Crude Oil Storage Report - June 24

[dan_s]

CRUDE OIL INVENTORY/’000 bbls (Week Ended 6/19/15)

Current: 462,993
Actual Build/(Withdrawal): (4,934)
Economist Average Estimate: (1,678)
Previous: 467,927

A very bullish report and clear sign that U.S. oil production is one decline. I expect oil in U.S. storage to continue to decline all summer.

[ChuckGeb]

Looking at the DOE crude oil inventory chart it appears that the draw is similar to prior years and that storage is still 80-90 million barrels above the prior year as well as top of 5 year range. Hard for me to get excited until I see an increase in the downward slope of the trend line and some closing of the gap.

[dan_s]

U.S. Crude oil storage levels will continue to decline all summer. My SWAG is that they are under 420 million barrels by the end of August. U.S. oil production will be on steep decline by the end of the summer, dropping by 100,000 barrels per day month-after-month. Global demand for refined products is expected to increase by ~2 million barrels per day from Q2 to Q4. See: https://www.iea.org/oilmarketreport/omrpublic/

For those of you new to this business - THERE IS ALWAYS GOING TO BE A LOT OF OIL IN STORAGE. WE DO NOT HAVE TO TAKE STORGE TO ZERO BEFORE OIL PRICES CAN GO BACK UP.

Yes, U.S. oil in storage will stay over the 5-year average, but there is now ZERO RISK of storage filling. That "Sky is falling" stuff earlier this year was total BS. BTW we keep building more storage in the U.S. because the refiners want more storage.

Why do refiners want more storage tanks?????? Demand for oil and NGLs (by the refiners / processors) has been going up since mid-2013. Think of it this way: Crude oil and NGLs are the "raw materials" for those that process them to "manufacture" the fuels we use. Refined hydrocarbon liquids are also the feed stock for the companies that make almost everything we consume. Since there is increasing demand for refined products, it makes sense that raw material inventories are higher than the 5-year average, which include a period of much lower demand.

Crude oil and NGLs (from the ground) that were processed in the U.S. went from 18.2 million barrels per day in mid-2013 to 19.3 million barrels per day now. Forecasts are for the volumes being processed to be over 19.5 million barrels per day in Q4.

The point is that this issue of the U.S. storage levels is way over-blown, but wall street traders do watch it so we must do the same.

[prince_jake_33]

Thanks for reporting this number

[GeraldR]

Seems to be a good storage number, but what I keep scratching my head about is the continuing increase in domestic production. This week the EIA report shows that production in the lower 48 went up another 76,000 bpd. Where the hell is it coming from?

[dan_s]

EIA numbers are way off. They have no actual data until they get if from the states. The latest "actual" production on the Texas Railroad Commission website is for March. The Texas RRC is forecasting a drop in Texas production from March to April.

What EIA and IEA show for recent months is just their forecast.