{"id":1534,"date":"2016-12-01T08:44:36","date_gmt":"2016-12-01T14:44:36","guid":{"rendered":"http:\/\/www.ctsfutures.com\/?p=1534"},"modified":"2016-12-13T14:29:10","modified_gmt":"2016-12-13T20:29:10","slug":"morning-thoughts-2016-12-01","status":"publish","type":"post","link":"https:\/\/udg.ehs.mybluehost.me\/morning-thoughts-2016-12-01\/","title":{"rendered":"Morning Thoughts &#8211; Dec 1"},"content":{"rendered":"<p><u><a href="../wp-content\/uploads\/Nesvick.png\" alt=\"Nesvick\" width=\"287\" height=\"117\" \/><\/a>Energy<\/u> &#8211;<br \/>\nAn especially wild day in energy futures yesterday.\u00a0 Obviously by now everyone knows OPEC came up to an agreement on a production cut.\u00a0 I have attached a breakdown here for your review and here are some stream-of-consciousness thoughts on the issue:<\/p>\n<ul>\n<li>For the longest time I could not understand the Iranian figures in the OPEC release. The figures showed Iran participating in the production cut based on what appeared to be a ridiculously large reference level, yet at the same time there is also a mention of Iran increasing production the same chart.\u00a0 I couldn\u2019t figure it out on my own, but I did come across this posted on Twitter (attached below).\u00a0 While I don\u2019t normally post Twitter snapshots here, I want to give the \u201cauthor\u201d credit for figuring out this OPEC \u201caccounting\u201d.\u00a0 This is from Nader Itayim (@ncitayim) who is apparently a correspondent for Argus Media<\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-medium wp-image-1535\" src="../wp-content\/uploads\/Iran-Output-503x600.png\" alt=\"Iran Output\" width=\"503\" height=\"600\" srcset="../wp-content\/uploads\/Iran-Output-503x600.png 503w, https:\/\/udg.ehs.mybluehost.me\/wp-content\/uploads\/Iran-Output-252x300.png 252w, https:\/\/udg.ehs.mybluehost.me\/wp-content\/uploads\/Iran-Output-1080x1287.png 1080w, https:\/\/udg.ehs.mybluehost.me\/wp-content\/uploads\/Iran-Output.png 1468w\" sizes=\"(max-width: 503px) 100vw, 503px\" \/><\/p>\n<ul>\n<li>Another interesting bit of \u201caccounting\u201d by OPEC is the Angola figure. The reference production levels for OPEC members were the Oct levels, except for Angola which used its Sep production figure.\u00a0 Their Sep production figure was much larger than their level in Oct, making it appear they\u2019ve cut production.\u00a0 As shown in the attached breakdown, compared to their Oct total they\u2019re actually allowed an increase in production.<\/li>\n<li>As the chart shows, for the countries participating in the production cuts based on Bloomberg Oct production totals the total production cut is closer to 1.28 mbpd rather than the reported 1.43 mbpd. Perhaps I\u2019m splitting hairs here, but I think that is still worth pointing out.<\/li>\n<\/ul>\n<p><a href="../wp-content\/uploads\/OPEC-production.png\" alt=\"OPEC Production Breakdown\" width=\"517\" height=\"330\" srcset="../wp-content\/uploads\/OPEC-production.png 517w, https:\/\/udg.ehs.mybluehost.me\/wp-content\/uploads\/OPEC-production-300x191.png 300w\" sizes=\"(max-width: 517px) 100vw, 517px\" \/><\/a><\/p>\n<ul>\n<li>But that also leads to the countries not participating. Indonesia has production at a similar level for several months now, so it is unlikely their production figure changes a ton going forward.\u00a0 However, both Libyan and Nigerian production is bouncing off very depressed levels.\u00a0 Libyan production in Oct was estimated +180k bpd from Sep and Nigerian production was estimated +170k bpd.\u00a0 Both have ample room for growth from current levels, so how much of a cut are we really going to see?\u00a0 It\u2019ll be interesting to see what these two countries\u2019 Nov figures look like.<\/li>\n<li>Adding the new production figures for the participating countries and just assuming steady production from Libya, Nigeria, and Indonesia (vs. Oct) leads to an \u201cOPEC\u201d total of roughly 32.7 mbpd.\u00a0 So this could basically be seen as a production freeze from Apr\/May levels.<\/li>\n<li>OPEC members insist the deal is contingent on non-OPEC participation. Russian officials stated yesterday they would participate by cutting by \u201cup to\u201d 300k bpd.\u00a0 This comes after Russia posted a 385k bpd Sep monthly production increase and a 123k bpd monthly increase in Oct.\u00a0 Again, it\u2019ll be interesting to see what their Nov production level is and from what level they\u2019re willing to cut.<\/li>\n<\/ul>\n<p>So OPEC has yet another well engineered short squeeze and the crude oil bulls are having their moment in the spotlight.\u00a0 However, I\u2019m still not entirely sure what impact this truly will have on global crude oil supplies.\u00a0 In addition to Libya and Nigeria above, we\u2019ve also seen US domestic (shale) production has stabilized and is starting to turn up.\u00a0 Rig counts have been on the rise.\u00a0 US producers have become more efficient, and the EIA show new well oil production is up per-rig YOY in almost all shale areas (chart below).\u00a0 Sure this agreement takes some supply off the market in the short term, but I do question the upside following yesterday\u2019s ~9% move.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-medium wp-image-1537\" src="../wp-content\/uploads\/New-well-600x364.png\" alt=\"New-well oil production per rig\" width=\"600\" height=\"364\" srcset="../wp-content\/uploads\/New-well-600x364.png 600w, https:\/\/udg.ehs.mybluehost.me\/wp-content\/uploads\/New-well-300x182.png 300w, https:\/\/udg.ehs.mybluehost.me\/wp-content\/uploads\/New-well.png 909w\" sizes=\"(max-width: 600px) 100vw, 600px\" \/><\/p>\n<p><strong><u>DISCLAIMER<\/u><\/strong><strong>:<\/strong><br \/>\nThe information contained herein has been taken from trade and statistical services and other sources we believe are reliable. Opinions expressed reflect judgments at this date and are subject to change without notice. These materials represent the opinions and viewpoints of the author\u00a0 and do not necessarily reflect the opinions or trading strategies of Nesvick Trading Group LLC and its subsidiaries. Nesvick Trading Group, LLC does not guarantee that such information is accurate or complete and it should not be relied upon as such. Officers, employees, and affiliates of Nesvick Trading Group, LLC may or may not, from time to time, have long or short positions in, and buy or sell, the securities and derivatives (for their own account or others), if any, referred to in this commentary. There is risk of loss in trading futures and options and it is not suitable for all investors. PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RETURNS. Nesvick Trading Group LLC is not responsible for any redistribution of this material by third parties or any trading decision taken by persons not intended to view this material.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Energy &#8211; An especially wild day in energy futures yesterday.\u00a0 Obviously by now everyone knows OPEC came up to an agreement on a production cut.\u00a0 I have attached a breakdown here for your review and here are some stream-of-consciousness thoughts on the issue: For the longest time I could not understand the Iranian figures in [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":1537,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[13],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.2 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Morning Thoughts - Dec 1 - CTS<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href="../wp-content\/uploads\/New-well.png\" \/>\n\t<meta property=\"og:image:width\" content=\"909\" \/>\n\t<meta property=\"og:image:height\" content=\"551\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"David Zelinski\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@CTSfutures\" \/>\n<meta name=\"twitter:site\" content=\"@CTSfutures\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"David Zelinski\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/udg.ehs.mybluehost.me\/morning-thoughts-2016-12-01\/\",\"url\":\"https:\/\/udg.ehs.mybluehost.me\/morning-thoughts-2016-12-01\/\",\"name\":\"Morning Thoughts - Dec 1 - CTS\",\"isPartOf\":{\"@id\":\"https:\/\/udg.ehs.mybluehost.me\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/udg.ehs.mybluehost.me\/morning-thoughts-2016-12-01\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/udg.ehs.mybluehost.me\/morning-thoughts-2016-12-01\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/udg.ehs.mybluehost.me\/wp-content\/uploads\/New-well.png\",\"datePublished\":\"2016-12-01T14:44:36+00:00\",\"dateModified\":\"2016-12-13T20:29:10+00:00\",\"author\":{\"@id\":\"https:\/\/udg.ehs.mybluehost.me\/#\/schema\/person\/2ebea80d35d247463c6be35dcf694285\"},\"breadcrumb\":{\"@id\":\"https:\/\/udg.ehs.mybluehost.me\/morning-thoughts-2016-12-01\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/udg.ehs.mybluehost.me\/morning-thoughts-2016-12-01\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/udg.ehs.mybluehost.me\/morning-thoughts-2016-12-01\/#primaryimage\",\"url\":\"https:\/\/udg.ehs.mybluehost.me\/wp-content\/uploads\/New-well.png\",\"contentUrl\":\"https:\/\/udg.ehs.mybluehost.me\/wp-content\/uploads\/New-well.png\",\"width\":909,\"height\":551,\"caption\":\"New-well oil production per rig\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/udg.ehs.mybluehost.me\/morning-thoughts-2016-12-01\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/udg.ehs.mybluehost.me\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Morning Thoughts &#8211; 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