I’ve always found at Christmas time, that I tend to be really unfocused and end up overlooking some critical things, like work, stocking stuffers for my wife – you know, minor stuff! Case in point, last week was (in my mind at least) my end of year post except I forgot to actually say it was, and today being Friday, I find myself in a bit of a bind.

You see, instead of working on some final Christmas themed missive, for the better part of the last week I have been lazing around the house in a t-shirt (novelty of course) and sweats (apologies for the visual) completely ignoring the market and thinking about nothing except hanging out with my family and whether chicken wings and peanuts is an appropriate midnight snack.

I feel like I have completely cheated you all out of one final diatribe, plus I didn’t take the opportunity to say Merry Christmas and Happy Holidays to all of you.  But… I’m totally out of time and feeling a bit lazy, it being December 23rd and all so I figured the easiest thing to do here was to recycle a post from last year (with a few edits) and “mail it in”.

So without further ado, ‘Twas the Night Before Christmas, a Christmas ode to the oilpatch.

(For the record, this post last year was a ton of work, so I have not much more than a twinge of guilt for reusing it.)

A Christmas Ode to the Patch

‘Twas the night before Christmas, when all through the patch
not a rig-hand was stirring, no need to dispatch.
The frac-trucks were parked by the fence-line with care,
in hopes that new capex soon would be there.

The welders were nestled all snug in their beds,
while visions of pipe-racks danced in their heads.
And Rachel in her ‘kerchief, and Trudeau in his cap,
had just settled down for a carbon tax nap.

When out in the market there arose such a clatter,
I sprang from my desk to see what was the matter.
Away to check prices I went with a flash,
Hoping the market would not again crash.

The price of oil seemed to be rallying hard,
Thanks to OPEC playing the oversupply card.
Then what to my wondering eyes should appear,
but a weather report, making gas prices more dear.

With tight oil production, the signals are mixed
But I knew in a moment the market was fixed.
More rapid than eagles, the opinions abound,
and the sector, it seems is primed to rebound

“Now OPEC! Obama!
Now, Climate and Notley!
On, Trudeau! On, Drumpf!
On, Saudi and Putin!
To the end of the world!
To the end of the glut!
Give it up! Give it up!
The oil patch is up!”

No more slagging of oilsands, plastics and pipe.
Export markets to open, the timing is ripe.
But up to their pulpits the pundits they flew,
Lower for longer! And end of times too!

And so, in a panic, I think this can’t be,
is the world really over for people like me?
So I turned off the news and fixed a stiff drink,
but the thought of the end made me hurl in the sink.

Fossil fuels done for – green power they say,
and coal is a goner, by sometime in May.
The wind it blows turbines that spin all around,
and the sun warms up panels, not just worms on the ground.

The world it is changing! Adapt now we must!
The future’s renewable, opportunity robust!,
Who cares if my taxes go up, up, forever,
Our leaders know all, since they are so clever.

The fate of our industry held tight in their hands,

While advantage is gifted to far, far off lands.
Yet even at that, I hold firmly to hope,
that when all’s said and done, surely we’d cope?

The prices drift round, there’s no rhyme and no reason,
yet with OPEC in play, the rally’s plainly in season.
A simple cut here, some aggressive demand,
Two years of no spending – we’ll be back in command.

For the sector is fickle and it sure is some work,
it gyrates and shakes but then turns with a jerk.
The bears time is done for, the prices will rocket,
and then I’ll have plenty of cash in my pocket .

So doomsters take heed, your view is short-sighted,
The market I know is no longer blighted.
So here I exclaim, ‘ere I drive out of sight,
“Happy Christmas to oil, and to all a good night!”

Prices as at December 23, 2016 (December 16, 2016)

• The price of oil rallied at the end of the week on improving confidence OPEC would live up to their deal.
  • Storage posted a surprise increase
  • Production fell slightly
  • The rig count in the US and Canada continues to grow
• Natural gas was up during the week as cold weather drove big demand increases

• WTI Crude: $53.06 ($51.90)
• Nymex Gas: $3.662 ($3.415)
• US/Canadian Dollar: $0.7394 ($ 0.7489)

Highlights

• As at December 16, 2016, US crude oil supplies were at 485.4 million barrels, an increase of 2.4 million barrels from the previous week and 32.9 million barrels ahead of last year.
  • The number of days oil supply in storage was 29.5, ahead of last year’s 29.1.
  • Production was down for the week by 10,000 barrels a day at 8.786 million barrels per day. Production last year at the same time was 9.179 million barrels per day. The change in production this week came from small reductions in both Alaska deliveries and lower 48 production. With the increase in rig counts since the summer we will likely be seeing a gradual inflation in production numbers
  • Imports rose from 7.360 million barrels a day to 8.471, compared to 7.326 million barrels per day last year.
  • Refinery inputs were up during the week at 16.658 million barrels a day
• As at December 16, 2016, US natural gas in storage was 3,597 billion cubic feet (Bcf), which is 2% above the 5-year average and about 6% less than last year’s level, following an implied net withdrawal of 209 Bcf during the report week – the largest December withdrawal on record.
  • Overall U.S. natural gas consumption was up 11% during the week as cold weather set in and demand increased across all sectors
  • Consumption has averaged 92 billion cubic feet per day (Bcf/d) during the first three weeks of December 2016, exceeding last year’s level by 21% and topping the previous five-year (2011–15) average by 17%
  • Production for the week was flat and imports from Canada rose by 18% from the week before in response to cold weather
• As of December 19, the Canadian rig count was 202 (30% utilization), 144 Alberta (36%), 23 BC (32%), 33 Saskatchewan (31%), 2 Manitoba (33%)). Utilization for the same period last year was about 20%.
• US Onshore Oil rig count at December 23 was at 523, up 13 from the week prior.
  • Rig count at January 1, 2015 was 1,482
• Natural gas rigs drilling in the United States was up 3 at 129.
  • Rig count at January 1, 2015 was 328
• US split of Oil vs Gas rigs is 80%/20%, in Canada the split is 50%/50%
• Offshore rig count was up 2 at 24
  • Offshore rig count at January 1, 2015 was 55

Drillbits

• China imported a record level of LNG in November – 2.66 million tonnes – up 46.6 percent from a year earlier. BMI Research expects the country to hit another import record in December as importers scramble to supply enough gas for winter heating.
  • China is the third largest LNG importer in the world, but unlike Japan and South Korea, its imports are growing very quickly.
• President Obama has effected a permanent ban on oil and gas drilling in most of the U.S. Arctic and Atlantic continental shelf, invoking a rarely used provision from the 1953 Outer Continental Shelf Lands Act. Prime Minister Justin Trudeau followed suit with a similar Arctic ban.
• Drumpf Watch: All eyes are now on the inauguration planning. Drumpf is purportedly having trouble attracting musical acts any more current than the 1990s, although the newly formed trio of Scott Baio, Kid Rock and Ted Nugent is sure to entertain.