Energy Prospectus

Hurricane Delta had an impact last week and it will also impact next week's report. The hurricane lowered production and imports.

Summary of Weekly Petroleum Data for the week ending October 9, 2020

U.S. crude oil refinery inputs averaged 13.6 million barrels per day during the week ending October 9, 2020 which was 277,000 barrels per day less than the previous week’s average.
Refineries operated at 75.1% of their operable capacity last week. < Traders are hyper sensitive to the refinery utilization rate. It should pick up again after hurricane Delta related shutdowns are restored.
Gasoline production decreased last week, averaging 9.2 million barrels per day.
Distillate fuel production decreased last week, averaging 4.3 million barrels per day.

U.S. crude oil imports averaged 5.3 million barrels per day last week, down by 447,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 5.3
million barrels per day, 15.4% less than the same four-week period last year.
Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 398,000 barrels per day, and distillate fuel imports averaged 160,000 barrels per day.

> U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 3.8 million barrels from the previous week. At 489.1 million barrels, U.S. crude oil inventories are about 11% above the five year average for this time of year.
> Total motor gasoline inventories decreased by 1.6 million barrels last week and are about 1% below the five year average for this time of year. Finished gasoline and blending components inventories both decreased last week. < Gasoline inventories are well below 30 days of supply.
> Distillate fuel inventories decreased by 7.2 million barrels last week and are about 19% above the five year average for this time of year. < VERY GOOD NEWS.
> Propane/propylene inventories decreased by 1.9 million barrels last week and are about 11% above the five year average for this time of year.
>> Total commercial petroleum inventories decreased by 16.8 million barrels last week. < Overall a very bullish report except that traders are attributing the big inventory declines to Hurricane Delta and they remain focused on the low refinery utilization rate and the non-stop Covid-19 fear mongering.

Total products supplied over the last four-week period averaged 18.4 million barrels a day, down by 12.6% from the same period last year.
Over the past four weeks, motor gasoline product supplied averaged 8.6 million barrels a day, down by 7.5% from the same period last year.
Distillate fuel product supplied averaged 3.9 million barrels a day over the past four weeks, down by 3.7% from the same period last year.
Jet fuel product supplied was down 41.8% compared with the same four-week period last year. < What normally goes into Jet Fuel is being blended back into distillates.
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From the detailed weekly EIA supply report

U.S. oil production declined 500,000 bpd from 11.0 million to 10.5 million bpd, primarily the result of Hurricane Delta.

Days of Supply made big moves back toward normal levels (very bullish):
36.3 to 35.9 for crude oil
26.4 to 26.1 for gasoline
48.1 to 42.0 for distillate < very good
43.4 to 29.4 for jet fuel < I've heard that refiners are blending jet fuel back into diesel, which makes the big decline in distillates even more impressive.

Lots more details here: https://www.eia.gov/dnav/pet/pet_sum_sn ... _nus_w.htm

Energy Report: Supplies Slide
By Phil Flynn (Oct 15, 2020 08:49AM ET) < Before the EIA report above.

The supply side for oil does not seem to matter because the world is still focused on anemic demand, the lack of a COVID-19 relief package, and the possibility of a second wave of the coronavirus pandemic.

The OPEC Secretary General, HE Mohammad Sanusi Barkindo, said that, “oil demand still looks anemic, OPEC is hopeful that the world won’t return to deepest lockdowns.” Today’s oil price seems to agree with him because not even a very bullish supply drop in crude, gasoline, and a stunner drop in distillates, failed to give the market a bid.

The American Petroleum Institute (API) reported that the U.S. crude supply fell by a whopping 5.4221 million barrel. The API said that U.S. gasoline supply fell by 1.513 million barrels and a huge 3.930 million barrel drop in distillate.

Of course the market is ignoring this early today because they chalk it up all to Hurricane Delta. There is no doubt that the hurricane made the draws larger, and in the Cushing delivery point, we saw a 2.199-million-barrel increase. Yet, they ignore the broader trend of tightening supply because there is this belief that demand is not going to get better.

OPEC Secretary-General HE Mohammad Sanusi Barkindo says that he believes that oil demand is not recovering as quickly as expected. When OPEC Plus meets in November and December, they will take stock of the whole year. When he was asked about the planned OPEC plus plan to raise output next year, he said there is no cause for alarm. Tell the market that as it deals with the return of Libyan oil.

Still, while demand has been not as strong as they hoped, inventories are tightening globally. Going into the fourth quarter can be an issue because an increase in demand due to a weather event could leave the complex vulnerable to price spikes.

Mr. Barkindo does say that “We will see a strong rebound in GDP next year. We have no doubt a vaccine will be available next year.” Maybe, but the U.K. sees the second wave of Covid and the U.K. Health Secretary says that the country is moving to a “high alert level.” Vitol CEO says that oil demand in the U.S. and the E.U. has passed its peak! That leaves the rest of the world to suck down the barrels.

Natural Gas is on a wild ride as the weather forecast for cold and its duration fluctuates. Today we get the EIA natural gas number at 9:30am central time and oil at 10:00am.

The REAL COST of the Covid shutdowns is spreading poverty < which IMO will cause many more deaths than the virus - Dan S.

We have written before that you cannot tax your way to prosperity. Oppressive tax is keeping people in poverty. Bloomberg News: “Millions of low-income Americans are locked into poverty thanks to U.S. tax policy, Federal Reserve Bank of Atlanta researchers say. About a quarter of lower-income workers effectively face marginal tax rates of more than 70% when adjusted for the loss of government benefits, a study led by Atlanta Fed Research Director David Altig found. That means for every $1,000 gained in income, $700 goes to the government in taxes or reduced spending. In some cases, there are no gains at all.

Poorer families may rely on Medicaid insurance, welfare payments, food stamps, housing vouchers and tax credits that are based on family incomes. Small increases in wages can bring big losses of benefits, reinforcing a negative cycle in which workers aren’t rewarded if they improve their skills or pay.

“This is a perverse incentive that says you shouldn’t try to make yourself better,” said Atlanta Fed President Raphael Bostic, who is leading a virtual conference Thursday intending to focus attention on the problem.

“They are not dumb. It’s on us to actually change those incentives so that people understand what the potential is and move forward towards opportunity.” According to the U.S. Census Bureau, 34 million Americans lived below the poverty line last year.
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And the idiots in Washington play politics while millions of families that were doing just fine in Q1 now face poverty! I rarely agree with Wolf Blitzer, but I give him a high five for kicking Nancy Pelosi' ass.