Energy Prospectus

Summary of Weekly Petroleum Data for the week ending June 28, 2019

U.S. crude oil refinery inputs averaged 17.3 million barrels per day during the week ending June 28, 2019, which was 47,000 barrels per day less than the previous week’s average. Refineries operated at 94.2% of their operable capacity last week.
> Gasoline production decreased last week, averaging 9.9 million barrels per day.
> Distillate fuel production increased last week, averaging 5.3 million barrels per day.

U.S. crude oil imports averaged 7.6 million barrels per day last week, up by 929,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 7.3 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 536,000 barrels per day, and distillate fuel imports averaged 98,000 barrels per day.

> U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 1.1 million barrels from the previous week. At 468.5 million barrels, U.S. crude oil inventories are about 5% above the five year average for this time of year.
> Total motor gasoline inventories decreased by 1.6 million barrels last week and are at the five year average for this time of year. Finished gasoline and blending components inventories both decreased last week.
> Distillate fuel inventories increased by 1.4 million barrels last week and are about 6% below the five year average for this time of year.
> Propane/propylene inventories increased by 1.3 million barrels last week and are about 11% above the five year average for this time of year.
>>Total commercial petroleum inventories increased last week by 2.5 million barrels last week.

Total products supplied over the last four-week period averaged 20.9 million barrels per day, virtually unchanged from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.7 million barrels per day, down by 0.1% from the same period last year. Distillate fuel product supplied averaged 4.1 million barrels per day over the past four weeks, up by 1.6% from the same period last year. Jet fuel product supplied was up 2.2% compared with the same four-week period last year.

Traders always seem to over-react to the initial report before settling down when they see the detailed report. IMO U.S. production declining by 200,000 barrels per day since May 31st (per EIA) is more important than the slightly disappointing (smaller than expected) decline in crude oil inventories.

Shutting down of the big PA refinery means less crude drawn for storage.

The Phil Flynn Energy Report: 07-03-2019 (Jul 03, 2019 11:20AM ET)
The Oil Market Massacre

The oil bears shot down the oil market before they saw the whites of their eyes. There was a post OPEC plus oil market meeting massacre that reminds you of the Boston Massacre that helped lay the groundwork for the American Revolution. OPEC’s shot at stabilizing oil prices was heard around the world and was universally rejected as not enough or more of the same. Perhaps the traders wanted to see a bigger cut in production. Or they just assume that U.S. shale oil production will fill the void. Perhaps they were just in a hurry to get out and celebrate our independence and wanted to dump positions so they could get a good spot at the fireworks display. Yet the market action seems to suggest it is really fearing softening demand even as demand softness looks to be temporary, and we get a report that signals demand in the U.S. is near a record high.

The American Petroleum Institute reported that the U.S. crude oil supply fell last week by 5 million barrels, at least 2 million barrels more than expected. Gasoline supply also fell by 387,000 barrels, not quite as much as the 2.2-million-barrel drop expected, but distillates fell by 1.7 million barrels putting supply in that category more than 7% below the five-year average. This was the type of report that normally would have created bullish market fireworks, yet afterwards the battle-worn bulls had retreated from battle, fearing to make a stand ahead of the holiday.

The Saudi Arabian Energy Minister Khalid Al-Falih is “enthusiastic about where oil demand is going” yet the market was not. The Saudis for their part say they can stand up to shale as well as al-Falih said in a news conference Monday that “I have no doubt in my mind that U.S. shale will peak and the decline like every other basin in history. The question is when. Until it does, it would be prudent for us that have a lot at stake also for those of us who want to protect the global economy.” Yet despite more signs that the Shale patch is struggling financially, the oil market for the moment is believing that shale can go on and pursue oil production happiness even if a prolonged price drop will cause more shale spending cutbacks.

In fact, the oil market sell-off all but assures that Fed Chairman Jerome Powell will put his John Hancock on a Fed Statement that will cut rates this month along with other signers that vote on monetary policy. The drop-in oil will provide the Fed the cover they need as the drop-in oil should keep inflation pressure subdued.

Of course, this Independence Day swoon did not come fast enough to save you much at the gas tank ahead of the Holiday. AAA reported that gas prices were up to $2.748 last night, up from $2.684. Maybe we can blame OPEC for not having their meeting earlier. Maybe we can blame Philadelphia, home to Independence Hall where we had the signing of the Declaration of Independence, but also the Philadelphia Energy Solutions (PES) refinery. AAA says that last week, PES announced that they will permanently close the South Philadelphia refinery this month, which is the oldest and largest refinery on the East Coast. The announcement came following a June fire and explosion at the refinery, which produces 335,000 barrels of crude per day (42 U.S. gallons per barrel). While gasoline stocks from Canada, neighboring refineries, and the Colonial Pipeline will help backfill supply, retailers will likely face increased transportation costs, which will drive up prices in the Northeast and surrounding regions.

Remember that because of the Independence Day holiday you have the God given rights to two energy reports from the Energy Information Administration. Yes, both the petroleum status report and the natural gas storage report. Both reports can provide some fireworks. The petrol report will use the API as its base case for bullish or bearish. The Nat gas injection number to beat is 83 bcf.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the Pursuit of Happiness. Go out and Celebrate America! Happy Fourth of July! Your right to prosper should be in the Constitution!

Go here https://www.eia.gov/dnav/pet/pet_sum_sn ... _nus_w.htm and scroll down to Days of Supply. Sure doesn't look like we have a "glut" of oil based liquids to me.