Energy Prospectus

Summary of Weekly Petroleum Data for the week ending May 22, 2020

U.S. crude oil refinery inputs averaged 13.0 million barrels per day during the week ending May 22, 2020 which was 87,000 barrels per day more than the previous week’s average. Refineries
operated at 71.3% of their operable capacity last week. < Refiners need to ramp up to at least 90% of capacity in June.
Gasoline production increased last week, averaging 7.2 million barrels per day.
Distillate fuel production decreased last week, averaging 4.8 million barrels per day.

U.S. crude oil imports averaged 7.2 million barrels per day last week, increased by 2.0 million barrels per day from the previous week. Over the past four weeks, crude oil imports averaged
about 5.9 million barrels per day, 16.4% less than the same four-week period last year. < Spike in imports caused rise in crude oil inventory.
Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 292,000 barrels per day, and distillate fuel imports averaged 155,000 barrels per day.

> U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 7.9 million barrels from the previous week. At 534.4 million barrels, U.S. crude oil inventories are about 13% above the five year average for this time of year. < High, but no danger of reaching working storage level of ~580 million barrels.
> Total motor gasoline inventories decreased by 0.7 million barrels last week and are about 10% above the five year average for this time of year. Finished gasoline inventories decreased while blending components inventories increased last week. < We need to see a big increase in gasoline demand this summer.
> Distillate fuel inventories increased by 5.5 million barrels last week and are about 24% above the five year average for this time of year.
> Propane/propylene inventories increased by 1.5 million barrels last week and are about 13% above the five year average for this time of year.
>> Total commercial petroleum inventories increased last week by 14.9 million barrels last week.

Total products supplied over the last four-week period averaged 16.2 million barrels a day, down by 20.1% from the same period last year.
Over the past four weeks, motor gasoline product supplied averaged 7.0 million barrels a day, down by 25.7% from the same period last year.
Distillate fuel product supplied averaged 3.5 million barrels a day more than the past four weeks, down by 13.6% from the same period last year.
Jet fuel product supplied was down 66.6% compared with the same four-week period last year.

Oil CEO says US shale rebound is at least a year away . Bloomberg .
Even if the economy continues to recover and a second wave of the pandemic is less damaging than the first, U.S. shale drillers may still take at least a year before moving rigs back into the field, according to the leader of an oilfield-services company. Precision Drilling Corp. Chief Executive Officer Kevin Neveu said activity in U.S. shale basins is in for a “prolonged downturn,” with drilling not rebounding until late in the second quarter of 2021 at the earliest, or the end of next year at the latest.

Oil and gas industry reports record-breaking job losses in April
The oil and gas industry lost 26,300 jobs in April, the largest drop of industry jobs in a single month, according to job data dating to 1990. Texas saw a record surge of more than 2 million claims for unemployment in roughly a six-week period after Gov. Greg Abbott’s executive order in March shut down businesses he deemed nonessential to prevent the spread of the coronavirus, and to tanking oil prices resulting from an oil war between Saudi Arabia and Russia. The economic fallout also sent commodity prices to historic lows.
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MY TAKE:
> The active rig count has fallen much further than expected.
> Upstream companies won't increase drilling programs until oil is firmly over $40/bbl and only slightly until oil is firmly over $50/bbl.
> Oilfield Service companies really need to hunker down to survive.
> As bad as this sounds, the seeds of an oil shortage will sprout in June and have leaves by July.
> If OPEC+ can keep it together for a few more months they will get the higher oil prices they need within six months.