The U.S. Energy Information Administration said in its weekly report that crude oil inventories fell by 4.9 million barrels in the week ended April 1. Market analysts' expected a crude-stock rise of 3.2 million barrels, while the American Petroleum Institute late Tuesday reported a supply drop of 4.3 million barrels.
Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, rose by 357,000 barrels last week, the EIA said. Total U.S. crude oil inventories stood at 529.9 million barrels as of last week.
The report also showed that gasoline inventories increased by 1.4 million barrels, compared to expectations for a drop of 1.0 million barrels, while distillate stockpiles rose by 1.8 million barrels.
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We are entering the time of year when refiners ramp up production of summer blend gasoline. In addition to higher fuel demand, the summer blends require more crude oil because refiners can not blend in as much NGL (primarily butane). Credit Suisse's top energy sector analyst predicts $50/bbl WTI by sometime in May as he predicts a BIG increase in global gasoline demand. BTW the U.S. refiners are now exporting four million barrels per day of gasoline and diesel.
Oil Storage Report - April 6
Oil Storage Report - April 6
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Storage Report - April 6
What caused the inventory to fall?
The input to refineries stood at 16.1 MMbpd (million barrels per day) for the week ending on April 1, 2016—a rise of 1.3 MMbpd compared to the prior week. Refineries operated with a capacity utilization of 89.8% for the week ending on April 1, 2016—compared to 89.2% in the previous week. Motor gasoline production rose by 9,000 barrels for the week ending on April 1, 2016—compared to the previous week. The rise in refineries’ capacity utilization clearly outlines the anticipated higher demand for gasoline in the summer season. The net imports of crude also fell by 1.9 MMbpd for the week ending on April 1, 2016—compared to the previous week. The rise in refining activity was primarily responsible for the fall in the crude oil inventory. The above chart shows the refining activity.
I expect refiner capacity utilization to ramp up to 92% to 93% by the end of April. Refiners are turning low cost oil into high priced gasoline and diesel with the peak demand period for transportation fuels just a few weeks away.
The input to refineries stood at 16.1 MMbpd (million barrels per day) for the week ending on April 1, 2016—a rise of 1.3 MMbpd compared to the prior week. Refineries operated with a capacity utilization of 89.8% for the week ending on April 1, 2016—compared to 89.2% in the previous week. Motor gasoline production rose by 9,000 barrels for the week ending on April 1, 2016—compared to the previous week. The rise in refineries’ capacity utilization clearly outlines the anticipated higher demand for gasoline in the summer season. The net imports of crude also fell by 1.9 MMbpd for the week ending on April 1, 2016—compared to the previous week. The rise in refining activity was primarily responsible for the fall in the crude oil inventory. The above chart shows the refining activity.
I expect refiner capacity utilization to ramp up to 92% to 93% by the end of April. Refiners are turning low cost oil into high priced gasoline and diesel with the peak demand period for transportation fuels just a few weeks away.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Storage Report - April 6
Helping to support oil prices yesterday, TransCanada Corp. (ticker: TRP) announced the delayed restart of its Keystone pipeline, which has a capacity of 590 MBOPD.
International crude oil benchmark Brent was underpinned by planned maintenance work at Norway’s Ekofisk and Britain’s Buzzard oil fields.
The EIA reported that gasoline stocks rose for the first time in six weeks, along with stockpiles at Cushing, Oklahoma, but investors remained focused on the overall inventory number, reports CNBC.
“I think the market is more about the total change in (crude) inventories, rather than individual components,” said Scott Shelton, energy broker with ICAP. “It’s the first week of the second quarter and we have a net draw. That will force the bears to rethink their bearish balances for Q2.”
Scott Shelton worked for me in Tulsa when I was at Hess. He is a sharp guy and a TU basketball fan.
International crude oil benchmark Brent was underpinned by planned maintenance work at Norway’s Ekofisk and Britain’s Buzzard oil fields.
The EIA reported that gasoline stocks rose for the first time in six weeks, along with stockpiles at Cushing, Oklahoma, but investors remained focused on the overall inventory number, reports CNBC.
“I think the market is more about the total change in (crude) inventories, rather than individual components,” said Scott Shelton, energy broker with ICAP. “It’s the first week of the second quarter and we have a net draw. That will force the bears to rethink their bearish balances for Q2.”
Scott Shelton worked for me in Tulsa when I was at Hess. He is a sharp guy and a TU basketball fan.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Storage Report - April 6
U.S. crude production declined by 14,000 barrels per day during the week ending April 1, but remained above the 9 MMBOPD mark, reports the EIA. This week’s data implies that we’re going to slide below 9 million next week.
Keep in mind that weekly data reported by the EIA is based on their forecast models and limited survey data. They really do not know how much oil is produced in the U.S. each week. What they report is just their SWAG. Many analysts, including me, believe they are over-reporting production because their forecast models put too much weight on the historical numbers. When the states report actual production 3-4 months from now, it may be quite different. It usually is.
Keep in mind that weekly data reported by the EIA is based on their forecast models and limited survey data. They really do not know how much oil is produced in the U.S. each week. What they report is just their SWAG. Many analysts, including me, believe they are over-reporting production because their forecast models put too much weight on the historical numbers. When the states report actual production 3-4 months from now, it may be quite different. It usually is.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Storage Report - April 6
A drop in crude oil imports seen this week was caused by fog in the Houston Ship Channel, and imports are likely to rise again next week, said Matt Smith, director of commodity research at shipping tracker ClipperData.
The price gains are “a knee-jerk reaction to a bullish headline crude number,” said Smith. “But given that we should see a return to [inventory] builds next week, it seems like this could be a temporary move.”
We are at the point in this cycle where supply is falling (thanks to MUCH LOWER drilling & completion activity) and rising demand.
The price gains are “a knee-jerk reaction to a bullish headline crude number,” said Smith. “But given that we should see a return to [inventory] builds next week, it seems like this could be a temporary move.”
We are at the point in this cycle where supply is falling (thanks to MUCH LOWER drilling & completion activity) and rising demand.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group