I am out of the office this week so this is a short one, hope it doesn’t leave people wanting more…

It’s been a rough week for the energy sector (won’t it be nice to not have to say that at some point?). Storage, price collapse redux, reduced demand growth forecast from the IEA (can’t they just stop for a bit?). There are lots of people piling on.

First it was the colossal hypocrisy of the Keystone XL denial. Then it was the announcement of the Exxon probe by the New York State’s Attorney’s office all mixed up against the backdrop of the Paris climate change talks. Some of the headlines were fairly apocalyptic – End of Days for Oil! Oil’s Time is Done – you get the point.

The final nail in the coffin for me was an article talking about Jeff Rubin’s latest pet theory – that oilsands(and by extension Canada) are uneconomic in the current environment and that the world’s second largest resource was done, over. Put a fork in it. Fortunately, I read that while still in the office and since we all know Rubin has been right about the energy sector time and again I was able to run out and sell my entire position in Suncor before it sank to a negative share price. Sorry, this last part was a lie. I don’t own shares in Suncor. And not a day goes by that I don’t kick myself for that.

Anyway, it was interesting to me that the same week that the last rites were being administered to Canada’s energy sector by both domestic analysts and the American piolitical elite, the good folks at the Energy Information Administration (EIA) elected to publish one of their country briefs (they do this once a month) and wouldn’t you know it? This time it was Canada! (one has to wonder, does this stuff ever get shared with, say, the guy who lives in that fancy house at 1600 Pennsylvania Ave?

So – excerpt central from that report:

“Canada is one of the world’s five largest energy producers and is the principal source of U.S. energy imports. The country is a net exporter of most energy commodities and a significant producer of crude oil and other liquids from oil sands, natural gas, and hydroelectricity. Energy exports to the United States account for the vast majority of Canada’s total energy exports.”

“Canada is expected to continue to be one of the largest sources of growth in non-OPEC liquid fuel supply…”

“Nearly all of Canada’s oil exports were directed to the United States in 2014. Canada is the largest source of U.S. crude oil and refined products imports, accounting for about 37% in 2014. That year, the United States imported 3.4 million b/d of oil and petroleum products from Canada, of which 2.9 million b/d were crude oil, including diluents.”

“While overall U.S. imports of crude oil are declining, Canada is one of the few countries from which U.S. crude oil imports are increasing. Over the past decade, U.S. imports of crude oil and other liquids from Canada have increased 58%, while oil imports from the other major suppliers have decreased, displaced largely by increased domestic production.”

“Canada is one of the world’s largest producers of dry natural gas and the source of most U.S. natural gas imports.”

There was also a section on coal and electricity – I won’t bore people with the detail, but it’s more of the same.

Bottom Line – Canada is the single most important trading partner that the U.S. has when it comes to energy. If that doesn’t meet the test of “national interest” I am at a loss to explain what does. I know that Obama is way smarter than I could ever hope to be, but can someone please explain this to me?

Never mind the quotes – look at the graph. It would appear that we are here to stay. Even if they want tro replace us.

Prices as at November 13, 2015 (November 6, 2015)

• The price of oil ended the week down, after a choppy week of indicators.
  • Storage posted a more than expected increase
  • Production was up marginally
  • Markets are by and large drifting
  • The rig count decreased again
• Natural gas gained slightly during the week as production declines were offset by a persistently warm fall

• WTI Crude: $40.85 ($44.39)
• Nymex Gas: $2.379 ($2.366)
• US/Canadian Dollar: $0.7510 ($ 0.7517)

Highlights

• As at November 6, 2015, US crude oil supplies were at 487.0 million barrels, an increase of 4.2 million barrels from the previous week and 108.5 million barrels ahead of last year. A major contributor was a surge in imports
• The number of days oil supply in storage was 31.2, ahead of last year’s 24.6.
• Production was up to 9.185 million barrels per day. Production last year at the same time was 8.985 million barrels per day. Based on the numbers, it is likely that by December year over year production growth in the U.S. will be negative. The increase in production this week came from Alaska.
• As at November 6, 2015, US natural gas in storage was 3,978 billion cubic feet (Bcf), which is 5% above the 5-year average and about 10% higher than last year’s level, following an implied net injection of 46 Bcf during the report week.
• Overall U.S. natural gas consumption increased by 5% this week with the increase across all sectors
• Oil rig count at November 13 was up to 574 from 572 the week prior.
• Natural gas rigs drilling in the United States are down to 193 from 199.
• As of November 9, the Canadian rig count was at 173 (23% utilization), 119 Alberta (22%), 31 BC (35%), 20 Saskatchewan (17%), 3 Manitoba (20%)). Utilization for the same week last year was 45%.
• US split of Oil vs Gas rigs is 74%/26%, in Canada the split is 38.6%/61.4%

Drillbits

• Hey – I said it would be light this week!
• Drumpf Watch – Drumpf gave an impassioned speech the other day where he call people in Iowa idiots, said Marco Runio was a lightweight and compared Ben Carson to a child molester. His polling numbers went up.