Diamond Shines, Gridiron Fumbles

Maybe it was the Chicago Cubs breaking the curse. Perhaps it’s this season’s home run explosion. Whatever the reason, many Major League baseball teams are bringing in big crowds this year. That comes just as the league that overtook baseball in terms of viewership is slipping badly.

The National Football League’s attendance admittedly has been dragged down by three recently relocated California teams, including the L.A. Chargers, formerly of San Diego, who were unable to fill a 27,000 seat soccer stadium. To put that number into perspective, the 30th most-watched college football team last year, the Texas Tech Red Raiders, drew more than 58,000 fans on average.

But it isn’t just that – NFL television ratings have been falling too. A Super Bowl win by the Cleveland Browns might turn things around.

Source: WSJ

 

US Oil Drillers Cut Rigs For Third Week In A Row

U.S. energy firms cut the number of oil rigs operating for a third week in a row as a 14-month drilling recovery stalled as companies pared back on spending plans when crude prices were softer.

Drillers cut five oil rigs in the week to Sept. 22, bringing the total count down to 744, the least since June, Baker Hughes Inc. (NYSE: BHGE), a GE company, said in its closely followed report on Sept. 22.

That put the rig count on track for a second month of losses in a row and also its biggest monthly decline since May 2016. It was also on track for its first reduction in rigs over a three-month period since the second quarter of 2016.
Source: Oil & Gas Investor

 

Brexit & Beyond: Theresa May Tries to Break Brexit Stalemate, More Pointers to Stronger Eurozone Growth, Europe’s Crumbling Political Order

Brexit & Beyond: Europe in Flux is The Wall Street Journal’s round-up of news and analysis of how Brexit will affect global business, economies and finance. You can sign up here.

MUST READS

British Prime Minister Theresa May gives her landmark Brexit speech in Florence, Italy on Friday.
Jeff J Mitchell/Getty Images

Theresa May Calls for Two-Year Brexit Transition Period: British Prime Minister Theresa May said the U.K. would honor its financial commitments to the European Union’s current budget and seek to retain current trade terms with the bloc for two years after its planned exit in 2019.

London Says It Won’t Reissue Uber’s License: The U.K. capital’s top transport authority said Uber Technologies Inc. was unfit to hold onto its private-car hire license here, threatening a shutdown of the service in one of Uber’s biggest global markets.

Eurozone PMI Beats Forecasts, Pointing to Stronger Growth: The eurozone economy found fresh momentum in September and may have accelerated in the third quarter as a whole, according to surveys of purchasing managers released Friday.

Even in Staid Germany, Protest Parties Poised to Gain Ground: Germany’s seemingly predictable election campaign may well have a twist in its tail. If the last opinion polls before Sunday’s parliamentary elections are a guide, the crumbling of Europe’s old political order is affecting even the continent’s bastion of stability, writes Marcus Walker.

Why Angela Merkel Needs Donald Trump: Chancellor Angela Merkel may owe a debt of gratitude to Donald Trump for her commanding lead in the polls ahead of the German general election. WSJ’s Anton Troianovski explains.

Six Things To Know About The German Election: Germany heads to the polls on Sunday to elect a new federal government.And while Angela Merkel’s position as Chancellor looks safe, the election could throw up surprises, with implications for the markets, the euro and the European economy. Here are six things to know.

U.K. Police Charge Man With London Subway Bombing: U.K. police on Friday charged an 18-year-old man with bombing a London subway train last week in a blast that left 30 people injured.

Spanish Police Arrest Suspect in Terror-Attacks Investigation: Spanish police arrested a man for alleged collaboration with the terrorists that killed 16 people in Spain last month, the country’s interior ministry said, in a sign that the cell is larger than investigators had initially indicated.

Europe’s Foreign Debt Binge Could Push U.S Rates Lower: European investors are buying more foreign bonds than ever before, another sign that many fund managers aren’t expecting tapering from the European Central Bank to boost local yields anytime soon.

How Aldi Plans to Conquer America: Limit Choice: Born in the ashes of WWII, the secretive German supermarket chain Aldi offers shoppers limited choices and rock-bottom prices—a formula expected to roil an American grocery market undergoing change.

IN THE PAPERS

U.K. Government Breaks with Protocol over Florence SpeechPolitico

Leave Voters Won’t Let Brexit Spoil Their Retirement FunBloomberg

Almost 10,000 EU Health Workers Have Quit NHS since Brexit VoteThe Guardian

U.K. Draws Record Overseas Tourists after Pound’s Brexit PlungeThe Guardian

– Compiled with the help of Toby Luckhurst

For breaking news and intelligence on Brexit, finance, markets, deals and people from London, download WSJ City for iPhone or Android smartphone. And you can find more analysis of politics, economics and regulation in the European Union over on Real Time Brussels. 

Source: WSJ

 

Souki’s Tellurian Grabs Haynesville Acreage For LNG Exports

The steady flow of A&D activity in the Haynesville continued in September but LNG underscored one deal more directly and deliberately than previous transactions.

Exporter Tellurian Inc. (NASDAQ: TELL) said it plans to buy 9,200 net acres in Red River, DeSoto and Natchitoches parishes, La., for $85.1 million in a bid to undercut Henry Hub prices. The seller of the assets was undisclosed.

The deal marks a step forward for Tellurian’s LNG plans to export gas from a proposed 1,000-acre Driftwood terminal near Lake Charles, La.

Tellurian was co-founded in February 2016 by Charif Souki, the former CEO and co-founder of Cheniere Energy Inc. (NYSE: LNG) who left the company after disagreements with activist investor Carl Ichan. Tellurian’s other founder is Martin Houston, who is described by the Oil & Gas Council with being “the key architect of BG Group’s world-class LNG business.”
Source: Oil & Gas Investor

 

The Curious Case of Anti-Fracking Groups Activity in Nevada

The usual anti-fossil fuel suspects, Sierra Club and Center for Biological Diversity (CBD), are “searching for water in the desert” with a new lawsuit filed to challenge the U.S. Bureau of Land Management’s (BLM) June sale of oil and gas leases in Nevada, a state with barely any oil and gas activity to speak of. This is a trending strategy for anti-fracking groups to target similar states with virtually zero oil and natural gas production like Vermont and Maryland as places to ban fracking.

Just how much oil and gas activity is there in Nevada? The Associated Press reported on the state of Nevada’s unconventional oil and gas activity to-date:

“Only about 20 fracking permits have ever been issued in Nevada and only seven wells have been drilled – five of those in 2014 and one most recently last year, said Richard Perry, administrator of the Nevada Division of Minerals Commission on Mineral Resources.”

With such low oil and gas activity, it’s surprising how much anti-fossil fuel activism has recently bubbled up in Nevada. Earlier this year, an anti-fracking bill failed in the state legislature. Of course, the bill was backed by groups with financial ties to California billionaire Tom Steyer.

With the Nevada legislature out until 2019, anti-fossil fuel groups are chasing down anti-fracking opportunities like a weary traveler after a mirage in the desert – this time by suing the BLM for “sidestepping” the National Environmental Protection Act (NEPA) claiming BLM didn’t “adequately evaluate the effects of fracking in and near Nevada’s rare wetlands.”

CBD claims in its press release that:

“BLM failed to consider the consequences of oil drilling in the area, from contamination of critical desert water sources to emission of climate-altering greenhouse gases.”

These “Keep It In the Ground” groups keep on denying science.

Several studies have concluded that fracking is not a major threat to drinking water. After five years of research, the U.S. EPA released its final study earlier this year on fracking and groundwater and found no evidence of widespread contamination. As for greenhouse gases, EPA released its 2017 final Greenhouse Gas Inventory and the data clearly shows that methane emissions from both natural gas and petroleum systems have declined significantly since 1990. These emissions also decreased from 2014 to 2015 – at a time when natural gas production hit record highs. U.S. carbon emissions have fallen 14 percent since 2005, reductions expert after expert have largely credited to increased natural gas use.

CBD also states in its press release that its argument is based on the following:

“The BLM sidestepped the National Environmental Protection Act in neglecting to update its environmental assessment for the sale, the lawsuit argues. Most concerning, the outdated assessment used did not adequately evaluate the effects of fracking in and near Nevada’s rare wetlands.”

On June 15, 2017, the Las Vegas Review Journal reported on the lack of interest in Nevada’s BLM auction from oil and gas producers:

“The federal Bureau of Land Management received bids on just three of 106 parcels of public land it offered for oil and gas leases during a quarterly auction Wednesday that drew protests from conservation groups. Of the 196,000 acres on the auction block in Eureka, Lander and Nye counties, fewer than 5,800 acres drew competitive bids.”

The “lack of interest” by oil and gas producers seemed to have left the anti-fossil fuel groups who protested the sale with disappointment. The Las Vegas Review Journal reported on the reaction by WildEarth Guardians:

“The results — or lack thereof — left environmental advocates scratching their heads. ‘We’re glad the whole bunch didn’t sell … but it raises questions about what the hell the BLM is doing.’ At least some taxpayer money was spent to study and prepare the parcels for sale, but all that funding and effort ‘seems to have gone to waste.’”

Wait a minute, so Sierra Club and CBD’s lawsuit is based on the claim that the “BLM sidestepped” NEPA and that BLM used an “outdated assessment” to evaluate the “effects of fracking in and near Nevada’s rare wetlands” – yet another anti-fossil fuel group, WildEarth Guardians, tells the Las Vegas Review Journal that money was in fact spent to study and prepare parcels for the June lease sale.

These “Keep It In the Ground” groups are really contradicting one another. Despite the fact that these anti-fossil fuel groups aren’t on the same page, Sierra Club and CBD claims are nevertheless false. The BLM website makes available to the public the “Finding of No Significant Impact” document, which is likely the “study” WildEarth Guardians reportedly made reference to in the Las Vegas Review Journal’s news findings back in June. NEPA was in fact taken into account by BLM when the lease sale decision was made. The BLM explains in the lease sale documents that a NEPA analysis is not to be conducted until “leases enter into development stage, wetlands and cultural resources would be further addressed through additional project- and site-specific NEPA analysis.”

WildEarth Guardians told the Las Vegas Review Journal:

“Nevada is marginal for oil and gas in the first place. Why is the BLM even trying to sell these leases in the first place?”

Here at Energy in Depth, we couldn’t agree more – Nevada is marginal for oil and gas development, but mineral and property rights are important, as is access to development on public lands. With that said, our question juxtaposed to WildEarth Guardian – we want to know why “Keep It in the Ground” groups are trying to ban fracking in Nevada in the first place?

Source: Energy In Depth

 

#ExxonKnew Lawyer Leads San Francisco Lawsuit Against Oil & Gas Companies

This week, two California cities, San Francisco and Oakland, announced they are suing five oil and gas companies for allegedly causing global sea levels to rise. For those following the #ExxonKnew saga, it will come as no surprise that this is just the latest component of their campaign.

The lawsuit also comes just after the release of an #ExxonKnew study that tried to tie sea level rise to specific companies, and the lawsuit cites #ExxonKnew reporting paid for by anti-fossil fuel foundations.

In seeking to sue ExxonMobil and other oil and gas companies for contributing to climate change, San Francisco hired the one lawyer who has spent the last decade conspiring with activists to try and figure out a way to blame individual companies for global warming.

So let’s take a look at Matt Pawa, the lawyer hired by the plaintiffs to argue their case.

Pawa attended the now infamous 2012 conference in La Jolla, California, where attendees strategized how to hold companies accountable for “climate change damages.” He also attended the secret January 2016 #ExxonKnew meeting at the Rockefeller Family Fund offices where activists strategized ways to “establish in the public’s mind that Exxon is a corrupt institution” and discussed “avenues for legal actions” against the company.

Pawa also gave a presentation to state attorneys general before their March 29, 2016, press conference with Al Gore announcing additional investigations of ExxonMobil. When the Wall Street Journal reached out to Pawa to inquire about his role in the briefing, Pawa emailed Lem Srolovic at the New York AG’s office, asking what he should do. Srolovic replied, “My ask is if you speak to the reporter to not confirm that you attended or otherwise discuss the event.” In other words: don’t tell the media the truth.

Pawa is closely tied with several groups involved in the #ExxonKnew campaign. He previously sat on the board of the Climate Accountability Institute, which “manipulated academic research to smear Exxon,” according to one report. Before starting his own practice, he worked at Cohen Milstein, the law firm that administered the subpoena from the U.S. Virgin Islands Attorney General to ExxonMobil. Pawa is also on the board of the Center for International Environmental Law, the group responsible for the Smoke & Fumes website, which alleges the fossil fuel industry used the “tobacco playbook” to sow doubt about climate change.

Pawa brought a similar lawsuit against fossil fuel companies in 2010, alleging that they were responsible for melting sea ice that had protected an Alaskan village from storms. It was dismissed for lack of standing and Pawa’s appeal failed. Pawa later sued ExxonMobil for an MTBE spill in New Hampshire, resulting in a $236 million judgment against the company.

InsideClimate News published an article on Pawa in 2010, in which Pawa said about his effort to link ExxonMobil to tobacco companies:

“We’ve only just begun to fight. Think where tobacco litigation was in the 1950s and 1960s – there were cases tried to defense verdict after defense verdict. The lawyers doing that? Many of them went bankrupt or came close. You learn by doing, and you learn which cases to try and which theories work. Maybe someone will come by ten years from now and think of something new, but we’re setting the table for what comes after.” (emphasis added)

Pawa’s firm was absorbed by Hagens Berman Sobol Shapiro earlier this month “in an effort to pursue climate change litigation against companies.”

The lawsuit comes on the heels of several other California communities suing 37 fossil fuel companies earlier this summer for causing climate change. Environmental activists are pushing California Attorney General Xavier Becerra to launch his own #ExxonKnew investigation, even as parallel investigations by the New York and Massachusetts attorneys general remain locked up in court.

So what does the lawsuit say? It faults the five oil and gas companies for knowing about climate change while continuing to meet the energy demands of consumers, including residents and government officials in cities like San Francisco and Oakland:

“Even today, with the global warming danger level at a critical phase, Defendants continue to engage in massive fossil fuel production and execute long-term business plans to continue and even expand their fossil fuel production for decades into the future.”

But there are a number of problems with this line of reasoning, the most obvious of which is that we’re all responsible for contributing to climate change. The residents of San Francisco drive cars and fly in planes powered by petroleum and turn on lights and Instagram from phones that are recharged at least in part by natural gas power plants. Our society runs on fossil fuels and it is hypocritical for San Francisco to sue these companies for providing a product its citizens rely on. California emitted 440.4 million metric tons of CO2 equivalent in 2015.

The plaintiffs fault oil and gas companies for knowing about climate change in the mid-20th century, accusing them of ignoring the “warnings” and proceeding “to double-down on fossil fuels.” But they later admit that the public had also been warned about climate change as far back as 1896. It remains unclear why energy producers are to be blamed for this while the city of San Francisco escapes any responsibility, other than the fact that the city would obviously not sue itself.

The lawsuit also bizarrely criticizes the companies for correctly stating that natural gas reduces global carbon dioxide emissions:

“Exxon’s ‘Lights Across America’ website advertisement states that natural gas is ‘helping dramatically reduce America’s emissions’ even though natural gas is a fossil fuel causing widespread planetary warming and harm to coastal cities like San Francisco and the use of natural gas competes with wind and solar, which have no greenhouse gas emissions.”

According to Carbon Brief, a UK-based website covering climate issues, “Increases in [natural] gas electricity generation is the largest driver, account for 33% of the total emissions reduction in 2016.” (emphasis added)

San Francisco also faults ExxonMobil and BP for supposedly understating the expected market share of electric vehicles in their energy forecasts. But it is unclear exactly how a forecast can be understated, as it predicts something, based on presently available information, which has not yet occurred. That would be similar to accusing a meteorologist for understating next Sunday’s temperature – you cannot know if they were correct until Sunday arrives.

Undaunted, the plaintiffs justify their accusation by suggesting “electric vehicle technology has taken off.” But the electric vehicle market share in the U.S. declined each year between 2013 and 2015, and in 2016 electric vehicles were still less than one percent of the U.S. market share. The plaintiffs further justify their accusation that ExxonMobil and BP “understated” electric vehicle demand by referencing a 2015 General Motors proclamation that merely states the “future is electric.”

Why are the words of GM valued as a more accurate prediction of the future than the words of ExxonMobil and BP? We’ve heard bold predictions about the future of electric vehicles before, like when Thomas Edison made a prediction in 1914 that still hasn’t panned out more than a century later:

“I believe that ultimately the electric motor will be universally used for trucking in all large cities, and that the electric automobile will be the family carriage of the future. All trucking must come to electricity. I am convinced that it will not be long before all the trucking in New York City will be electric.”

The lawsuit closes by saying:

“Defendants have inflicted and continue to inflict injuries upon the People that require the People to incur extensive costs to protect public and private property, against increased sea level rise, inundation, storm surges, and flooding.”

That’s a pretty spurious argument on which to rest your case. The public has known for decades of the link between burning fossil fuels and global warming, yet society has continued to use oil and natural gas because there are still no alternatives that match their low-cost, their energy density, and their dispatchability.

San Francisco continues to use fossil fuels as it seeks to blame others for that use, which is a perfect explanation as to why this lawsuit is but the latest hypocritical component of a larger political campaign.

Source: Energy In Depth

 

Bank Stocks Are Starting to Look Attractive Again

Don’t look now, but bank stocks are staging a comeback.

The KBW Nasdaq Bank Index of large U.S. commercial lenders has risen 3.2% this week, jumping past the broader S&P 500, which is little changed from the start of the week.

Boosting the index’s allure: a rise in bond yields. Treasury yields have climbed in recent sessions as investors increasingly believe the Federal Reserve will raise rates in December. The yield on the benchmark 10-year U.S. Treasury note recently was at 2.245%, compared to 2.202% last Friday.

On Wednesday, the Fed’s dot plots showed that 12 of 16 central bank officials expected one more rate increase this year and three next year. The revelation took some investors by surprise. A streak of soft inflation data this summer had many investors and analysts doubting how quickly the Fed could raise rates.

Investors now see a 73% chance of one or more additional rate increases by the end of the year, according to federal-funds futures tracked by CME Group, compared to a roughly 50-50 split before the Fed’s meeting.

Renewed bets on higher rates could give bank stocks a fresh boost. Expectations that President Donald Trump would slash taxes and loosen regulations pushed financial stocks higher in the months after the election. This year many of those so-called Trump trades unwound or reversed as uncertainty grew about course of policy changes in Washington.

With the U.S. economy looking stronger than it did in the first half of the year and the Fed keeping the door open for future rate hikes, analysts are seeing new opportunities in bank stocks.

“If rates have indeed seen their lows for the year, then we think banks in particular can have a run,” Bank of America Merrill Lynch analysts wrote in a research note Friday.

Source: WSJ

 

Apple Falls Again as iPhone 8 Hits Shelves

Lines to enter Apple Stores stretched around New York City blocks Friday morning but shares of the technology giant are falling again.

Apple dropped 1.5% to $151.10 in morning trading, worst among S&P 500 technology stocks, as the iPhone 8 and iPhone 8 Plus went on sale. Apple’s stock is down for the third in a row and was on pace for its lowest close since Aug. 1. Shares remain up 30% for the year.

Analysts question whether consumers are taking a wait-and-see view of the two new models, with the pricier iPhone X scheduled to roll out in another six weeks.

Investors are attempting to parse whether sluggish iPhone 8 sales will offset by pent-up demand for the iPhone X. Micheal Olson, an analyst at Piper Jaffray & Co., on Friday boosted his price target for Apple’s stock to $196 from $190, saying that the potential for fewer iPhone 8 sales won’t matter much since prospective buyers are waiting for the iPhone X.

“Any weakness for early sales of iPhone 8 could be a case of ‘short-term pain for long-term gain,’” he wrote.

It’s not uncommon for the excitement surrounding new Apple products to waver after their unveiling. Apple’s stock decline since Sept. 12, when Apple showed off its iPhone 8, iPhone 8 Plus and iPhone X, through Thursday was 4.6%, the steepest since 2013, according to WSJ Market Data Group. Back then, shares fell 5.5% from the date that iPhone 5S and iPhone 5C were announced until the phones went on sale.

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Source: WSJ

 

Twin Eagle Expands Northeast With West Virginia Frack Sand Terminal Acquisition

Twin Eagle Sand Logistics LLC said Sept. 21 it acquired a West Virginia frack sand terminaling asset, marking the Houston-based company’s entry into the Northeast Marcellus and Utica shale market.

Twin Eagle purchased the terminaling asset, located near Bridgeport, West Virginia, from Process Transloading Bridgeport for an undisclosed amount. The terminal serves the southern Utica and Marcellus sand logistic markets with more than 130 railcar spots and 20,000 tons of flat and silo storage, according to the company release.

Despite already being well-established shale plays, Griff Jones, Twin Eagle’s CEO, said he believes the Marcellus and Utica have “significant growth potential given sand technology advancements and infrastructure additions needed to address logistical constraints.”
Source: Oil & Gas Investor

 

Stocks to Watch: Facebook, Apple, Alphabet, Sprint, Texas Instruments, Finish Line

Among the companies with shares expected to trade actively in Friday’s session are Facebook, Apple, Alphabet, Sprint, Texas Instruments and Finish Line.

Facebook shares edged down 0.2% premarket. The social-media giant said just before the market closed Thursday that it has struck a deal with congressional investigators to share Russia-backed ads purchased during the U.S. presidential campaign. CEO Mark Zuckerburg said the company is taking additional steps to protect election integrity on its platform moving forward.

Shares of Apple fell 0.6% premarket after extending recent declines Thursday. They are now down nearly 5% from where they were before its highly-anticipated product launch event last week. Initial reviews of the iPhone maker’s smart watch have been lackluster, and the company acknowledged problems with cellular connectivity.

Google-parent Alphabet shares inched down 0.3% before the opening bell after the search-engine giant’s confirmation that it will issue refunds for ads bought through its systems that ran on websites with fake traffic.

Shares of Sprint advanced 3.9% premarket after Reuters reported that the wireless carrier is close to reaching a deal to merge with fellow telecom giant T-Mobile US. T-Mobile shares were up 1.2%.

Texas Instruments shares were little changed premarket. The chip maker raised its quarterly dividend by 24% and said its board added $6 billion in share repurchase authority.

Finish Line shares fell 10% premarket following the athletic apparel retailer’s quarterly earnings and revenue miss. The firm also cut its full-year outlook.

Shares of CarMax climbed 2.9% premarket. The used car retailer exceeded Wall Street’s profit and sales expectations in the most recent quarter.

Shares of Versartis fell 85% before the opening bell after the company gave a downbeat trial result for its growth-hormone deficiency treatment.

Hewlett Packard Enterprise shares edged up 0.8% premarket after Bloomberg News first reported that the business-technology giant plans to cut its workforce by 10%.

Shares of General Motors were up less than 0.1% premarket. The auto maker is laying off more than 250 workers from an engine factory in Canada and trimming production at two U.S. facilities.

This is an expanded version of the “Stocks to Watch” section of our Morning MoneyBeat newsletter. To receive it every morning via email, click here: http://on.wsj.com/MoneyBeatUSSignup

Source: WSJ

 

OPEC Says Winning Battle To Curb Oil Glut

Output cuts by OPEC and other oil producers are clearing a supply glut that has weighed on crude prices for three years, ministers said at a meeting on Sept. 22 to review the pact that expires in March 2018.

OPEC, Russia and several other producers have cut production by about 1.8 million barrels per day (bbl/d) since January.

The group is considering extending the deal beyond its March expiry, although two sources said the Sept. 22 gathering was unlikely to make a specific recommendation on an extension.
Source: Oil & Gas Investor

 

Libya and Nigeria Open Their Oil Spigots—Energy Journal

Here’s your morning jolt of news, insight and analysis on the global energy business.

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OPEC’S ‘PROBLEM CHILDREN’ ARE HOLDING DOWN OIL PRICES

A flood of oil from strife-torn members Libya and Nigeria is threatening to derail a deal by major oil producers to cut the global crude supply and prop up oil prices, reports The Wall Street Journal.

Libya and Nigeria are exempt from an agreement brokered last year by the Organization of the Petroleum Exporting Countries and other producers to cut about 2% of the world’s oil production.

The African countries’ oil industries at the time were crippled by civil unrest and weren’t expected to recover any time soon, write Benoit Faucon and Summer Said and Sarah Kent.

But since then new output from Libya and Nigeria has almost wiped out half of the cuts achieved by OPEC’s other members—over 1.2 million barrels a day.

OPEC summoned the countries’ oil chiefs to explain their production in a meeting in Vienna on Friday.

Libya and Nigeria are pumping out so much new oil that, combined with robust output from the U.S., they are keeping the world well supplied with crude and weighing down prices, said Ian Taylor, chief executive of Vitol Group, the world’s largest independent oil trader.

Mr. Taylor said he doesn’t see oil reaching $60 a barrel this year. “I would be very surprised to see it with a six in front of it before the end of the year.”

MARKETS

Crude prices fluctuated between gains and losses Friday while an OPEC meeting was underway amid uncertainty about whether major oil producers will extend a deal to limit the oil supply.

Brent crude, the global oil benchmark, fell 0.12% to $56.36 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading dwon 0.36% at $50.37 a barrel.

LOWER U.S. OIL PRICES ARE A SHOT IN THE ARM FOR CRUDE EXPORTS

Hurricane season wreaked havoc on U.S refineries but the disruption is proving to be a boon for exports, write Alison Sider and Lynn Cook.

“U.S. oil is trading at the biggest discount to the global price in two years, helping extend a boom in exports of crude from American shale fields to refiners in Europe and Asia,  After Hurricane Harvey hammered the Gulf Coast last month, the price of Nymex crude sank to as much as $6.30 a barrel below its European counterpart, Brent—the widest gap since August 2015,” the Journal reports.

WORLD IN SUSPENSE AS TRUMP MULLS PULLING OUT OF IRAN DEAL

U.S. officials are gaming out multiple scenarios for the nuclear agreement with Iran, which President Donald Trump has publicly floated pulling out of.

Mr. Trump has long derided the deal negotiated by the Obama administration, Europe, Russia and China, saying it allowed Iran to continue building out its nuclear program. The Journal’s Felicia Schwartz writes that the options “aren’t as simple as staying in the deal or leaving it.”

Angry over Iran’s other moves like advances in its ballistic missile program, Mr. Trump could declare the deal isn’t in the interest of American national security.

He could decide to say Iran isn’t in compliance with the deal. Or he could go with France’s recommendation of opening a separate round of negotiations about Iran’s ballistic missile program.

Ending the Iran deal would have implications for the oil market. Iran has added about a million barrels a day to the oil market since sanctions were lifted in January 2016.

Oil prices would likely rise if the deal fell apart, on the prospect that Iran’s oil exports would fall and create a supply shortage.

Source: WSJ

 

WSJ Wealth Adviser Briefing: Stock Pickers Adapt, Household Wealth at Record

Adapt or die. Whenever I think of this idiom, I think of “Moneyball,” the movie starring Brad Pitt as Billy Beane, the Oakland A’s general manager who helped usher in baseball’s focus on statistical analysis. In that movie, when faced with sticking to the status quo with a broken baseball franchise or trying to maximize his opportunity by finding value where others saw none, the Pitt character says “adapt or die”.

Whenever I find stories that inspire that phrase in my mind, I like to share them. Here, a look at how stock pickers are adapting to a passive world by trying to profit from it:

In what’s emerging as a nascent line of market research across Wall Street, investors are attempting to puzzle out how passive investing creates opportunities—or pitfalls—for individual stock trading. They are looking at factors such as the percentage of a stock owned by index funds and money flows into and out of such funds as they size up whether to buy or sell shares of a company.

This new type of analysis shows how the rise of passive investing—tracking a basket of securities rather than picking individual ones—is changing the makeup of markets. Even active investors are now resigning themselves to the influence of indexing and are contriving ways to take advantage of its impact.

The research, by investors and academics alike, is largely in its infancy, many say. And fundamental factors, such as valuations, generally remain most important to stock pickers. But with passive investing this year representing about 29% of assets in domestic stock funds alone, according to Moody’s Investors Service —a figure the firm sees topping 50% as soon as 2021—investors who pick single stocks are paying attention.

“When I think about what makes a stock tick, it comes back to earnings, the quality of management and the ability of a company to execute, but being in an ETF is a factor to be aware of,” said Christopher Marinac, director of research at Atlanta-based FIG Partners, of exchange-traded funds, a popular form of index investing.

Read on for more, and Happy New Year.

Below, some of the best analysis and insight from WSJ writers and columnists, and occasionally beyond, on investing, the wealth-management business and more.

TALKING POINTS
We’re rich! The total net worth of U.S. households pushed further into record territory, hitting $96.2 trillion in the second quarter of 2017, propped up by improving home values and stock prices.

Streetwise. As the central bank sets out to reverse quantitative easing, there are at least three reasons not to worry too much about its impact on markets—and one good reason to be concerned.

Thursday’s markets. The Dow Jones Industrial Average and the S&P 500 ended a streak of record closes, as investors took stock of the Federal Reserve’s renewed commitment to raise interest rates again this year. The Dow fell 53.36 points, or 0.2%, to 22359.23. The S&P 500 slipped 0.3% to 2500.60, and the tech-heavy Nasdaq Composite fell 0.5% to 6422.69.

PLANNING AND INVESTING
Actively underperforming
. Between June 2016-17, 57% of actively managed large-cap funds underperformed the S&P 500, according to S&P Dow Jones Indices.

Indexing insightWhether you believe in “strategic beta” or old-fashioned market-cap indexing may not be important as they both can provide low-cost diversified and tax-efficient portfolios, writes WSJ Wealth Adviser contributor Allan S. Roth. What is important, however, is picking an approach and sticking with it.

BUSINESS AND PRACTICE
Adviser Voices. Michael Conway, president and chief executive of Conway Wealth Group, positions his firm to be the CFO to CEOs–managing their lives in a holistic way that considers more than investment strategy.

Adviser Profile. Faith Xenos, founding partner of Singer Xenos Schechter Sosler Wealth Management, says one of the greatest challenges facing clients in transition is a lack of access to critical financial- and estate-planning information. So her firm helps clients create an “If I Die” document that compiles account numbers, investments and other pertinent information.

ADVISER CALENDAR
– Transparency Task Force Transparency Symposium / Boston, Sept. 28
– APFA Financial Advisor Boot Camp / Los Angeles, Oct. 5-6
– IMCA Private Wealth Advisor (PWA) 2017 / Chicago, Oct. 16-17
– FPA Minnesota 2017 Annual Symposium / Minneapolis, Oct. 16-17
– ADISA 2017 Annual Conference / Las Vegas, Oct. 23-25
– ACA Fall Compliance Conference / San Diego, Oct. 25-27
– FinCon 2017 / Dallas, Oct. 25-28
– The SRI Conference / San Diego, Nov. 1-3
– ACP Annual Conference / San Antonio, Nov. 8-11

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The WSJ Wealth Adviser Briefing covers topics of interest to wealth managers, financial planners and other advisers. It’s delivered to subscribers by email each workday morning; you can sign up for email delivery here: http://on.wsj.com/WealthAdviserSignupPlease send tips, suggestions or other comments to michael.wursthorn@wsj.com or Wealth Editor Brian Hershberg at brian.hershberg@wsj.com.

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Source: WSJ

 

WSJ City: North Korea Threatens H-Bomb, EU Urges End to Brexit Stalemate

Good morning from the WSJ City desks in London. Be the first with high-value stories. Download WSJ City for on your mobile and let us keep you in the loop from 6am. The WSJ City app. Upwardly mobile. iPhone and Android. Your friends and colleagues can sign up to this newsletter here.

MUST READS FROM WSJ CITY

North Korea’s foreign minister said the country could detonate a hydrogen bomb over the Pacific Ocean in response to President Donald Trump’s speech before the United Nations that warned the US would ‘annihilate’ North Korea if forced to defend itself or its allies. WSJ City

Ahead of a closely watched speech on Brexit by UK Prime Minister Theresa May, the European Union’s chief negotiator said Britain needs to speedily present concrete proposals on all the main sticking points for divorce talks to advance. WSJ City

While Angela Merkel’s position as chancellor looks safe, Sunday’s German election could throw up surprises, with implications for the markets, the euro and the European economy. Here are six things to know. WSJ City

As the US Federal Reserve sets out to reverse quantitative easing, there are at least three reasons not to worry too much about its impact on markets—and one good reason to be concerned, writes WSJ’s James Mackintosh in his Streetwise column. WSJ City

A global rating agency has once again downgraded China, and there is little new information for investors to digest. It may however be worth reading between the lines, writes Anjani Trivedi for Heard on the Street. WSJ City

After a long absence, global investors are pouring money into hedge funds that focus on China, India and other emerging markets. Much of the cash flood is originating in the US. WSJ City

Stock pickers, who for so long decried the rise of passive investing, are now trying to profit from it. Across Wall Street, investors are attempting to determine how passive investing creates opportunities–or pitfalls–for individual stock trading. WSJ City

IN THE PAPERS

Theresa May is expected to break the Brexit negotiations stalemate in her Florence speech today by offering EU citizens living in the UK greater legal protections. FT (£)

May will indicate in her speech that the UK is willing to observe the rules of the EU for two years post-Brexit in an attempt to prevent a ‘cliff-edge’ exit from the union and spur positive sentiment with EU negotiators. The Times (£)

The government has told the financial services industry that Britain will develop a distinct regulatory framework to bolster the competitive advantage of banks, fund managers and insurers post-Brexit. FT (£)

UK banks and building societies will be able to carry out immigration checks on 70 million accounts from January 2018 as part of Theresa May’s plan to create a ‘hostile environment’ for illegal immigrants. The Guardian

Applications for British citizenship from the EU’s ‘original’ 14 member countries has tripled since the year before the Brexit referendum, according to Home Office data. FT (£)

MARKETS TODAY

European markets fell slightly at the open on Friday, as renewed threats from North Korea soured sentiment, and a fall in base metal prices hit London’s commodity-focused companies.

The FTSE 100 opened down 0.2%, while the Stoxx 600 Europe fell 0.1%. Miners posted further losses as iron-ore prices extended Thursday’s near-5% decline. Copper, aluminium, nickel and zinc were also in the red after S&P downgraded China’s credit rating on Thursday.

Assets perceived to be safe havens including the yen and gold edged higher after North Korea’s foreign minister said the country could detonate a hydrogen bomb over the Pacific Ocean. The latest show of aggression rattled Asian markets, with most benchmarks falling.

“If you look around there are just not a lot of reasons to buy,” said Chris Weston, chief strategist at IG Markets. “The commodity trade is under pressure, people are talking about tightening in various economies, [and] the North Korean hydrogen threat is keeping people on their toes.”

COMING UP

Theresa May’s Brexit speech in Florence.

Source: WSJ

 

Beast of Burden – Are Higher California Margins Worth The Hassle For Refiners?

California’s 12 remaining refineries don’t feel much love from their native state. The refinery fleet is particularly sophisticated — capable of refining mostly heavy and sour crude oil into the ultra-clean transportation fuels that state rules require. But state regulators seem to treat refiners like unwanted guests, to the point that rules have been put in place to actively encourage the shift from petroleum-based fuels to lower-carbon alternatives. The reward for refiners’ pain comes in the form of higher refining margins — particularly during unplanned outages. Today we weigh the rewards of higher gasoline and diesel prices today against a questionable future for refining in the Golden State tomorrow.

Source: RBN Energy

 

Wayne Forest Lease Sales Changing Lives With Nearly $7 Million To Date

The Bureau of Land Management (BLM) conducted a competitive online auction today for federal minerals on 191 acres located in the Wayne National Forest (WNF). The combined sale of this acreage – all of which is located in Monroe  County, Ohio — totaled $192,023.84, bringing the grand total for the three WNF lease sales thus far to just under $7 million. That grand total only accounts for five percent of the potential acreage available to lease in WNF.

The state of Ohio will receive approximately 25 percent of today’s sale, and each county with WNF acreage will also receive a share of the proceeds.  This is certainly good news for the people who live and work in Monroe County, as Monroe County Commissioner Mick Schumacher recently told the Times Leader,

“The money goes to the county to be divided. The school district gets 68 percent, and the rest is to be divided between the townships, local governments and levies. This is only initial sales, not royalties.”

But it’s not just the direct revenue from WNF lease sales and royalty payments that are having significant impacts. The real potential economic driver going forward is access to larger private units that will now be available for exploration. Previously, some private minerals and lands adjacent to the public land leased today were held hostage because WNF is a non-contiguous patchwork of federal and private lands and minerals weaved together, which is problematic for economic oil and natural gas development. Thanks to this recent lease sale, more exploration on adjacent private lands can be developed, and with that comes significant tax benefits from property taxes paid on production. As you can see below, Monroe County has watched its property taxes from production skyrocket since shale development began. In 2015 the county collected over $3.4 million.

With 37,904 acres yet to be leased in the Wayne through competitive online auction sales, WNF leasing and development are going to provide tremendous benefits for nearby communities in the coming years — especially if local schools near Ohio are any indicator.

Local schools see big benefits

The oil and gas industry has truly been transformational for children in Appalachia. Monroe County schools are reporting that revenue from the WNF lease sales combined with taxes from oil and natural gas development has enabled them to have more resources available for students.  This added funding has helped curtail the recent trend of students transferring to schools that have traditionally had more resources available.  As Beallsville High School Head Football Coach Larry Deem recently said,

“It’s a step in the right direction, and hopefully the kids are starting to see it, too. We will have what we are supposed to have (enrollment wise). As of right now, this is the first year we don’t have any eighth graders open-enrolled out of Beallsville for the first time since I’ve been here.” (Emphasis added)

To put the significance of this into perspective, it’s important to understand the school has been in dire need of funding to add and improve resources. For instance, the Beallsville High School football team has been using a two-room trailer that has only one restroom,  no hot water and a leaky roof as its locker room. Thanks to local oil and gas leasing and development, including in WNF revenue, the school is now able to make improvements. As Beallsville Superintendent Jeffrey Greenley recently reported to the Intelligencer,

“There is a legitimate business reason to invest in our campuses. Every year we lose 102 students to Barnesville, and in 2016 we also lost another 102 to Shadyside. We receive $6,000 per student, and if I keep 50 kids from leaving the district for three years, we make our full investment back. I don’t think they’re going to come back, but if I can keep them from going there in the first place is the goal. … We want to compete for our kids, and we have to invest in these programs to keep them.”

Greenley reported that one school in his district has been able to spend $948,000 on academic materials just within the last 15 months, with plans to spend an additional $200,000, thanks to revenue from oil and gas.

But Beallsville is not the only school district in the region that has benefited. Thanks to property taxes paid on production combined with proceeds from the mineral sales in WNF, the Switzerland of Ohio Local School District recently made a $700,000 improvement to their athletic field, replacing grass with artificial turf. This is a repair that should last 15 years before it needs replaced.  In fact, all three schools in the district are planning to make improvements to their athletic complexes, including their softball and baseball fields, all funded exclusively by oil and gas money.

In Monroe County particularly, gaining access to these federal minerals is vital, which is why the local schools have overwhelmingly supported the leasing of federal minerals. This is just one more example of many of how disconnected fringe environmental activists really are out of touch with the people who live in work in these communities. The fact is, fracking is positively changing lives and lifting communities and schools in Appalachia.

Source: Energy In Depth

 

Marketed: Chevron Permian Basin Assets, Texas/New Mexico

Affiliates of Chevron Corp. (NYSE: CVX) has Permian Basin assets in New Mexico and Texas for sale through two, sealed-bid offerings being handled by EnergyNet.

Chevron Midcontinent LP is selling operated assets and about 8,100 gross (7,500 net) acres in the South Cowden Field Ector County, Texas. The offer includes 31 producing wells and a six-month average net income of about $32,000 per month.
Source: Oil & Gas Investor