells under .....

DATA INSIGHT | December 19, 2012

Bite Worse Than Bark? Implications of low real yields and recent IMF research on fiscal cuts

The real 10-year Treasury yield registered a historical low of -0.87% on October 4, and set a new record low again recently (-0.88% on December 6). Recent research by the International Monetary Fund ( IMF ) has indicated that fiscal multipliers have been higher in advanced economies since the Great Recession. We highlight this new evidence along with the fact that investors are letting the US government borrow at real negative interest rates in this note. At the same time, we assess the implicat.....

MARKET INSIGHT | December 17, 2012

RESEND: Whiting, We Have a Problem... Analyzing the Reported Delay in BP Whiting's Modernization Project

(Please note that we are resending the report that we published last Friday.) Earlier this morning, a news story reported that the timeline for the completion of the work on the 12 Pipestill CDU in the BP Whiting refinery had been delayed due to construction problems. In this Market Insight, we describe how this new information has changed our outlook for the refinery’s operations that we presented in a previous Special Report (“The Enigmatic BP Whiting”). We now believe that there is a high.....

SPECIAL REPORT | November 29, 2012

The Enigmatic BP Whiting: Could The Refinery Be Running Light Sweet Crude Next Summer?

The recent shutdown of the largest crude distillation unit ( CDU ) at BP’s Whiting refinery has the potential to impact the evolution of the WTI forward curve given that the facility draws a large share of its inputs from Cushing. The exact timing and circumstances for the restart of the CDU , however, remain unclear given that the company has not disclosed much of this information. In this Special Report, we outline three possible scenarios for the timeline of the BP Whiting upgrading projec.....

DATA INSIGHT | November 15, 2012

Weighing In: Implications of 2013 SPGSCI/DJUBS weights for energy commodities

In this note, we assess the potential impact of the 2013 weights (vs. 2012 levels) on index investment in energy commodities for the S&P GSCI and the Dow Jones – UBS commodity indexes.

DATA INSIGHT | November 14, 2012

LLS Market Update

PADD 3 light sweet imports continue to post year-on-year declines In this Data Insight, we provide an update on the recent behavior of the LLS market from two perspectives. First, we disaggregate the latest EIA data on crude imports to the United States and comment on the volatility present amidst the secular decline of light sweet imports in the U.S. Gulf Coast ( USGC ). Second, we discuss the evolution of the LLS -Brent and LLS -Maya spreads.

MARKET INSIGHT | October 26, 2012

Another hurricane threat to the U.S. Northeast

Refining disruption could further depress already low product stocks Hurricane Sandy is on track to make landfall in the U.S. Northeast early next week. In this Market Insight, we highlight the potential market disruptions that the storm may cause and draw a comparison to the impact of Hurricane Irene last year. As we note, several factors could make the market more volatile this time, especially given the low levels of products inventories in the region.