Well I guess I should take a mulligan on that Doha meeting forecast, however it does appear that the market reacted as if I was right, special nod of thanks to Kuwait, where the underpaid immigrant labour force was able to take about 1.5 million barrels a day off-line in a three day strike that accomplished nothing substantive.

While the “freeze document” itself was apparently prepared in advance of the meeting and pretty much everyone in the room thought the meeting a mere formality, the Saudis had other ideas and allowed politics to interfere with oil production and prices for the first time in a very long time. Apparently, the prospect of a strengthening Iran was more anathema to the Saudis than a weakening balance sheet.

Needless to say, some leaders were not impressed.

What does the Doha failure mean?

In the great scheme of things this matters less and less since as we have discussed previously, the decline of US production is accelerating as is the production coming off-line around the world ex-OPEC. What this suggests is that the timeline for rebalancing is moving up.

It also suggests that in many respects, the oil market has moved on from OPEC, at least for the short term, and instead is looking to fundamentals driving the price going forward.

That said, it is worthy of note that OPEC says that the freeze will be on the agenda for their June meeting, keeping the psychological lift under oil prices without actually having to do anything.

Sign ‘O’ The Times

As I am sure many of you have seen, Prince passed away yesterday, another significant loss to pop culture and the music scene in what has so far been a year of serious attrition in the music industry, particularly if you are of my, ahem, vintage.

While he spent a career living larger than life and moving weirdly into and out of the mainstream consciousness, his influence is undeniable. Prince was a prolific songwriter, master musician, genius guitar player, enigmatic pop star and a symbol for many of his contemporary generation.

Regardless of the circumstances of his death, his loss is kind of a big deal.

So, in honour of his purpleness, today I am spinning a few of his greatest hits and making some tongue in cheek dedications along the way.

1999 (Party like it’s 1999)

So, um, I was dreaming when I wrote this, forgive me if it goes astray, but I dedicate this bit of nostalgia to the fellas over at OPEC who it is hoped remember what that year was like. Oil prices hit a then all-time low of $14 and OPEC, together with some non-OPEC producers made the decision to actually cut production to eliminate a supply glut and put some foundation under prices. Over the next decade prices rallied from less than $10 a barrel to over $100 as part of an energy boom which was only briefly interrupted by the financial crisis.

Let’s Go Crazy

This one is being dedicated to our fearless leaders in government, who seem to be engaging in a frenzied, all-out crazy party of deficit spending, tax increases, carbon schemes, rebates and environmental handouts in the hopes of building their legacy for the afterworld – A world of never ending happiness, U can always see the sun, day or night. Or something like that.

When Doves Cry

This one I am sending out to young Justin Trudeau in the hopes that he will use the song as some form of inspiration to lighten up on the whole “environmental review” stuff on national interest energy infrastructure projects. Seriously Justin – stop questioning yourself, you’re not too demanding, and not too much like your father.

Little Red Corvette

This I dedicate to Barack Obama – not for any particular reason, maybe I just think it would a nifty retirement present. Convertible, American-made, a beast on gas and probably a ton of fun to drive around between golf courses in Hawaii.

Raspberry Beret

This one is dedicated to all the under-employed energy service workers out there, working part time at the five and dime. It’s a happy go-lucky pick me up song and eminently hummable. It never fails to improve my mood.

KISS

This is clearly for Vladimir Putin. You don’t have to watch Dynasty, to have an attitude…

Nothing Compares 2 U

This is kind of a no-brainer. This one is for Donald Drumpf of course. Nothing compares 2 him.

Purple Rain

Nope, I wasn’t going to forget this one, even though it’s so obvious and some people will never forgive me for this.  An epic ballad about a relationship that started as a friendship, grew in intensity and ultimately crashed (albeit around one of the epic guitar solos in rock history), this can only be dedicated to the oil industry at large and the love/hate relationship it has with energy consumers. Honey I know, I know, I know times are changing – It’s time we all reach out for something new…

I mean let’s face it, oil gushing from a well can only be one thing right?

Purple rain, purple rain.

Prices as at April 22, 2016 (April 15, 2016)

• The price of oil ended the week up
  • Storage posted a small increase
  • Production was down
  • The rig count fell
  • Conitnued production declines and some major outages helped keep prices elevated
• Natural gas rose during the week with oil

• WTI Crude: $43.72 ($40.38)
• Nymex Gas: $2.140 ($1.970)
• US/Canadian Dollar: $0.7884 ($ 0.7781)

Highlights

• As at April 15, 2016, US crude oil supplies were at 538.6 million barrels, an increase of 2.1 million barrels from the previous week and 49.6 million barrels ahead of last year. It should be noted that storage at Cushing, where WTI is priced is declining week over week, where most of the volatility in inventory is occuring is in the Gulf Coast Region where a majority of imports arrive, so in weeks where imports spike, storage spikes there as well.
  • The number of days oil supply in storage was 33.3, ahead of last year’s 30.6.
  • Production was down for the week at 8.953 million barrels per day. Production last year at the same time was 9.385 million barrels per day. The decrease in production this week came from the Lower 48.
  • Imports increased again during the week
  • Refinery inputs recovered somewhat during the week
• As at April 15, 2016, US natural gas in storage was 2,484 billion cubic feet (Bcf), which is 49% above the 5-year average and about 55% higher than last year’s level, following an implied net injection of 7 Bcf during the report week.
  • Overall U.S. natural gas consumption fell by 12.1% for the week across all sectors
• Oil rig count at April 22 was down to 343 from 351 the week prior.
  • Rig count at January 1, 2015 was 1,482
• Natural gas rigs drilling in the United States was down 1 at 88.
  • Rig count at January 1, 2015 was 328
• As of April 18,with break up in full force, the Canadian rig count was at 39 (6% utilization), 28 Alberta (6%), 8 BC (11%), 3 Saskatchewan (3%), 0 Manitoba (0%)). Utilization for the same period last year was about 10%.
• US split of Oil vs Gas rigs is 80%/20%, in Canada the split is 20%/80%
• Offshore rig count was at 26
  • Offshore rig count at January 1, 2015 was 55

Drillbits

• Earnings season is here! Earnings season is here! Actually, it gets its real start next week. Results are expected to brutal for a quarter where oil prices averaged about $33 and many E&P companies were unhedged.
  • Notwithstanding the above, the midstream sector seems to be doing OK. Altagas reported results on Wednesday – Q1 2016 EBITDA was $178 million which was about the same as the same period last year.
  • Pembina Pipeline announced that the company has received approval from the Alberta Energy Regulator (“AER”) relating to the construction of two 270 kilometre, 24 and 16 inch pipelines between Fox Creek and Namao, Alberta (the “Fox Creek to Namao Pipelines”), as part of a series of projects that form the company’s Phase III Expansions (“Phase III Expansion”). The Phase III expansion is the largest capital project in the company’s history
  • Steel Reef Infrastructure Corp, a company that invests in private midstream infrastructure assets in Western Canada received a $75 million equity investment from InStar AGF Essential Infrastructure Fund
• More from the strange but true department, following on the strage news from last week of Liberal party support for some energy infrastructure comes this weirdness out of Edmonton where apparently Rachel Notley is softening in her opposition to Northern Gateway. Unless a gas leak in her office is detected in the next few days, this is quite a positiive development.
•  A strike by oilfield workers in Kuwait took about 1.6 million barrels a day (60% of production) off-line for three days. Workers were protesting wage and benefit roll-backs as part of an austerity program. The government said they wouldn’t negotiate with striking workers so the union went back to work. Not sure exactly what was accomplished.
  • It should be noted that 1.7 million barrels is pretty close to what global spare capacity is, so if the strike had gone on for any legth of time, it would have exposed how razor thin the production/supply balance is. It also shows how vulnerable we are to medium term supply shocks with so much capex having been cut
• Approximately 200,000 barrels of oil is expected to be offline in Nigeria until June after a pipeline that services the Forcados oil terminal was sabotaged
• Pemex was given a $4.2 infusion from the Mexican government to cover losses. The government controlled monopoly posted a loss of 2015 of $32 billion and has $87 billion in debt
• 150 leaders of the free and not-so-free world piled onto fossil fuel powered jets to fly to New York on Friday (ironically “Earth Day”) to sign the “historic” Paris Climate Accord that will cost trillions and do little to appreciably slow climate change
• Drumpf Watch – Drumpf won New York’s primary handily and now we move on to the so-called “East Coast” primaries where it is expected he will not have quite an easy ride.