Crude Oil Storage Report - May 20

[dan_s]

CRUDE OIL INVENTORY/’000 bbls (Week Ended 5/15/15)

Current: 482,165
Actual Build/(Withdrawal): (2,674)
Economist Average Estimate: (730)
Previous: 484,839

Although storage levels are still quite high, we should continue to see big draws from storage week after week through at least the end of July. This is the time of year that refiners draw from storage to produce more transportation fuels.

The "normal" range for oil storage levels this time of year is 380 to 400 million bbls.

I believe we will see the impact of the big drop in active drilling rigs this summer. I am expecting U.S. oil production to drop by over 100,000 bbls per day month-after-month during the 2nd half of this year. It takes ~1,000 rigs drilling for oil in this country to keep production flat and we are way below that level today. The active rig count will continue to fall through the summer. I think it will take WTI over $70/bbl before we see an increase in the active rig count. Most of the upstream companies will not increase capital expenditure budgets until they are sure oil & gas prices are going to stay at levels that give them a good return on investment.