Oil Price down on an unexpected rise in U.S. crude oil inventory (primarily an increase in imports)
After the American Petroleum Institute surprised markets yesterday by reporting a build of 3.66 million barrels for the week ending August 10, the Energy Information Administration today confirmed a build, but reported that it had been significantly bigger at 6.8 million barrels.
Analysts polled by S&P Global Platts had forecast an inventory decline of 1.7 million barrels for the period.
The EIA reported that at 414.2 million barrels, U.S. crude oil inventories are a bit above the five-year average for the season.
In gasoline, inventories were down by 700,000 barrels last week, compared with a build of 2.9 million barrels a week earlier but slightly above the seasonal average. Gasoline production averaged 10.2 million bpd, from 9.9 million bpd the week before last.
Distillate inventories added 3.6 million barrels last week, after a build of 1.2 million barrels in the prior week, with production averaging 5.3 million bpd, up by 100,000 bpd on the previous week.
Meanwhile the market is worrying about supply from Venezuela and preparing for the last round of U.S. sanctions against Iran, which will target its oil industry specifically. Some oil bulls are preparing for oil prices of US$150 and even US$200, Reuters reported yesterday, citing prominent hedge fund manager Pierre Andurand and Jean-Louis Mee, chief executive of Westbeck Capital.
Reuters Article: https://www.reuters.com/article/uk-oil- ... SKBN1KZ1G6
Andurand expects oil to jump to US$150 a barrel as U.S. sanctions against Iran kick in in a couple of months and crude supply shrinks by a million bpd or more. Mee is even more bullish, seeing the ultimate loss of supply at more than 2 million bpd.
“Our view is that by November 4, we will have lost between 1.3 and 1.4 million barrels (of output) a day. It is a very big number. That’s based on the view that the U.S. will allow a few temporary exception waivers .... Ultimately, we could see losses from Iran exceed 2 million barrels a day,” the Westbeck Capital chief executive said.
By Irina Slav for Oilprice.com
Oil Price - August 15
Oil Price - August 15
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Price - August 15
U.S. Crude Inventory is still way below where it should be on days of supply.
Total petroleum imports were 11.1 MMBbls per day, up from 10.2 MMBbls per day last week
Total petroleum imports were 11.1 MMBbls per day, up from 10.2 MMBbls per day last week
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Price - August 15
Raymond James comments on EIA weekly report 8/15/2018:
This week's petroleum inventories update was bearish relative to consensus. "Big Three" petroleum inventories (crude, gasoline,
distillates) rose by 9.6 MMBbls, versus consensus estimates for a draw of 1.8 MMBbls. Crude inventories rose by 6.8 MMBbls, versus
consensus calling for a draw of 2.5 MMBbls. Cushing crude inventories rose by 1.6 MMBbls, with Gulf Coast inventories up 0.4
MMBbls. Gasoline inventories decreased by 0.7 MMBbls, versus consensus calling for a draw of 0.3 MMBbls; while distillate
inventories rose by 3.6 MMBbls, versus consensus calling for a build of 1.0 MMBbls. Total petroleum inventories were up 17.4
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 rose to 98.1% from 96.6% last week. Total petroleum imports were 11.1 MMBbls per day, up from last week’s
10.2 MMBbls per day. Total petroleum product demand decreased 3.5% after last week’s 1.7% increase. On a four-week moving
average basis, there is a 1.6% y/y decrease in total demand. U.S. (Lower 48) production was 10.5 MMBbls per day, flat from last
week. As always, weekly demand and supply figures are provisional estimates subject to frequent revisions.
With oil prices having come down from four-year highs earlier this summer, we continue to see a supportive fundamental backdrop:
the larger U.S. producers are exhibiting restraint in capital allocation; OPEC+Russia’s gradual unwinding of production cuts is being
offset by declines in Venezuela and, to a lesser extent, the latest supply outage in Libya; there are still supply declines in several nonOPEC
geographies (e.g., Mexico); and the picture for global demand growth is broadly upbeat. Meanwhile, the “spill over” from
Permian midstream bottlenecks is likely to result in a renewed “blowout” in the Brent-WTI spread; meanwhile. The 12-month
futures strip ($63.93/Bbl for WTI and $71.26/Bbl for Brent) shows a slightly backwardated near-term curve for Brent and a steeply
backwardated WTI curve (at least in the front couple of months). Several wild cards remain in play, such as: 1) on the bullish side,
the possibility of supply disruptions above and beyond the current ones; and 2) on the bearish side, the prospect of further strength
in the U.S. dollar.
This week's petroleum inventories update was bearish relative to consensus. "Big Three" petroleum inventories (crude, gasoline,
distillates) rose by 9.6 MMBbls, versus consensus estimates for a draw of 1.8 MMBbls. Crude inventories rose by 6.8 MMBbls, versus
consensus calling for a draw of 2.5 MMBbls. Cushing crude inventories rose by 1.6 MMBbls, with Gulf Coast inventories up 0.4
MMBbls. Gasoline inventories decreased by 0.7 MMBbls, versus consensus calling for a draw of 0.3 MMBbls; while distillate
inventories rose by 3.6 MMBbls, versus consensus calling for a build of 1.0 MMBbls. Total petroleum inventories were up 17.4
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 rose to 98.1% from 96.6% last week. Total petroleum imports were 11.1 MMBbls per day, up from last week’s
10.2 MMBbls per day. Total petroleum product demand decreased 3.5% after last week’s 1.7% increase. On a four-week moving
average basis, there is a 1.6% y/y decrease in total demand. U.S. (Lower 48) production was 10.5 MMBbls per day, flat from last
week. As always, weekly demand and supply figures are provisional estimates subject to frequent revisions.
With oil prices having come down from four-year highs earlier this summer, we continue to see a supportive fundamental backdrop:
the larger U.S. producers are exhibiting restraint in capital allocation; OPEC+Russia’s gradual unwinding of production cuts is being
offset by declines in Venezuela and, to a lesser extent, the latest supply outage in Libya; there are still supply declines in several nonOPEC
geographies (e.g., Mexico); and the picture for global demand growth is broadly upbeat. Meanwhile, the “spill over” from
Permian midstream bottlenecks is likely to result in a renewed “blowout” in the Brent-WTI spread; meanwhile. The 12-month
futures strip ($63.93/Bbl for WTI and $71.26/Bbl for Brent) shows a slightly backwardated near-term curve for Brent and a steeply
backwardated WTI curve (at least in the front couple of months). Several wild cards remain in play, such as: 1) on the bullish side,
the possibility of supply disruptions above and beyond the current ones; and 2) on the bearish side, the prospect of further strength
in the U.S. dollar.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group