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JPM: “We Could Be Just Weeks Away From Cushing Effectively Running Out Of Crude”

JPM: "We Could Be Just Weeks Away From Cushing Effectively Running Out Of Crude"

Back in April 2020, the landlocked West Texas Intermediate crude oil price briefly crashed into negative territory – a stunning turn of events that cost traders.



JPM: "We Could Be Just Weeks Away From Cushing Effectively Running Out Of Crude"

Back in April 2020, the landlocked West Texas Intermediate crude oil price briefly crashed into negative territory - a stunning turn of events that cost traders massive losses - when the spot oil market found itself with an unprecedented glut as there was literally too much oil to be stored, and as such those traders who were assigned delivery would pay others just to take the physical oil off their hands. Well, in just a few weeks we may see the opposite scenario: no physical oil at all in the largest US commercial storage facility, leading to what may be a superspike in the price of oil.

In a note predicting the near-term dynamics of the oil market, JPMorgan's commodity Natasha Kaneva writes that in a world of pervasive nat gas and coal shortages which are forcing the power sector to increasingly turn to oil (boosting demand by 750bkd during winter and drawing inventory by 2.1mmb/d in Nov and Dec), Cushing oil storage - which just dropped to 31.2mm barrels, the lowest since 2018...

... may be just weeks from being "effectively out of crude." The bank's conclusion: "if nothing were to change in the Cushing balance over the next two months, we might expect front WTI spreads to spike to record highs—a “super backwardation” scenario."

Before we get into the meat of the note, first some background which as usual these days, begins with Europe's catastrophic handling of its energy needs.

As JPM notes, the heating season of 2021/2022 is opening with record high global gas prices even as cold winter weather has yet to arrive. Such are the quirks of the natural gas market that, when/if cold winter arrives, demand for gas tends to outpace any source of supply. In the US alone, in a given week in winter, natural gas demand can surge by 50-70 bcf, if not more, with limited response from supply. The situation is so dire at the moment that - JPMorgan observes - "finding even 1 bcf of spare capacity is becoming increasingly difficult."

The good news is that with Russian domestic gas storage sites 97% full, stockpiling should be finalized by November 1, potentially freeing 4-10 bcm of additional shipments to Europe. However, on Monday we reported that Gazprom had booked only 35% of Yamal-Europe exit pipeline capacity for November (same as in October) and chose not to book additional transit volumes via Ukraine, implying that Russia is not currently planning to ship additional gas to Europe at least until Nord Stream 2 is fully authorized.

And as JPM notes, echoing what Goldman said earlier this week, "without additional Russian volumes, the winter weather premium currently embedded in the European natural gas price cannot significantly diminish until outlook for January weather becomes more certain."

In short, even higher nat gas prices are on deck, especially if the winter is cold.

So with record coal and gas prices, the power sector and energy intensive industries are turning to oil, potentially boosting demand by 750 kbd during winter and drawing oil inventory by 2.1 mbd over November and December. Earlier today, Reuters quoted Saudi Arabia's Minister of Energy Prince Abdulaziz bin Salman who confirmed that users switching from gas to oil could account for demand of 500,000-600,000 barrels per day (bpd), adding that the world was now waking up to shortages in the energy sector.

Abdulaziz said the potential switch depended on how severe winter weather would be and how expensive alternative energy prices would be. He outlined a wide range of factors that have led to a recent spike in energy prices, including limited investment in hydrocarbons and infrastructure, low inventories, the lifting of pandemic lockdowns and COVID-19 vaccine uptake rates.

"People all of a sudden woke up to the reality that they are running out of everything: they are ran out of investments, they ran out of stocks and they ran out of … creativity in trying to be attending to real solution that address real issues," Prince Abdulaziz told the CERA Week India Energy Forum.

In any case, in the clearest example yet of market tightness, Cushing crude storage fell to 31.2 mb last week as noted in the chart above. And because operational tank bottoms are likely 20-25% of capacity- or about 20 mb - JPM predicts that "we could be just weeks away from Cushing being effectively out of crude" and adds that "if nothing were to change in the Cushing balance over the next two months, we might expect front WTI spreads to spike to record highs—a “super backwardation” scenario."

If JPM's prediction is correct - and recall just yesterday we published a similar take from Morgan Stanley which now expects a similar "peak supply" scenario playing out, if over the longer term prompting the bank to hike its Q1 2022 price target to $95 from $77.5/bbl - it would have a catastrophic (read higher) impact on the price of oil.

Of course, there are potential mitigating factors: as Kaneva notes, though the dynamics of the US crude balance are different than they were in 2018 and much different than they were in 2014—the last two times Cushing drew down toward operational limits—the market still has a few levers to pull before we worry about such a scenario.

Today, the oil market is already reacting to the possibility that Cushing inventories bottom out and the export arb from the US Gulf Coast to Northwest Europe has been closed since 14 Oct. Consequently, the bank expects US crude exports to fall to an  average 2.0-2.2 mbd by mid-November, with most of that ~500 kbd cut coming from flows to Europe.

But while this may be good news for the US, it's even more bad news for Europe - this reduction in flows to Europe would come at a time when European crude markets are already quite tight. According to data from Kpler, Europe crude oil stocks are already at their lowest since late 2018. Since 15 July, Europe crude stocks have fallen 35 mb, a rate of 362 kbd.

European exports aside, and focusing on Cushing inbound flows, JPM notes that last week the Steele City to Cushing section of the Keystone pipeline halted for three days as Keystone shifted flows to Patoka and the pipeline was still flowing at a much lower than normal rate early this week, though flows appear to be back above 400 kbd this morning.

Total Keystone flows fell on Tuesday as flows to Patoka slowed as well. If Keystone flows to Cushing—normally 350-625 kbd—return consistently to normal soon, Cushing would be much closer to balance. However, if the shift in flows is intended to serve as line fill for  Capline, Keystone may not be a short-term solution to the Cushing tank bottoms issue.

Capline should require about 5.2 mb of line fill in total. With start-up not planned until 1 Jan, the rate of line fill should not be more than about 100 kbd. While this additional tightness in the PADD 2 crude balance certainly does not help matters at Cushing, it should be more than offset by the continued ramp up of the 760 kbd Line 3 Replacement, JPM suggests.

Finally, flows on the Enbridge Mainline group of pipelines, which includes the Line 3 Replacement, have only increased about 200 kbd since the start of Line 3, which means the potential for much more crude volume flowing into PADD 2 could be just across the horizon, assuming Canadian producers are willing and able to supply them.

Tyler Durden Thu, 10/21/2021 - 11:28

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Haven’t had COVID yet? It could be more than just luck

Even taking into account people who have had COVID but didn’t know it, there’s still likely to be a group of people who have never been infected.



I Wei Huang/Shutterstock

We all know a few of those lucky people who, somehow, have managed to avoid ever catching COVID. Perhaps you’re one of them. Is this a Marvel-esque superpower? Is there any scientific reason why a person might be resistant to becoming infected, when the virus seems to be everywhere? Or is it simply luck?

More than 60% of people in the UK have tested positive for COVID at least once. However, the number of people who have actually been infected with SARS-CoV-2, the virus that causes COVID-19, is thought to be higher. The calculated rate of asymptomatic infections varies depending on the study, though most agree it’s fairly common.

But even taking into account people who have had COVID and not realised it, there is still likely a group of people who never have. The reason why some people appear immune to COVID is one question that has persisted throughout the pandemic. As with so much in science, there isn’t (yet) one simple answer.

We can probably dismiss the Marvel-esque superpower theory. But science and luck likely both have a role to play. Let’s take a look.

The simplest explanation is that these people have never come into contact with the virus.

This could certainly be the case for people who have been shielding during the pandemic. People at significantly greater risk of severe disease, such as those with chronic heart or lung conditions, have had a tough couple of years.

Many of them continue to take precautions to avoid potential exposure to the virus. Even with additional safety measures, many of these people have ended up with COVID.

Due to the high level of community transmission, particularly with the extremely transmissible omicron variants, it’s very unlikely that someone going to work or school, socialising and shopping hasn’t been near someone infected with the virus. Yet there are people who have experienced high levels of exposure, such as hospital workers or family members of people who have had COVID, who have somehow managed to avoid testing positive.

We know from several studies vaccines not only reduce the risk of severe disease, but they can also cut the chance of household transmission of SARS-CoV-2 by about half. So certainly vaccination could have helped some close contacts avoid becoming infected. However, it’s important to note that these studies were done pre-omicron. The data we have on the effect of vaccination on omicron transmission is still limited.

Read more: Four strange COVID symptoms you might not have heard about

Some theories

One theory around why certain people have avoided infection is that, although they are exposed to the virus, it fails to establish an infection even after gaining entry to the airways. This could be due to a lack of the receptors needed for SARS-CoV-2 to gain access to cells.

Once a person does become infected, researchers have identified that differences in the immune response to SARS-CoV-2 play a role in determining the severity of symptoms. It is possible that a quick and robust immune response could prevent the virus from replicating to any great degree in the first instance.

The efficacy of our immune response to infection is largely defined by our age and our genetics. That said, a healthy lifestyle certainly helps. For example, we know that vitamin D deficiency can increase the risk of certain infections. Not getting enough sleep can also have a detrimental effect on our body’s ability to fight invading pathogens.

An illustration of SARS-CoV-2, the coronavirus that causes COVID-19.
The SARS-CoV-2 virus needs to attach to receptors to gain access to our cells. Kateryna Kon/Shutterstock

Scientists studying the underlying causes of severe COVID have identified a genetic cause in nearly 20% of critical cases. Just as genetics could be one determining factor of disease severity, our genetic makeup may also hold the key to resistance to SARS-CoV-2 infection.

I research SARS-CoV-2 infection on nasal cells from human donors. We grow these cells on plastic dishes which we can then add virus to and investigate how the cells respond. During our research we found one donor whose cells could not be infected with SARS-CoV-2.

We discovered some really interesting genetic mutations, including several involved with the body’s immune response to infection, that could explain why. A mutation we identified in a gene involved with sensing the presence of a virus has previously been shown to confer resistance to HIV infection. Our research is on a small number of donors and highlights that we’re still only scraping the surface of research into genetic susceptibility or resistance to infections.

There’s also the possibility that previous infection with other types of coronaviruses results in cross-reactive immunity. This is where our immune system may recognise SARS-CoV-2 as being similar to a recent invading virus and launch an immune response. There are seven coronaviruses that infect humans: four that cause the common cold, and one each that cause Sars (severe acute respiratory syndrome), Mers (Middle East respiratory syndrome) and COVID.

How long-lasting this immunity may be is another question. Seasonal coronaviruses that circulated pre-2020 were able to reinfect the same people after 12 months.

Read more: The common cold might protect you from coronavirus – here's how

If you’ve managed to avoid COVID to date, maybe you do have natural immunity to SARS-CoV-2 infection, or perhaps you’ve just been lucky. Either way, it’s sensible to continue to take precautions against this virus that we still know so little about.

Lindsay Broadbent receives funding from The Wellcome Trust.

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“Natural immunity” from omicron is weak and limited, study finds

SAN FRANCISCO, CA—May 18, 2022—In unvaccinated people, infection with the Omicron variant of SARS-CoV-2 provides little long-term immunity against…



SAN FRANCISCO, CA—May 18, 2022—In unvaccinated people, infection with the Omicron variant of SARS-CoV-2 provides little long-term immunity against other variants, according to a new study by researchers at Gladstone Institutes and UC San Francisco (UCSF), published today in the journal Nature.

Credit: Photo: Michael Short/Gladstone Institutes

SAN FRANCISCO, CA—May 18, 2022—In unvaccinated people, infection with the Omicron variant of SARS-CoV-2 provides little long-term immunity against other variants, according to a new study by researchers at Gladstone Institutes and UC San Francisco (UCSF), published today in the journal Nature.

In experiments using mice and blood samples from donors who were infected with Omicron, the team found that the Omicron variant induces only a weak immune response. In vaccinated individuals, this response—while weak—helped strengthen overall protection against a variety of COVID-19 strains. In those without prior vaccination, however, the immune response failed to confer broad, robust protection against other strains.

“In the unvaccinated population, an infection with Omicron might be roughly equivalent to getting one shot of a vaccine,” says Melanie Ott, MD, PhD, director of the Gladstone Institute of Virology and co-senior author of the new work. “It confers a little bit of protection against COVID-19, but it’s not very broad.”

“This research underscores the importance of staying current with your vaccinations, even if you have previously been infected with the Omicron variant, as you are still likely vulnerable to re-infection,” says co-senior author Jennifer Doudna, PhD, who is a senior investigator at Gladstone, a professor at UC Berkeley, founder of the Innovative Genomics Institute, and an investigator of the Howard Hughes Medical Institute.

A Weaker Infection

As the Omicron variant of SARS-CoV-2 spread around the globe in late 2021 and early 2022, anecdotal evidence quickly mounted that it was causing less severe symptoms than Delta and other variants of concern. However, scientists weren’t initially sure why that was, or how a weaker infection might impact long-term immunity against COVID-19.

“When the Omicron variant first emerged, a lot of people wondered whether it could essentially act as a vaccine for people who didn’t want to get vaccinated, eliciting a strong and broad-acting immune response,” says Irene Chen, co-first author of the new study and graduate student in Ott’s lab. Other first authors are Rahul Suryawanshi, PhD, a Gladstone staff research scientist, and Tongcui Ma, PhD, scientist in the Roan Lab at Gladstone.

To find the answer, the team of researchers first examined the effect of Omicron in mice. Compared to an ancestral strain of SARS-CoV-2 and the Delta variant, Omicron led to far fewer symptoms in the mice. However, the virus was detected in airway cells, albeit at lower levels. Similarly, Omicron was able to infect isolated human cells but replicated less than other variants.

The team then characterized the immune response generated by Omicron infections. In mice infected with Omicron, despite the milder symptoms, the immune system still generated the T cells and antibodies typically seen in response to other viruses.

“We demonstrated in this study that the lower pathogenicity of Omicron is not because the virus cannot take hold,” says Nadia Roan, PhD, an associate investigator at Gladstone.

That leaves other reasons that might explain why Omicron differs from other variants in terms of symptoms and immunity, including the lower replication seen with Omicron or the types of antibodies that the immune system generates in response to the virus.

No Cross-Variant Protection

To gauge how the immune response against Omicron fared over time, the researchers collected blood samples from mice infected with the ancestral, Delta, or Omicron variants of SARS-CoV-2 and measured the ability of their immune cells and antibodies to recognize five different viral variants—ancestral (WA1), Alpha, Beta, Delta, and Omicron.

Blood from uninfected animals was unable to neutralize any of the viruses—in other words, block the ability of any of the viruses to copy themselves. Samples from WA1-infected animals could neutralize Alpha and, to a lesser degree, the Beta and Delta virus—but not Omicron. Samples from Delta-infected mice could neutralize Delta, Alpha and, to a lesser degree, the Omicron and Beta virus.

However, blood from Omicron-infected mice could only neutralize the Omicron variant.

The team confirmed these results using blood from ten unvaccinated people who had been infected with Omicron—their blood was not able to neutralize other variants. When they tested blood from 11 unvaccinated people who had been infected with Delta, the samples could neutralize Delta and, as had been seen in mice, the other variants to a lesser extent.

When they repeated the experiments with blood from vaccinated people, the results were different: vaccinated individuals with confirmed Omicron or Delta breakthrough infections all showed the ability to neutralize all the tested variants, conferring higher protection.

“When it comes to other variants that might evolve in the future, we can’t predict exactly what would happen, but based on these results, I’d suspect that unvaccinated people who were infected with Omicron will have very little protection,” says Ott. “But on the contrary, vaccinated individuals are likely to be more broadly protected against future variants, especially if they had a breakthrough infection.”

“Our results may be useful not only to inform individuals’ decisions on vaccination, but also for the design of future COVID-19 vaccines that confer broad protection against many variants,” says Charles Chiu, MD, PhD, a professor of infectious diseases at UCSF and a co-senior author of the work.


About the Research Project

The paper “Limited Cross-Variant Immunity after Infection with the SARS-CoV-2 Omicron Variant Without Vaccination” was published in the journal Nature on May 18, 2022.

Other authors are Abdullah Syed, Camille Simoneau, Alison Ciling, Mir Khalid, Bharath Sreekumar, Pei-Yi Chen, Renuka Kumar, Mauricio Montano, Ronne Gascon, Frank Soveg, Ashley George, and Warner Greene of Gladstone; Noah Brazer, Prachi Saldhi, Miguel Garcia-Knight, Alicia Sotomayor-Gonzalez, Venice Servillita, Amelia Gliwa, Jenny Nguyen, Xiaohui Fang, Mazharul Maishan, Michael Matthay, and Raul Andino of UCSF; and Ines Silva, Bilal Milbes, Noah Kojima, Victoria Hess, Maria Shacreaw, Lauren Lopez, Matthew Brobeck, Fred Turner, and Lee Spraggon of Curative, Inc.

The work was supported by the National Institutes of Health (grants F31 AI164671-01, U54HL147127 and R21AI59666), the Natural Sciences and Engineering Research Council of Canada (PDF-533021-2019), the Roddenberry Foundation, Pamela and Edward Taft, the Howard Hughes Medical Institute, the Van Auken Private Foundation, David Henke, Emergent Ventures at the Mercatus Center (Fast Grants #2164 and #2208), George Mason University, the Innovative Genomics Institute, the US Centers for Disease Control and Prevention (75D30121C10991), Abbott Laboratories, and the Sandler Program for Breakthrough Biomedical Research at UCSF.

About Gladstone Institutes

To ensure our work does the greatest good, Gladstone Institutes focuses on conditions with profound medical, economic, and social impact—unsolved diseases. Gladstone is an independent, nonprofit life science research organization that uses visionary science and technology to overcome disease. It has an academic affiliation with the University of California, San Francisco.

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The role party affiliation played in getting US to grim new milestone of 1 million COVID deaths

Your willingness to get a vaccination is tied to your political party. And that may have deadly consequences.



The American flag flies at half-staff at the U.S. Capitol in Washington on May 14, 2022, after President Biden ordered flags lowered to commemorate 1 million American dead due to COVID-19. AP Photo/Pablo Martinez Monsivais

COVID-19 has now claimed the lives of 1 million Americans – a grim milestone made worse by the fact that probably a third of those fatalities could have been avoided. Estimates suggest that more than 318,000 deaths from the disease occurred among individuals who had access to vaccines, but chose not to receive any.

With such a devastating pandemic sweeping the country, and the globe, why would so many Americans forego a potentially life-saving vaccine?

One key answer to this question is – as with much in the U.S. today – partisan politics.

Since vaccines for COVID-19 first became available, polls have consistently shown that Republicans are much less likely than Democrats to be vaccinated or to want to be vaccinated. According to monthly surveys conducted by the Kaiser Family Foundation, this partisan gap has averaged more than 30 percentage points between May 2021 and April 2022.

But the story is both more complicated and wide-ranging than it first appears. We know that party and ideology account for many of the differences in the lives of Americans.

Our research finds that not only is party affiliation a powerful predictor of vaccine willingness, it also contributes to other attitudes that promote or inhibit willingness to be vaccinated, giving it added power.

At a gathering of people and trucks, one person holds flags with a swear word statement against Biden and in favor of Trump.
The start of ‘The Peoples Convoy’ protest against COVID-19 vaccine and mask mandates in Adelanto, California, on Feb. 23, 2022. Patrick T. Fallon/AFP via Getty Images

The pull of partisanship

In two surveys we conducted in March and June of 2021, we found that party affiliation affected COVID-19 vaccination preferences independently of some of the standard influences such as education, age and race. That means party alone can help determine whether a person got a vaccination.

What we also found, however, is that partisanship has additional effects on vaccination status and willingness. That’s because it contributes to other factors that also affect willingness to get vaccinations, and so contributes “indirectly” to willingness as well as directly.

These indirect factors included the impact of partisanship on one’s concern for contracting COVID-19 oneself; concern for others contracting it; trust in government; trust in scientists and medical professionals; and conspiracy theories surrounding the vaccine – namely that the vaccine would insert a tracking microchip into the body and that it could cause sterility.

Party affiliation influenced Americans’ attitudes in each of these areas, which in turn affected a person’s willingness to get a COVID-19 vaccine. This basically multiplies the effect that party affiliation has over vaccinations.

Vaccine divide

Republicans and Democrats haven’t always felt this differently about potentially life-saving vaccines.

A review of historical public opinion trends during other health crises shows that in 1954, Republicans were roughly equally as likely – only 3 percentage points less – as Democrats to say they were willing to get the then-new polio vaccine.

The vaccine hesitancy gap between the parties for the Asian flu vaccine in 1957 was somewhat larger, but still a far cry from today’s gap – Democrats were 9 points more likely to get that vaccine. For the swine flu vaccine in 1976, Democrats were 4 points more likely to get the vaccine.

But since 2000, there have been double-digit partisan gaps in willingness to accept other vaccines to address public health crises. When the administration of George W. Bush raised the possibility of reintroducing the smallpox vaccine in 2002, Republicans were 11 points less likely than Democrats to say they would get the vaccine. During the swine flu pandemic in 2009, this difference grew to 15 points. Most recently, initial reaction in a July 2020 Gallup Poll to the promise of a new COVID-19 vaccine produced a gap of 34 points: 81% of Democrats said they were likely to get the vaccine compared to just 47% of Republicans.

While there is no way to definitively tell if Republicans are dying from COVID-19 at higher rates than Democrats as a result of these discrepancies, there are numbers that suggest it. An ABC News analysis shows that after vaccines became readily available, states that voted for Donald Trump in 2020 had an average of 38% higher death rates due to COVID-19 than states that voted for Joe Biden.

The partisan difference in vaccine hesitancy can be traced to a broader change in each party’s attitudes toward science.

A church interior with blue ribbons hung from walls that each represent one person dead from COVID-19.
In January 2022, 2-foot-long blue ribbons encircle First Parish Congregational Church in Gorham, Maine, each representing a Maine resident who had died from COVID-19. Ben McCanna/Portland Press Herald via Getty Images

What happened?

Polling data shows that throughout the 1970s and 1980s, Republicans were consistently more likely than Democrats to report a great deal of confidence in the scientific community.

In the mid-1980s, however, prominent Republican leaders began to publicly disparage scientific input on public policy issues – initially about the acid rain debate, then expanding to other topics.

Over time, these messages discrediting science and scientists’ opinions on public policy affected public opinion within the parties.

In the early 2000s, the parties began to switch positions. Since 2008, Democrats have consistently displayed greater confidence in science, with the largest gap on record – 30 percentage points – occurring in the most recent survey measuring it, in 2020.

The path from broader distrust in science to hesitancy toward vaccines may have a long history, but it is fairly straightforward. Scientists are the ones who research and develop vaccines, while scientifically trained doctors and nurses administer them. The most prominent talking heads in the media advocating for vaccination are from the scientific community – including, most notably, Dr. Anthony Fauci. Based on years of rhetoric from party leaders, Republican voters were already primed to distrust these figures.

Our own research demonstrates that citizens who distrust scientists and who distrust medical professionals are less likely to be vaccinated and show less willingness to consider doing so in the future.

Since these tendencies are now more prominent in the Republican Party than in the Democratic Party, this helps drive the overall partisan gap in COVID-19 vaccination and death rates among red and blue states.

Even as COVID-19 seems to be becoming less deadly, experts warn that it is not the last viral pandemic we will face.

Elected officials and other policymakers planning for future threats would be wise to keep in mind the depth of the ongoing partisan divide on vaccination.

For example, while state and federal officials made a point of doing specialized outreach to boost COVID-19 vaccination rates in low-income communities and communities of color, specialized outreach may also be appropriate on the basis of partisan affiliation. Furthermore, such outreach needs to consider that a prominent hurdle to overcome among Republicans is a deficit in trust in medical professionals specifically – and science more generally.

Monika L. McDermott is affiliated with brilliant corners Research and Strategy as a consultant.

David R. Jones does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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