The U.S. Energy Information Administration said in its weekly report that crude oil inventories fell by 2.2 million barrels in the week ended May 4. That compared with analysts' expectations for a decline of 200,000 barrels, while the American Petroleum Institute late Tuesday reported a supply-drop of 1.9 million barrels.
Total U.S. crude oil inventories stood at 433.8 million barrels as of last week, which the EIA considered to be in the lower half of the average range for this time of year.
Domestic oil production- driven by shale extraction - rose to a fresh all-time high of 10.70 million barrels per day last week. Only Russia currently produces more, at around 11 million bpd.
The report also showed that gasoline inventories decreased by 2.2 million barrels, compared to expectations for a decline of 450,000 barrels.
For distillate inventories including diesel, the EIA reported a drop of 3.8 million barrels.
Comments below are from 24/7 Wall Street.com:
Crude Oil Price Jumps on Iran, Lower Inventories
By Paul Ausick May 9, 2018 11:05 am EDT
Before the EIA report, benchmark West Texas Intermediate (WTI) crude for June delivery traded up about 2.6% at around $70.88 a barrel, and it rose about 3% to around $71.29 shortly after the report’s release. WTI settled at $69.06 on Tuesday and opened at $70.11 Wednesday morning. The 52-week range on June futures is $44.54 to $71.25, and the high was posted this morning.
The U.S. withdrawal from the nuclear non-proliferation deal with Iran is having its expected effect of pushing crude oil prices higher. Brent crude for July delivery traded up around 3% Wednesday morning at $77.20 a barrel, about $6 a barrel more than WTI.
The reimposition of U.S. sanctions on Iran is almost certainly due in part to an agreement between the United States and Saudi Arabia to ease, if not lift entirely, the production cuts imposed by OPEC and its partners, including Russia, that began last year. That is the only way that the president could have avoided a sharp increase in crude oil prices that he already has declared are too high.
Reuters analyst John Kemp cited a comment by U.S. Treasury Secretary Steven Mnuchin who said Tuesday that the United States has had “conversations with various parties … that would be willing to increase the oil supply.” There are a limited number of producing nations that have the spare capacity to make that happen: Saudi Arabia, Kuwait, United Arab Emirates, Russia and the United States.
In exchange for more oil production, the Trump administration will increase pressure on Iran to cease its destabilization efforts in Yemen, Syria and other Middle East countries.
U.S. crude oil exports fell by 271,000 barrels a day last week, and U.S. production rose by 84,000 barrels a day to 10.7 million barrels. Exports averaged 1.88 million barrels a day last week and have a cumulative daily average for the year of 1.64 million barrels a day, a 118% increase over the year-ago export total.
Distillate inventories decreased by 3.8 million barrels last week and remain in the lower half of the average range for this time of year. Distillate product supplied averaged over 4.2 million barrels a day for the past four weeks, up by 4.1% compared with the same period last year. Distillate production averaged 5 million barrels a day last week, unchanged compared to the prior week’s production.
For the past week, crude imports averaged over 7.3 million barrels a day, down by 1.23 million compared with the previous week. Refineries were running at 90.4% of capacity, with daily input averaging about 16.5 million barrels a day, about 75,000 less than the previous week’s average. Exports of refined products fell by 195,000 barrels a day last week to 4.82 million.
According to AAA, the current national average pump price per gallon of regular gasoline is $2.826, up 1.2 cents from $2.814 a week ago and up 16.5 cents per gallon compared with the month-ago price. Last year at this time, a gallon of regular gasoline cost $2.34 on average in the United States.
Oil Storage Report - May 9
Oil Storage Report - May 9
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Storage Report - May 9
From the Raymond James Energy Sector Team:
This week's petroleum inventories update was bullish relative to consensus. ''Big Three'' petroleum inventories (crude, gasoline, distillates - with crude including the SPR draw) fell by 8.9 MMBbls, versus consensus estimates for a draw of 0.5 MMBBls. Commercial crude inventories fell by 2.2 MMBbls, versus consensus calling for a build of 1.0 MMBbls, while total crude inventories (including the SPR) drew by 2.9 MMBbls. Cushing crude inventories rose by 1.4 MMBbls, while Gulf Coast inventories were down 2.5 MMBbls. Total petroleum inventories were down 1.5 MMBbls.
Gasoline posted a draw of 2.2 MMBbls versus consensus calling for no change and distillate inventories (which remain at a more than three year low) showed a draw of 3.8 MMBbls, versus consensus calling for a draw of 1.5 MMBbls. As always, regardless of their week-to-week movements, U.S. inventories do not constitute a holistic picture of global (or even total OECD) inventories, but they represent the only ''real-time'' data source.
Refinery utilization fell to 90.4% from 91.1% last week. Total petroleum imports were 9.9 MMBbls per day, down from last week's 10.8 MMBbls per day. Total petroleum product demand increased 1.9% after last week's 6.1% increase. On a four-week moving average basis, there is a 2.7% y/y increase in total demand. Lower 48 production was 10.20 MMBbls per day, up 0.091 MMBbls per day from last week. As always, weekly demand and supply figures are provisional estimates subject to frequent revisions.
This week's petroleum inventories update was bullish relative to consensus. ''Big Three'' petroleum inventories (crude, gasoline, distillates - with crude including the SPR draw) fell by 8.9 MMBbls, versus consensus estimates for a draw of 0.5 MMBBls. Commercial crude inventories fell by 2.2 MMBbls, versus consensus calling for a build of 1.0 MMBbls, while total crude inventories (including the SPR) drew by 2.9 MMBbls. Cushing crude inventories rose by 1.4 MMBbls, while Gulf Coast inventories were down 2.5 MMBbls. Total petroleum inventories were down 1.5 MMBbls.
Gasoline posted a draw of 2.2 MMBbls versus consensus calling for no change and distillate inventories (which remain at a more than three year low) showed a draw of 3.8 MMBbls, versus consensus calling for a draw of 1.5 MMBbls. As always, regardless of their week-to-week movements, U.S. inventories do not constitute a holistic picture of global (or even total OECD) inventories, but they represent the only ''real-time'' data source.
Refinery utilization fell to 90.4% from 91.1% last week. Total petroleum imports were 9.9 MMBbls per day, down from last week's 10.8 MMBbls per day. Total petroleum product demand increased 1.9% after last week's 6.1% increase. On a four-week moving average basis, there is a 2.7% y/y increase in total demand. Lower 48 production was 10.20 MMBbls per day, up 0.091 MMBbls per day from last week. As always, weekly demand and supply figures are provisional estimates subject to frequent revisions.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Storage Report - May 9
Dan, judging from the assessments you quoted, such as——
<<Reuters analyst John Kemp cited a comment by U.S. Treasury Secretary Steven Mnuchin who said Tuesday that the United States has had “conversations with various parties … that would be willing to increase the oil supply.” There are a limited number of producing nations that have the spare capacity to make that happen: Saudi Arabia, Kuwait, United Arab Emirates, Russia and the United States.>>
as well as from a New Yorker profile of the new "reformer" on the throne in Saudi (April 9th), with quotes from the players,
it seems that the market sees a backstage deal in which Trump's decision attempts to overthrow the conservatives in Iran for the benefit of Saudi and Israel esp. In return for his compiiance, the Saudis and some of the OPEC producers agree to give up their cutbacks in order to protect the Trump economy by keeping US energy prices down. Apparently King Salman has been lobbying furiously for this scheme. Ideally for the administration, energy prices should be as depressed as possible. It seems that traders are already expecting official and unofficial pressure to deflate prices. After all, the invasion of Iraq was supposed to break OPEC and produce a cornucopeia for US businesses too. As you and Phil Flynn say, whether the supply/demand reality will conform to these wishful plans is another story. But some influential forces in the market seem to expect deflated prices.
As I finished writing the above, I see Nick Cunningham is voicing the same concerns at Oil Price.com ("Did Trump just kill the OPEC Deal?"), another sign that
this is another attempt to manipulate the mkt down:
https://oilprice.com/Energy/Energy-Gene ... -Deal.html
<<Reuters analyst John Kemp cited a comment by U.S. Treasury Secretary Steven Mnuchin who said Tuesday that the United States has had “conversations with various parties … that would be willing to increase the oil supply.” There are a limited number of producing nations that have the spare capacity to make that happen: Saudi Arabia, Kuwait, United Arab Emirates, Russia and the United States.>>
as well as from a New Yorker profile of the new "reformer" on the throne in Saudi (April 9th), with quotes from the players,
it seems that the market sees a backstage deal in which Trump's decision attempts to overthrow the conservatives in Iran for the benefit of Saudi and Israel esp. In return for his compiiance, the Saudis and some of the OPEC producers agree to give up their cutbacks in order to protect the Trump economy by keeping US energy prices down. Apparently King Salman has been lobbying furiously for this scheme. Ideally for the administration, energy prices should be as depressed as possible. It seems that traders are already expecting official and unofficial pressure to deflate prices. After all, the invasion of Iraq was supposed to break OPEC and produce a cornucopeia for US businesses too. As you and Phil Flynn say, whether the supply/demand reality will conform to these wishful plans is another story. But some influential forces in the market seem to expect deflated prices.
As I finished writing the above, I see Nick Cunningham is voicing the same concerns at Oil Price.com ("Did Trump just kill the OPEC Deal?"), another sign that
this is another attempt to manipulate the mkt down:
https://oilprice.com/Energy/Energy-Gene ... -Deal.html
Re: Oil Storage Report - May 9
1. Saudi Arabia hates Iran. They are in a shooting war today via Yemen rebel forces backed by Iran. Obviously, they want Trump to take a hard line against Iran.
2. OPEC has very little excess production capacity. They would already be cheating if they had a lot more production capacity.
3. This is a demand driven oil price rally. Oil prices needed to go up regardless of the Iranian Nuke Deal.
4. We do not need or want $100 oil. $70 is just fine.
5. Demand for refined products made primarily from oil will go up ~2.5 million barrels per day from Q2 to Q3. < This happens every year.
6. OPEC does not have 2.5 million barrels of additional production capacity. < See the chart in the last IEA "Oil Market Report".
WTI is now trading in a range where this strong support at $67 and strong resistance at $75. < I hope it stays here for awhile because much higher prices will slow global economic growth and demand for oil growth.
2. OPEC has very little excess production capacity. They would already be cheating if they had a lot more production capacity.
3. This is a demand driven oil price rally. Oil prices needed to go up regardless of the Iranian Nuke Deal.
4. We do not need or want $100 oil. $70 is just fine.
5. Demand for refined products made primarily from oil will go up ~2.5 million barrels per day from Q2 to Q3. < This happens every year.
6. OPEC does not have 2.5 million barrels of additional production capacity. < See the chart in the last IEA "Oil Market Report".
WTI is now trading in a range where this strong support at $67 and strong resistance at $75. < I hope it stays here for awhile because much higher prices will slow global economic growth and demand for oil growth.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group