Energy Prospectus

Summary of Weekly Petroleum Data for the week ending March 15, 2019 My comments are in blue.

U.S. crude oil refinery inputs averaged 16.2 million barrels per day during the week ending March 15, 2019, which was 178,000 barrels per day more than the previous week’s average. Refineries operated at 88.9% of their operable capacity last week. Gasoline production increased last week, averaging 9.9 million barrels per day. Distillate fuel production increased last week, averaging 4.9 million barrels per day. < Refiners are coming out of their semi-annual maintenance period and should ramp up to ~95% of capacity by mid-April.

U.S. crude oil imports averaged 6.9 million barrels per day last week, up by 186,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 6.6 million barrels per day, 11.2% less than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 793,000 barrels per day, and distillate fuel imports averaged 102,000 barrels per day.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 9.6 million barrels from the previous week. At 439.5 million barrels, U.S. crude oil inventories are about 2% below the five year average for this time of year.
> Total motor gasoline inventories decreased by 4.6 million barrels last week and are about 2% above the five year average for this time of year. Finished gasoline and blending components inventories both decreased last week.
> Distillate fuel inventories decreased by 4.1 million barrels last week and are about 4% below the five year average for this time of year.
> Propane/propylene inventories increased by 1.0 million barrels last week and are about 14% above the five year average for this time of year.
>> Total commercial petroleum inventories decreased last week by 12.6 million barrels last week. < This should draw a lot of attention. Inventories normally to not fall this fast until late April when refiners are ramping up production of transportation fuels.

Total products supplied over the last four-week period averaged 21.1 million barrels per day, up by 2.8% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.1 million barrels per day, down by 1.4% from the same period last year. Distillate fuel product supplied averaged 4.2 million barrels per day over the past four weeks, up by 8.2% from the same period last year. Jet fuel product supplied was up 7.2% compared with the same four-week period last year.

Investing.com - U.S. crude oil inventories fell unexpectedly last week, the Energy Information Administration said in its weekly report on Wednesday.

The EIA data showed that crude oil inventories declined by 9.59 million barrels in the week to March 15.

That was compared to forecasts for a stockpile build of 0.31 million barrels, after a decline of 3.86 million barrels in the previous week.

The EIA report also showed that gasoline inventories fell by 4.59 million barrels, compared to expectations for a draw of 2.41 million barrels, while distillate stockpiles dropped by 4.13 million barrels, compared to forecasts for a decline of 1.09 million.

U.S. crude prices traded higher after the data release, gaining 0.51% at $59.59 a barrel by 10:37 AM ET (14:37 GMT), compared to $59.15 prior to the publication.

London-traded Brent crude futures traded up 0.51% to $68.00 a barrel, compared to $67.60 ahead of the release.

U.S. crude ended lower at the close on Monday as bulls ran out of steam. Bloomberg laid the blame at the door of concerns over U.S.-China trade negotiations, reporting that Beijing was pushing back against Washington’s demands. Chinese officials appear to object to the fact that the Trump administration has not assured that tariffs will be lifted when the deal goes through.

While sources from Reuters pointed to high-level talks scheduled in Beijing for the week of March 25, the ongoing trade tensions run the risk that friction between the world’s two largest economies will cloud the outlook for the global economy, damaging demand for oil.

Despite the lingering concerns, WTI oil is still up more than 2.5% this month and has skyrocketed around 30% in 2019 as oil has been “supported by risk appetite through the link to rising stocks and fundamentally by OPEC/Russia (production) cuts and Trump sanctions (on Iran and Venezuela)”, Ole Hansen, head of commodity strategy at SaxoBank, said. “All (are) formidable opponents to any potential bear out there,” he added.

Aggressive production cuts carried out by OPEC, headed by Saudi Arabia, and another 10 allies of the oil-producing club, led by Russia, were in the spotlight this week as both the kingdom and Moscow stressed their plans to increase compliance with the output reduction.

Saudi Energy Minister Khalid al-Falih and Russian counterpart Alexander Novak appeared to band together in canceling an April meeting in favor of a more ‘sensible’ decision when the end of the current pact arrives in June.

But Investing.com analyst Barani Krishnan warned that the cancelled meeting may in fact be a Saudi strategy to silence any objections.

“The Saudis can silence much dissent within OPEC with their position as the cartel’s de-facto leader,” he said. “Yet Falih seemed to be taking no chances in risking any mixed or muddled messaging coming out of the group a month from now, when global demand for oil is expected to remain subdued with major economies on the decline, and any lack of adherence to cuts on OPEC’s part could immediately hurt crude prices.”