Tag Archives: Oil

Thoughts and Forecasts From Kyle Bass … Oil $100/Barrel By Year End 2021 ?

The summer garnered a new found passion towards Podcasts…. While we do our Monthly reviews and Newsletters in an Audio, Video, Podcast like format…. Most podcasts are an hour or longer, making for interesting deep dives into the discussion, especially if the person(s) talking are very intelligent in the specific material….

Hat tip JP for the shove in sharing your favorites…. I have taken the ball and run with it!

In another crossing with this interesting investor, Kyle Bass, on a paid podcast platform, specifically for professional investors…. we highlight Mr. Bass’ current thoughts…

Six years ago, we highlighted his thoughts here in our post and in reviewing his comments, his bets were very correct!

Forecasts and Future Expectations from Kyle Bass

Once again, like we did six years ago, in our public Diary of sorts, we outline Kyle’s thoughts for future reference …. so here we go:

  • The Federal Reserve will continue to support the markets with continued purchases.
  • Federal Reserve feels responsible for Capital Markets … i.e. Every Federal Reserve member has a Bloomberg Investment terminal on their desk and post public talks, Fed members go back to their office to check the markets reactions to their comments.
  • Much more inflation than actually as printed by CPI – (Consumer Price Index) Example of car price increases up 300% over last thirty years, but CPI auto costs increased 5% over that period.
  • Cost of Food increases may cause social inequity problems.
  • Oil hits $100 per barrel this year … due to mal investment over the last 7 years.
  • Short term interest rates not to go higher than 1.5% and long term (10 year) rates will not go higher than 2.5%. i.e. Bernanke Helicopter speech outlines the difficulty in raising rates a lot once they are at a lowered level for some time.
  • We push through the Delta Variant and there is a REAL re-opening effect that works its way through the economy (Hope this is correct!)

These were actually done in order of the Podcast (basically taking notes while listening) but the most interesting in our opinion are the last three points…

Marked as Forecast, which we have had a lot of lately…will review for accuracy in the future!

Have a Great “Kyle Bass” Forecasting Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Why You May Want to Accept that Seemingly Lowball Offer for that Small Royalty Interest You Have Acquired Some Time Ago …

While we all envy the person on television like Jud Clampett that receives some great news on a royalty interest, (or misses a rabbit only to hit oil) …in real life frequently this can be more trouble than gift.

Living in Texas a state that produces oil and natural gas royalty rights are very popular and frequently handed down from one generation to the next.

Continued Disposition Problems

We are continuing to run into an ever increasing number of need to dispose of seemingly small mineral right properties that maybe had an offer at one time or another that actually cost more to dispose of them the offer.

Photo by Albert Hyseni on Unsplash

Please don’t run out and dump that long ago relative’s income producing oil or gas property that has been in the family for years producing a nice monthly check … but the hundred dollar or seemingly worthless offer for that very small parcel of land that has a very small mineral right may be a good offer not only from a small tax reporting over the years that you may have to do but also from an organization standpoint in your estate.

While there are exceptions and of course when oil prices were in the mid 100s there were extreme cases of payments, it is very likely if you are receiving a very nominal amount of money from your mineral interest over the past decade that that mineral interest likely has very little value and maybe more of a burden to you from a tax standpoint and especially to your heirs from an estate cleaning standpoint than it’s worth.

No Need to Be Reckless – Do some Research

This is once again not an endorsement to go recklessly sell the mass form of income property but rather a recommendation to maybe think twice and do a little research when receiving a seemingly low offer by a professional mineral person who wants to consolidate his portfolio and take that interest off of your hands!

Have a Great “Cleaner Estate” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

What Do You Say When Someone Says They Will Give You Their Oil? …. Sorry, No TANKS … Neat Chart Explaining

On Monday while in a Zoom study group meeting, an Oil Futures contract expiring on Tuesday went negative ….

What?

Yep … in theory, had you bought one of those Futures contracts (there were about 100k open interest), you would be the proud owner of 1000 barrels of oil, AND the seller would pay you to take his oil….. the only issue, you need some place to store it!

What do you say when someone says they will give you their oil?   Sorry, No TANKS!

Being forever market nerds … when the contract went negative about 5 different alerts hit my vision and Donald “The Brain” texted within about a minute… Digressing…

Interesting Chart of the Events, Stay Tuned

Take note of the cost to store oil, late in this chart ! Hence the reason to “Pay” to get rid of the oil, plus the possible cost to shut the rig down….

Enjoy!

img_1370

Of course from our friends at Visual Capitalist…. Well done guys!

Have a Great “Free Oil” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

 

 

 

SPR – Strategic Petroleum Reserve … Neat Facts … About to get filled!

On Friday it was announced that the US Government would take this opportunity to buy oil on the open market and fill the SPR (Strategic Petroleum Reserve) …

With our venue here being Informational and Educational, we set off the find more about the SPR.

Strategic Petroleum Reserves (SPR)

With tons of friends and clients in the Energy Sector (likely forgotten more than we will ever know) we hope to get at least one point that you guys do not know … for the rest of us, it is likely most of these may be new as they were to us.

For those as interested (nerdie) as us, here is where the bulk of our information came from.

How Much is in the SPR Now?

3-6-20 SPR Current Inventory

How much can it hold?

Current authorized storage capacity – 713.5 million barrels… so almost 100 million barrels to be added…

Where are the locations (Big Underground Caverns)?

Crude Oil Storage by Site  (as of January 31, 2020)

SPR Sites v3

  • Bryan Mound – holds 230.2 MMB in 20 caverns – 66.7 MMB sweet and 164.0 MMB sour.
  • Big Hill – holds 143.3 MMB in 14 caverns – 62.5 MMB sweet and 81.2 MMB sour.
  • West Hackberry – holds 189.7 MMB in 22 caverns – 102.2 MMB sweet and 87.5 MMB sour.
  • Bayou Choctaw – holds 71.8 MMB in 6 caverns – 18.9 MMB sweet and 51.8 MMB sour.

Why do we have a SPR?

Established in the aftermath of the 1973-74 oil embargo, the SPR was established to counter a disruption in commercial oil supplies which could threaten the U.S. economy. It is also the critical component for the United States to meet its International Energy Agency obligation to maintain emergency oil stocks.

How do you get Oil Out of the SPR? (Neat Fact!)

The fact that oil floats on water is the underlying mechanism used to move oil in and out of the SPR caverns. To withdraw crude oil, fresh water is pumped into the bottom of a cavern. The water displaces the crude oil to the surface. After the oil is removed from the SPR caverns, pipelines send it to various terminals and refineries around the nation.

There you have it, a neat overview …. for those interested, this is just the tip of the SPR Iceberg, as there is a ton of really neat and more thorough information on the link at the beginning of this post and again here

Have a Great “SPR Informed” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

 

Russian Saudi Tiff Leads to Oil Spigot Opened up, FANTASTIC Corona Virus Dashboard … All You Need to Know

Events over the weekend and today’s market movements destroyed the immediate pertinence of a Great Loan Refinancing Post … it will be even more timely after the dust settles on the current events…

More important now in our minds, knowledge of what is going on…

You will likely run into multiple stories today that may not tell the complete picture due to the 140 character world we all want to live in, so we wanted to clear the air and arm you with straight forward information.

Saudi Russian Tiff Leads to Spigot Opening

Over the weekend, last Saturday afternoon after an OPEC (Organization of Petroleum Export Countries) meeting where Russia stepped away from the meeting and the organizations policies …. Saudi officials announce a Shock and Awe spigot turn on and directly attacked certain Russian markets with even lower initial oil price sales… Here is a great Bloomberg Article that you should be able to read even without a subscription (3 free reads a month) …

Key Takeaways:

  • Overzealous Egos know no barriers (Not kidding)
  • Lower Oil Prices will seep into your life and pocket book in the form of savings
  • This has nothing to do with the Corona Virus 
  • Markets will be jittery because of the prior point fear

Corona Virus Update

Donald the Brain located the best comprehensive dashboard site (may need patience as many are sharing this wonderful site, putting pressure on the page) I have seen, this is from Johns Hopkins University …. feel free to move the center globe around to your location and see just exactly how many cases are near… (likely not as many as you think)

Here is a fantastic chart from the dashboard that shows a high level picture of the Virus outbreaks, but also the recovered…

3-9-20 Corona Virus Infections rate

  • Looks like China has a handle on this already…(Top line)
  • New location Ex China virus confirmations may already be topping (Bottom line)
  • Recoveries are accelerating, exactly what you want to see (Middle line)

I know some of the headlines are frightening and the market movements are fast today triggered by some big Ego’s…go figure!

Hopefully this clarity will help you, should you run into something that may lead you down a different path!

Unknowns eventually become knows, and clarity is found!

Have a Great “Now You Know” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

Forecasts from Canadian Economist Derek Burleton … Trump Policy, US Economy, Rates, US Dollar and Oil Prices

Earlier this month at our “Out West” conference where “The Brain” crashed the party in  32 minutes, we had the opportunity to listen to famed Canadian economist, Derek Burleton.

We greatly enjoy hearing from stately folks outside the borders of the US for several reasons …

  • What exactly do people in their geographic area think of the situation?
  • Receiving differing media reports may lead to a totally different and valuable views.
  • Countries with TOTALLY different governments may have clarity that we may take for granted.

Derek Burleton Forecasts20170202_211041438_ios

Trump policies will likely not make major changes to the economy. Burleton likens economies to air craft carriers that are very hard to turn and only slightly changed by policy.

Given the above fact, in the short term, Burleton thinks the capital markets could be due for disappointment, as the markets may be pricing in too much optimism currently.

Rates will rise twice in 2017 and again in 2018. Interestingly the fed has said three times this year and recently are saying even more lately….

US Dollar and Oil are both at near term (12 month) highs.

We like the forecasts as a vote of calmness and reasonable expectations. Thanks Derek… we will be watching as this unfolds.

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com

Just how big is Oil … Friday Away from Office

A really cool chart follows below.  After a big Roth article mid week, we thought it nice to coast into your weekend…

Today is a Friday and I am out of the office, returning on Monday… Enjoy your weekend! 

What a fabulous chart by VisualCapitalist…

So much is always spoken of Gold or other Commodities such as Silver or Iron. This chart puts it all into perspective.

Think a movement from $140 to $28 a barrel doesn’t have a global ripple ? Think again! 

img_0665

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com

 

 

 

 

Oil … Possibly the Story of the year?

Oil, or the price movement of oil, is turning into an interesting topic. After bottoming at $26/barrel in February of this year, it moved briefly above $50/barrel.

How about this rollercoaster ride ? Well maybe parachute jump would be more accurate…

6-15-16 2 Year Crude Fredgraph.png

Now the bounce back to over $50! Wow!

6-15-16 YTD crude Fredgraph

What about this move down in Rig count? Capitalism at work!

6-17-16-oil-rigs-chart

What we suspected throughout this cycle was the trickle down effect from the Energy sector and especially the peripheral feeder vendors was greater than many thought.

The terrific success of US drillers (see above massive increase in rig count) may have created a greater positive than many understood  during the boom time. When the bottom dropped out of prices … well the negative may have been greater as well.

What if Energy stabilizes and revenues begin to flow again?

Could be a much needed tailwind??? … time will tell !

Have a Great Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com

 

 

 

 

 

 

 

Oil … Friday

Just like when you walk into an all you can eat buffet having skipped a meal or two before …. more likely than not, your plate will be too full as you sit down.

Last Friday my intention was to talk all about Oil this week… the week went fast and we ran out of time ! Overzealous … but hey this is a marathon, not a sprint!

Next week we will speak Oil… Promise !

Friday

Today is a Friday, heading into a summer weekend…

With a mid-week heavier than normal post under your belt …

Enjoy your weekend ..

Talk to ya next week..

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com

 

Technology Wonder Travels – Friday

Sitting in an airport, several hours early (yaya – nerd planner) mid week, the technological wonders smacked me over the head:20160608_134745191_iOS

  • To my right a gentleman closes a contract for some type of weapons (lots of bullet talk)
  • Directly in front a woman runs her office computer and checks in
  • On the left, a gentleman runs a conference call with a bunch of folks on it- very productive
  • To my back, multiple kids on their device, and a mom face timing her family too- amazing
  • For me- other than a tad bit of slower connection via the tethered phone (spoiled by office speed) virtually present in the office

Everyone completely productive and in touch — not possible 10 years ago… AMAZING!

Interestingly, 10 laptops and only one tablet…. definitely a working group again – mid week!

Friday

After two heavy articles this week … How about a light Friday ?

Next week OIL talk!!!

But that is next week … enjoy your weekend!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com