EIA Petroleum Report - October 8

[dan_s]

Nothing really that stunning in this report to justify the continuing drop in oil prices. - Dan

Summary of Weekly Petroleum Data for the Week Ending October 3, 2014

U.S. crude oil refinery inputs averaged about 15.6 million barrels per day during the week ending October 3, 2014, 135,000 barrels per day less than the previous week’s average. Refineries operated at 89.3% of their operable capacity last week. Gasoline production decreased last week, averaging 8.9 million barrels per day. Distillate fuel production decreased last week, averaging over 4.7 million barrels per day.

U.S. crude oil imports averaged over 7.7 million barrels per day last week, up by 428,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged 7.5 million barrels per day, 6.0% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 417,000 barrels per day. Distillate fuel imports averaged 47,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 5.0 million barrels from the previous week. At 361.7 million barrels, U.S. crude oil inventories are in the upper half of the average range for this time of year. Total motor gasoline inventories increased by 1.2 million barrels last week, and are in the middle of the average range. Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories increased by 0.4 million barrels last week and are in the lower half of the average range for this time of year. Propane/propylene inventories rose 1.1 million barrels last week and are well above the upper limit of the average range. Total commercial petroleum inventories increased by 3.8 million barrels last week.

Total products supplied over the last four-week period averaged over 19.3 million barrels per day, up by 0.7% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged 8.7 million barrels per day, down by 1.3% from the same period last year. Distillate fuel product supplied averaged 3.8 million barrels per day over the last four weeks, down by 0.6% from the same period last year. Jet fuel product supplied is up 5.5% compared to the same four-week period last year.

[k1f]

This from Forbes, an analysis forecasting continuing relentless pressure on crude prices:

http://www.forbes.com/sites/tomaspray/2 ... r=yahootix

[dan_s]

I know this may not ease the pain much, but the Sweet 16 stocks are already trading as if WTI has dropped to around $60/bbl. You can test this for yourself by downloading the Excel version of the forecast models and changing the oil, gas and NGL prices at the bottom to whatever you wish. Each forecast model has macros built in that change the forecast above and adjust the Fair Value Estimate.

For Example: For Continental Resources (CLR) I change the oil price to $55 for Q4 and 2015 and the valuation went to $60.80/share.

BUT WAIT A MINUTE: CLR has a lot of their production hedged at much higher prices. In order for CLR's "realized price" for oil to drop to $55, WTI would need to go down to close to $40/bbl.

In fact, all of the Sweet 16 have a good chunk of their future production hedged. I'm sure this will be a big topic of discussion on all of the 3rd quarter conference calls, along with questions about cutting back on CapEx if prices go lower.

For right now (10:35 AM CT) support at $87/bbl seems to be holding. That doesn't mean it won't go lower this afternoon or tomorrow, but the initial knee jerk reaction to the weekly EIA petroleum report has passed.

[dan_s]

See chart at: http://www.oilandgas360.com/analytics/c ... 9-26406629

This is the time of the year when oil inventories build as refiners get ready for heating oil demand. Note that inventories are actual lower than at same point last year.