Release The Hounds: Landlocked Oil Starts To Escape To The Gulf Coast [View article]
Yes, it will be interesting to see how this all works out. I'm not sure why refineries would continue switching over to heavy oils if there's a long-term glut of of light sweet crude; the lower price is the only reason I know of to prefer heavy oil.
I've read that the U.S. is still importing about half a million bpd of light sweet to the Gulf Coast, and I would suspect that the majority of the 1 million bpd being imported to the East Coast is also light sweet. I would guess that most of the U.S. production/logistics increases this year will go to substituting away for that imported light sweet (which is a major reason why I think Brent will eventually come under pressure). After that, I'm not sure what's going to happen. Either some U.S. refineries will have to switch back to light sweet, or the export ban will have to be lifted, or something similar...
Release The Hounds: Landlocked Oil Starts To Escape To The Gulf Coast [View article]
Thanks for the comment. I've talked at greater length about railroads elsewhere. Pipeline is much cheaper, but less flexible, and generally takes longer to build out. So I generally expect pipelines to supplant railroads on routes that are expected to produce oil flows over a reasonably long period of time. I can't imagine many routes that are economical for rail transport but not economical for pipeline.
Railroads will continue to move in to serve areas of new production or to relieve other bottlenecks. Bakken is one area where railroads might have longer staying power, simply because Keystone XL could put Canadian oil in competition with Bakken crude for pipeline space.
Release The Hounds: Landlocked Oil Starts To Escape To The Gulf Coast [View article]
I'm pretty sure there has been some Cushing/Gulf Coast rail arbitrage. However, I don't think the infrastructure is in place to move large quantities of oil from Cushing to the Gulf Coast by rail. There's a lot more east/west than north/south rail capacity.
Release The Hounds: Landlocked Oil Starts To Escape To The Gulf Coast [View article]
Thanks for the comment. Obviously, geopolitical factors could prevent Brent from dropping below $100; however, I believe that there is already a significant "risk premium" built into the price, and we're likely to see significant oversupply over the next 4-5 months on the global market.
As for the comparative pricing, I think there is still plenty of refinery demand for light sweet crude. Some of that is on the Gulf Coast, although most of those refineries are configured for heavier oil. But there are still a lot of older refineries on the East Coast that are importing Brent-priced crude from Africa or the Middle East. Phillips 66 just signed a deal for 50K bpd of rail capacity from Bakken to the Bayway refinery in NJ. Delta/Monroe Energy has been talking about the same thing. The new owners of the former Sunoco refinery in Philadelphia also want to stop using imported Brent, and are building rail unloading platforms.
When the pipelines are up and running, it will probably be cheaper to pipe the oil from Bakken to the Gulf Coast (via Cushing) and then send it by barge to the Northeast. (That's somewhat complicated by the fact that only U.S. flagged vessels can carry that oil.) I would guess the combined cost of pipeline and barge would be $8-$10/barrel.
Sharp (SHCAY.PK) has "nearly halted production" of displays for the regular iPad as demand shifts towards the iPad Mini and Apple (AAPL -0.6%) attempts to manage inventory, Reuters reports. Many analysts have already forecast the Mini, which is thinner and much lighter than the 4th-gen regular iPad, will account for a majority of iPad sales in Q1. Higher Mini sales benefit display suppliers AUO and LPL. Due to lower price tags, Apple's average gross profit on Mini sales appears to be lower than its average gross profit on regular iPad sales. [View news story]
I am sure that Apple is seeing very strong sales of the mini, and that this is impacting demand for the full-size iPad. However, I think this story needs to be taken with a big grain of salt. There have been lots of reports of a more significant iPad refresh coming this spring: smaller bezel, thinner profile, and possibly also IGZO screen. If that product is coming out in April or thereabouts, you'd expect production of the current generation to wind down over the next month or two.
Sharp (SHCAY.PK) has "nearly halted production" of displays for the regular iPad as demand shifts towards the iPad Mini and Apple (AAPL -0.6%) attempts to manage inventory, Reuters reports. Many analysts have already forecast the Mini, which is thinner and much lighter than the 4th-gen regular iPad, will account for a majority of iPad sales in Q1. Higher Mini sales benefit display suppliers AUO and LPL. Due to lower price tags, Apple's average gross profit on Mini sales appears to be lower than its average gross profit on regular iPad sales. [View news story]
This comment doesn't say much for the Cornell business school...
The iPad mini has a base selling price that's roughly 34% below the base price for the 4th gen. iPad. So a 40% margin on a base-model iPad mini would be $132 in gross profit, and a (lower) 35% margin on a base-model full size iPad would be $175 in gross profit.
Is RIM Ready To Become A Smartphone Leader Again? [View article]
I don't think it's a "synthetic short". Lots of people out there think RIM is doomed. I've put naked shorts on companies with 20%+ short interest at least twice (that I can recall) in the last two years. (NFLX and JCP)
Is RIM Ready To Become A Smartphone Leader Again? [View article]
That's not a scientific poll. Anybody can vote as many times as they want. Moreover, people who buy iPhones are generally not the people who hang around enthusiast sites.
Is RIM Ready To Become A Smartphone Leader Again? [View article]
If that's true it should help. But RIM still needs to differentiate in order to convince most people that a BlackBerry is not just meant for businesspeople. I own RIMM because I think that the market has been underestimating the probability that the company will make a comeback. But the product would have to be leaps and bounds ahead of iOS and Android for RIM to actually start challenging Apple and Samsung again in terms of subscriber count.
Is RIM Ready To Become A Smartphone Leader Again? [View article]
I agree: but RIM has been missing key apps to date. I actually own a Playbook, which I would love to use for video calling, but it doesn't have a Skype app available. So I can only use it to video chat with other Playbook users (i.e. nobody I know)...
We will presumably find out how many major apps are supported when BB10 launches.
Is RIM Ready To Become A Smartphone Leader Again? [View article]
I still don't like RAD (and at last check it's $1.57, not $1.38); $6 billion of net debt and minimal profitability. RAD certainly could double in price over the next couple of years, but there's also a real risk of bankruptcy if competition gets heavier or there's a double dip recession in the US. WAG and CVS have much higher valuations because they are much safer investments.
Why $100 Brent Will Not Last Through 2013 [View article]
Thanks for all the information. I agree that the WTI-Brent spread is closing. I just think that the import-substitution trend in the U.S. is going to force Brent down to the $90-$100 level, rather than WTI rising back above $100. Obviously, geopolitics could always throw a wrench in that forecast!
It will be interesting to see what happens in the next few weeks, now that Seaway capacity is up to 400K bpd. It seems very likely that Gulf Coast imports will drop yet again.
Release The Hounds: Landlocked Oil Starts To Escape To The Gulf Coast [View article]
Release The Hounds: Landlocked Oil Starts To Escape To The Gulf Coast [View article]
I've read that the U.S. is still importing about half a million bpd of light sweet to the Gulf Coast, and I would suspect that the majority of the 1 million bpd being imported to the East Coast is also light sweet. I would guess that most of the U.S. production/logistics increases this year will go to substituting away for that imported light sweet (which is a major reason why I think Brent will eventually come under pressure). After that, I'm not sure what's going to happen. Either some U.S. refineries will have to switch back to light sweet, or the export ban will have to be lifted, or something similar...
Release The Hounds: Landlocked Oil Starts To Escape To The Gulf Coast [View article]
Railroads will continue to move in to serve areas of new production or to relieve other bottlenecks. Bakken is one area where railroads might have longer staying power, simply because Keystone XL could put Canadian oil in competition with Bakken crude for pipeline space.
Release The Hounds: Landlocked Oil Starts To Escape To The Gulf Coast [View article]
Release The Hounds: Landlocked Oil Starts To Escape To The Gulf Coast [View article]
As for the comparative pricing, I think there is still plenty of refinery demand for light sweet crude. Some of that is on the Gulf Coast, although most of those refineries are configured for heavier oil. But there are still a lot of older refineries on the East Coast that are importing Brent-priced crude from Africa or the Middle East. Phillips 66 just signed a deal for 50K bpd of rail capacity from Bakken to the Bayway refinery in NJ. Delta/Monroe Energy has been talking about the same thing. The new owners of the former Sunoco refinery in Philadelphia also want to stop using imported Brent, and are building rail unloading platforms.
When the pipelines are up and running, it will probably be cheaper to pipe the oil from Bakken to the Gulf Coast (via Cushing) and then send it by barge to the Northeast. (That's somewhat complicated by the fact that only U.S. flagged vessels can carry that oil.) I would guess the combined cost of pipeline and barge would be $8-$10/barrel.
Sharp (SHCAY.PK) has "nearly halted production" of displays for the regular iPad as demand shifts towards the iPad Mini and Apple (AAPL -0.6%) attempts to manage inventory, Reuters reports. Many analysts have already forecast the Mini, which is thinner and much lighter than the 4th-gen regular iPad, will account for a majority of iPad sales in Q1. Higher Mini sales benefit display suppliers AUO and LPL. Due to lower price tags, Apple's average gross profit on Mini sales appears to be lower than its average gross profit on regular iPad sales. [View news story]
Sharp (SHCAY.PK) has "nearly halted production" of displays for the regular iPad as demand shifts towards the iPad Mini and Apple (AAPL -0.6%) attempts to manage inventory, Reuters reports. Many analysts have already forecast the Mini, which is thinner and much lighter than the 4th-gen regular iPad, will account for a majority of iPad sales in Q1. Higher Mini sales benefit display suppliers AUO and LPL. Due to lower price tags, Apple's average gross profit on Mini sales appears to be lower than its average gross profit on regular iPad sales. [View news story]
The iPad mini has a base selling price that's roughly 34% below the base price for the 4th gen. iPad. So a 40% margin on a base-model iPad mini would be $132 in gross profit, and a (lower) 35% margin on a base-model full size iPad would be $175 in gross profit.
Is RIM Ready To Become A Smartphone Leader Again? [View article]
Is RIM Ready To Become A Smartphone Leader Again? [View article]
Is RIM Ready To Become A Smartphone Leader Again? [View article]
Is RIM Ready To Become A Smartphone Leader Again? [View article]
Is RIM Ready To Become A Smartphone Leader Again? [View article]
We will presumably find out how many major apps are supported when BB10 launches.
Is RIM Ready To Become A Smartphone Leader Again? [View article]
Analysts Likely To Be Shocked As Amazon's Growth Disappoints [View article]
Why $100 Brent Will Not Last Through 2013 [View article]
It will be interesting to see what happens in the next few weeks, now that Seaway capacity is up to 400K bpd. It seems very likely that Gulf Coast imports will drop yet again.