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From Bust To Boom: Why Canada’s Rig Count Increased 50 Percent Last Year

Canadian rigs are going back to the field, coaxed by higher commodity prices and greater productivity. Across the land, 345 iron masts were turning bits last week, so the year-over-year rig count is up by almost 50 percent. But where are they drilling? The pickup has been seen mainly in Alberta, somewhat in Saskatchewan and not so much in British Columbia. (Click to enlarge) The Western Canadian Sedimentary Basin (WCSB) blankets an area twice the size of Texas and mostly underlays British Colombia, Saskatchewan and Alberta. More like a rumpled…

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US To Sell 10 Million Barrels Of Oil From Strategic Petroleum Reserve In February

Following a January announcement according to which the DOE planned to sell 8 million barrels of oil from the Strategic Petroleum Reserve, and which some speculated was the reason for the big buildup in crude inventories in the past several weeks, today the U.S. Energy Department said it will sell 10 million barrels of oil from the government’s emergency crude reserve in late February. 

This represents the second sale of oil from the emergency stash this year: according to Reuters, last month Shell bought 6.2 million barrels from the reserve and Phillips 66 bought 200,000 barrels, which was below the 8 million projected for sale. As explained below, that sale was partially held to fund a modernization of the SPR itself. More sales are expected be held in coming years to fund up to $2 billion for the revamp.

According to the notice of sale, the entire 10 million barrels will be sour crude drawn from three sites—Bryan Mound and Big Hill in Texas, and West Hackberry in Louisiana. Revenues from the sale will be deposited in the general fund of the U.S. Treasury to carry out the National Institutes of Health innovation projects as designated in the 21st Century Cures Act.

The sale from the SPR is required by a law passed last December to help raise funds for medical research. The law has mandated sales of 25 million barrels from the SPR over three years, starting with the sale of 10 million barrels this year.

The US oil reserve is held in a series of heavily guarded underground salt caverns along the coast in Texas and Louisiana and currently holds about 690 million barrels of mostly sour oil, a type containing high sulfur that many U.S. refineries can process. Part of the motivation to sell crude is to finance upkeep for the SPR itself. The reserves are held in salt caverns in Louisiana and Texas, setup decades ago in the aftermath of the Arab Oil Embargo in 1973. The SPR system can hold more than 700 million barrels of oil, the largest strategic stockpile in the world. The idea is that the SPR holds 90 days’ worth of oil supplies, which could be released in the event of a global outage.

A release has only occurred a handful of times, such as the Persian Gulf War, Hurricane Katrina and the Arab Spring.

Some of the storage systems are rusting and corroding after decades of use. In September, the DOE issued a report to Congress, which came to a dire conclusion about the condition of the reserve. “This equipment today is near, at, or beyond the end of its design life,” the report said. The sale “will allow the Department to take necessary steps to increase the integrity and extend the life” of the reserve, a DOE spokesperson said in December after the budget resolution was passed.

the SPR has been viewed as a cornerstone of US energy security policy. As long as the U.S. had 3 months’ worth of supply, it could weather unexpected disruptions. The International Energy Agency was setup in the 1970s as well, and participating members – in addition to the U.S., the group includes Europe, Japan, Korea, Australia and New Zealand – also have pledged to hold a 90-day supply. However, U.S. policymakers no longer view the SPR is all that important. Even the more hawkish members of Congress have been lulled into a sense of security from the surge in U.S. oil production and the resulting crash in oil prices. The world is awash in oil, so why does the U.S. need to stockpile such a massive volume of oil at great expense? The ostensible reason of selling off oil from the SPR is to finance its maintenance to ensure its existence over the long-term, but if the Congress still truly believed in the importance of the SPR, they would have found funding elsewhere instead of reducing the stockpile.

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Can Natural Gas Rescue Algeria’s Ailing Economy?

Algeria is paving the way for a stronger natural gas export profile in Europe, building off of preexisting relationships with Spain, Italy and Portugal, Forbes reported earlier this year. But efforts to restore growth based off energy sector expansion have a limited chance of revitalizing success as two years of low oil prices bear down on government revenues. “Boosting existing fields and new fields coming online this year will push output up,” Sonatrach’s CEO Amine Mazouzi said in January. The Algerian economy needs large-scale government reforms…

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Hedge Funds Sell Near-Record Amount Of Stock (Follow ‘Insiders’ & Bank Execs)

We know the big bank executives have been dumping $100 millions as their stock prices have soared.


We also now that corporate insiders are dumping their own stocks at the fastest pace in years.


And now we know that, as BofAML reports, net sales by hedge funds last week were the third-largest in history and the largest since last Feb…

Private clients were net buyers for the straight week, while institutional clients sold stocks for the fifth week and hedge funds were also net sellers following four weeks of net buying. Clients sold large and mid caps but bought small caps. Buybacks by corporate clients picked up slightly vs. the prior week, but year-to-date are tracking the lowest of any comparable period since 2012.

Net sales were largest in Consumer Discretionary – which notably saw its biggest sales by our clients in our data history (since 2008).

All three client groups (hedge funds, institutional clients, private clients) were sellers of Discretionary stocks last week, where this sector has seen among the weakest results and guidance this earnings season. Clients also sold stocks in Tech, Real Estate, Materials and Utilities.

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As we warned previously… If you can’t spot the sucker at the table… it’s you!

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Federal Judge Also Finds Fiduciary Rule Did Not Violate Federal Rulemaking Procedures As alleged by Business Groups Who challenged


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