Oil Price - July 31
Oil Price - July 31
The American Petroleum Institute (API) reported a crude oil inventory draw of 6.024 million barrels for the week ending July 25, compared to analyst expectations of a much smaller, 1.818-million barrel draw.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Price - July 31
U.S. crude oil inventories have averaged more than a 1,000,000 barrel decline PER DAY for the last six weeks. Big draws will continue through September (at least).
EIA Summary of Weekly Petroleum Data for the week ending July 26, 2019
U.S. crude oil refinery inputs averaged 17.0 million barrels per day during the week ending July 26, 2019, which was 43,000 barrels per day less than the previous week’s average. Refineries operated at 93.0% of their operable capacity last week.
> Gasoline production increased last week, averaging 10.4 million barrels per day.
> Distillate fuel production decreased last week, averaging 5.2 million barrels per day.
U.S. crude oil imports averaged 6.7 million barrels per day last week, down by 365,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 7.0 million barrels per day, 13.1% less than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 1,117,000 barrels per day, and distillate fuel imports averaged 103,000 barrels per day.
> U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 8.5 million barrels from the previous week. At 436.5 million barrels, U.S. crude oil inventories are at the five year average for this time of year.
> Total motor gasoline inventories decreased by 1.8 million barrels last week and are about 2% above the five year average for this time of year. Finished gasoline inventories increased while blending components inventories decreased last week.
> Distillate fuel inventories decreased by 0.9 million barrels last week and are about 3% below the five year average for this time of year.
> Propane/propylene inventories increased by 1.4 million barrels last week and are about 6% above the five year average for this time of year.
>>> Total commercial petroleum inventories decreased last week by 10.1 million barrels last week.
Total products supplied over the last four-week period averaged 21.1 million barrels per day, up by 1.2% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.6 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 past four weeks, down by 2.9% from the same period last year. Jet fuel product supplied was up 3.3% compared with the same four-week period last year.
EIA Summary of Weekly Petroleum Data for the week ending July 26, 2019
U.S. crude oil refinery inputs averaged 17.0 million barrels per day during the week ending July 26, 2019, which was 43,000 barrels per day less than the previous week’s average. Refineries operated at 93.0% of their operable capacity last week.
> Gasoline production increased last week, averaging 10.4 million barrels per day.
> Distillate fuel production decreased last week, averaging 5.2 million barrels per day.
U.S. crude oil imports averaged 6.7 million barrels per day last week, down by 365,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 7.0 million barrels per day, 13.1% less than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 1,117,000 barrels per day, and distillate fuel imports averaged 103,000 barrels per day.
> U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 8.5 million barrels from the previous week. At 436.5 million barrels, U.S. crude oil inventories are at the five year average for this time of year.
> Total motor gasoline inventories decreased by 1.8 million barrels last week and are about 2% above the five year average for this time of year. Finished gasoline inventories increased while blending components inventories decreased last week.
> Distillate fuel inventories decreased by 0.9 million barrels last week and are about 3% below the five year average for this time of year.
> Propane/propylene inventories increased by 1.4 million barrels last week and are about 6% above the five year average for this time of year.
>>> Total commercial petroleum inventories decreased last week by 10.1 million barrels last week.
Total products supplied over the last four-week period averaged 21.1 million barrels per day, up by 1.2% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.6 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 past four weeks, down by 2.9% from the same period last year. Jet fuel product supplied was up 3.3% compared with the same four-week period last year.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Price - July 31
I'm leaving to go to our Hess Club luncheon. I will be back around 3PM CT.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Price - July 31
WTI pulled back after the Fed announced a 0.25% rate cut because the U.S. dollar spiked in the afternoon.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Price - July 31
From Raymond James 7-31-2019
This week's EIA petroleum inventories update was bullish relative to consensus. "Big Three" petroleum inventories (crude, gasoline, distillates - including SPR) decreased by 11.2 MMBbls, versus consensus estimates calling for a draw of 3.3 MMBbls. Turning to crude, total inventories (including SPR) fell by 8.5 MMBbls versus consensus calling for a draw of 2.8 MMBbls and a normal seasonal draw of 0.8 MMBbls. Recall, a sizable portion of the crude builds in May and early June had been due to higher imports amid a narrower Brent-MEH spread. With the spread having widened back out, we think that crude draws will generally continue as summer driving season gets busier, though some week-to-week choppiness is still to be expected.
Refinery utilization fell slightly to 93.0% from 93.1% last week. Total petroleum product demand decreased 1.3% after last week’s 6.3% increase. On a four-week moving average basis, there is a 1.2% y/y increase in total demand.
Following a strong start to the year, oil prices pulled back in early summer, amid concerns about increased U.S. inventories and softer global oil demand, before regaining their footing over the past month. Fundamentally, we see a broadly supportive backdrop: the larger U.S. producers are exhibiting restraint in capital allocation; OPEC+Russia’s production cuts – in place through March 2020 – are noticeably contributing to inventory draws; U.S. sanctions against Iran continue to be impactful; and IMO 2020 is looming five months from now.
The 12-month futures strip ($57.25/Bbl for WTI and $63.13/Bbl for Brent) shows modest backwardation for both Brent and WTI; for comparison, our recently updated 2019 forecast is $62.50 WTI/$71.00 Brent, and the 2020 forecast is $92.50 WTI/$100 Brent.
Several wild cards remain in play, such as: 1) on the bullish side, the possibility of supply disruptions above and beyond the current ones, such as the possibility of military escalation vis-à-vis Iran; and 2) on the bearish side, indications of global macro slowdown (including the impact from trade conflicts) and resulting read-through for oil demand, following some mixed demand-related datapoints in recent months.
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I cannot send out the slides that Muhammed Ghulam, Senior Associate at Raymond James spoke from at our July 31st luncheon. However, I can send out RJ's fresh oil price forecast and the details behind it. It will be sent out via email this evening.
This week's EIA petroleum inventories update was bullish relative to consensus. "Big Three" petroleum inventories (crude, gasoline, distillates - including SPR) decreased by 11.2 MMBbls, versus consensus estimates calling for a draw of 3.3 MMBbls. Turning to crude, total inventories (including SPR) fell by 8.5 MMBbls versus consensus calling for a draw of 2.8 MMBbls and a normal seasonal draw of 0.8 MMBbls. Recall, a sizable portion of the crude builds in May and early June had been due to higher imports amid a narrower Brent-MEH spread. With the spread having widened back out, we think that crude draws will generally continue as summer driving season gets busier, though some week-to-week choppiness is still to be expected.
Refinery utilization fell slightly to 93.0% from 93.1% last week. Total petroleum product demand decreased 1.3% after last week’s 6.3% increase. On a four-week moving average basis, there is a 1.2% y/y increase in total demand.
Following a strong start to the year, oil prices pulled back in early summer, amid concerns about increased U.S. inventories and softer global oil demand, before regaining their footing over the past month. Fundamentally, we see a broadly supportive backdrop: the larger U.S. producers are exhibiting restraint in capital allocation; OPEC+Russia’s production cuts – in place through March 2020 – are noticeably contributing to inventory draws; U.S. sanctions against Iran continue to be impactful; and IMO 2020 is looming five months from now.
The 12-month futures strip ($57.25/Bbl for WTI and $63.13/Bbl for Brent) shows modest backwardation for both Brent and WTI; for comparison, our recently updated 2019 forecast is $62.50 WTI/$71.00 Brent, and the 2020 forecast is $92.50 WTI/$100 Brent.
Several wild cards remain in play, such as: 1) on the bullish side, the possibility of supply disruptions above and beyond the current ones, such as the possibility of military escalation vis-à-vis Iran; and 2) on the bearish side, indications of global macro slowdown (including the impact from trade conflicts) and resulting read-through for oil demand, following some mixed demand-related datapoints in recent months.
---------------------------------
I cannot send out the slides that Muhammed Ghulam, Senior Associate at Raymond James spoke from at our July 31st luncheon. However, I can send out RJ's fresh oil price forecast and the details behind it. It will be sent out via email this evening.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group