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Home Weather “Arctic air freezes Permian shale fields”… Fake news?

“Arctic air freezes Permian shale fields”… Fake news?

Guest “how to spot fake news” by David Middleton

Reporting from Ice Station Dallas

Fake news isn’t essentially false or unfaithful.

U.S. oil output plunges as Arctic air freezes Permian shale fields
By JAVIER BLAS AND SHEELA TOBBEN on 2/16/2021

(Bloomberg) –U.S. oil manufacturing has plunged by greater than 2 million barrels a day because the coldest climate in 30 years brings havoc to key producing states that hardly ever should take care of frigid Arctic blasts.

Oil merchants and firm executives, who requested to not be recognized, lifted their forecasts for provide losses from an earlier estimate on Monday of 1.5 million to 1.7 million barrels. They stated the losses had been notably giant within the Permian Basin, probably the most prolific U.S. oil area, which straddles West Texas and southeast New Mexico. Output cuts had been additionally vital within the Eagle Ford, in southern Texas, and the Anadarko basin in Oklahoma.

Two million barrels can be the equal of about 18% of total U.S. crude manufacturing, primarily based on the newest authorities knowledge.

[…]

The Permian oil outage helped to push West Texas Intermediate, the crude benchmark within the U.S., above $60 a barrel on Monday for the primary time in additional than a yr. Since then, oil costs have fallen barely as a result of U.S. refineries have additionally closed because of the chilly, lowering the quantity of crude wanted proper now. Energy Aspects Ltd., a marketing consultant, estimated that 3.1 million barrels a day of refining capability was down as of Monday.

[…]

World Oil

Blas asserts that U.S. crude oil manufacturing is down by 18%. While I’ve little doubt that Permian Basin oil & gasoline manufacturing has been impacted by the deep freeze, I haven’t been capable of finding any onerous knowledge but… But my Google searches preserve linking again to variations of the Javier Blas article quoted above and different Bloomberg sources, which cite nothing that’s verifiable. In one other instance Jonathan Garber of Fox Business cited Bloomberg’s Javier Blas and little else in an article asserting a 27% drop in U.S. manufacturing.

OIL Published 21 hours in the past
Texas storms trigger epic drop in U.S. oil manufacturing
‘It really is a perfect storm’

By Jonathan Garber FOX Business

Frigid temperatures knocked out electrical energy throughout Texas and resulted in one of many largest U.S. oil manufacturing disruptions ever.

Shut-ins associated to the winter storm have eliminated about 3 million barrels of day by day oil manufacturing, or 27% of U.S. output, a lot of which comes from the oil-rich Permian Basin positioned in West Texas and Eastern New Mexico.

[…]

Occidental Petroleum Corp., the No. 2 oil producer within the Permian Basin, on Tuesday gave prospects a power majeure discover, in line with Bloomberg, alerting them deliveries wouldn’t be made on account of manufacturing snafus brought on by the frigid temperatures.  An organization spokesperson didn’t reply to FOX Business’ request for remark.

Other firms that shut in amenities embody oil majors Chevron Corp. and ExxonMobil Corp.

Chevron was compelled to droop manufacturing within the Permian Basin whereas ExxonMobil closed refineries within the Houston space. Numerous different wells and refineries throughout the area had been compelled to quickly shut-in.

Fox Business

So… Bloomberg says that Oxy delivered a power majeure discover to prospects (Winter Storm Younger Dryas is certainly a power majeure)… But Oxy was too busy to substantiate what Bloomberg informed Fox Business. The hyperlink is to an article that explains what power majeure is. Chevron hasn’t introduced something about Permian Basin manufacturing and Exxon shutting in refineries within the Houston space is completely irrelevant to Permian Basin or U.S. crude manufacturing. A whole lot of refineries have been compelled to close down by Winter Storm Younger Dryas.

This is what Oxy needed to say:

Monday, February 15, 2021

Occidental Reschedules Fourth Quarter and Full-Year 2020 Results Due to Impacts of Severe Winter Storm

Monday, February 15, 2021 8:30 PM EST

HOUSTON – February 15, 2021 – Occidental (NYSE:OXY) introduced in the present day it has rescheduled its upcoming earnings launch and convention name on account of impacts of the extreme winter storm. The firm will announce its fourth quarter and full-year 2020 monetary outcomes after shut of market on Monday, February 22, 2021, and can maintain a convention name to debate outcomes on Tuesday, February 23, 2021, at 1 p.m. Eastern/ midday Central.

The convention name could also be accessed by calling 1-866-871-6512 (worldwide callers dial 1-412-317-5417) or by way of webcast at oxy.com/buyers. Participants might pre-register for the convention name at https://dpregister.com/sreg/10150650/df971440ac.

Fourth quarter and full-year 2020 monetary outcomes can be accessible via the Investor Relations part of the corporate’s website. A recording of the webcast can be posted on the website after the decision is accomplished.

Oxy

What’s the purpose in reporting guesses from “oil traders and company executives, who asked not to be identified” and second-hand unconfirmed rumour? While some firms will most likely quickly announce impacts to their manufacturing, basin-wide and nationwide manufacturing knowledge gained’t be accessible for some time.

This bit from the Javier Blas article can be “odd”…

The Permian oil outage helped to push West Texas Intermediate, the crude benchmark within the U.S., above $60 a barrel on Monday for the primary time in additional than a yr. Since then, oil costs have fallen barely as a result of U.S. refineries have additionally closed because of the chilly, lowering the quantity of crude wanted proper now.

OK… So, the manufacturing outage pushed WTI up, then the conclusion that refineries had been offline pushed it again down. Well, then, this calamitous collapse in crude oil and refined product manufacturing ought to have pushed gasoline futures via the roof… Right?

March 2021 Gasoline Futures, CME Group

March gasoline futures did shoot up by about $0.10/gal in heavy buying and selling on 16 February, however the quantity has dropped to nearly nothing. The similar sample occurred with April futures.

April 2021 Gasoline Futures, CME Group

Despite the alleged collapse in US oil manufacturing, gasoline costs are nonetheless on the identical trajectory they’ve been on for the reason that November coup d’état (I don’t give a rat’s @$$ in the event you disagree with my use of this phrase).

This bit from the Fox Business article is hilarious:

Typically, with a hurricane, producers and refiners are given every week’s discover and have loads of time to close of their operations. But this arctic storm took the world unexpectedly, leading to a “disorganized shut-in of these facilities,” Schork stated.

Fox Business

The record-shattering chilly temperatures and winter storm had been precisely forecasted well-ahead of time. No one ought to have been shocked by the climate. The solely actual shock was that nearly the entire wind generators froze, depriving the grid of about 25% of its standard electrical energy era.

While I’ve little doubt that Winter Storm Younger Dryas has quickly impacted crude oil and pure gasoline manufacturing. Assertions that it’s down 18% or 27% are meaningless. We gained’t know the way a lot it’s down or for a way lengthy for days, if not weeks. The disruptions can be nicely behind us by the point they will truly be quantified. The storm and document chilly climate has clearly shut down refineries and made it practically inconceivable for tanker vehicles to ship gasoline in lots of locations.

This clearly charges a faux news score:

“U.S. oil output plunges as Arctic air freezes Permian shale fields”

I don’t even know what a “Permian shale field” is… Would it’s like a subject of Burgess Shale (a Cambrian shale subject)?

We gained’t know if, or how a lot, U.S. oil manufacturing has been affected by Winter Storm Younger Dryas for a number of days, or weeks. The best technique to spot faux news is to search for dramatic headlines primarily based on nameless sources. Of course most mainstream media articles written concerning the oil & gasoline business are faux news.

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