Energy Prospectus

Summary of Weekly Petroleum Data for the week ending April 16, 2021

U.S. crude oil refinery inputs averaged 14.8 million barrels per day during the week ending April 16, 2021 which was 286,000 barrels per day less than the previous week’s average.
Refineries operated at 85.0% of their operable capacity last week. < Needs to increase to 90% in May.
Gasoline production decreased last week, averaging 9.4 million barrels per day.
Distillate fuel production decreased last week, averaging 4.6 million barrels per day.

U.S. crude oil imports averaged 5.4 million barrels per day last week, down by 448,000 thousand barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 5.9 million barrels per day, 5.0% more than the same four-week period last year.
Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 1.1 million barrels per day, and distillate fuel imports averaged 162,000 barrels per day.

> U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 0.6 million barrels from the previous week. At 493.0 million barrels, U.S. crude oil inventories are about 1% above the five year average for this time of year.
> Total motor gasoline inventories increased by 0.1 million barrels last week and are about 3% below the five year average for this time of year. Finished gasoline inventories decreased while blending components inventories increased last week.
> Distillate fuel inventories decreased by 1.1 million barrels last week and are about 2% above the five year average for this time of year.
> Propane/propylene inventories decreased by 0.1 million barrels last week and are about 18% below the five year average for this time of year.
>> Total commercial petroleum inventories increased by 3.6 million barrels last week.

Total products supplied over the last four-week period averaged 19.7 million barrels a day, up by 30.7% from the same period last year.
Over the past four weeks, motor gasoline product supplied averaged 8.9 million barrels a day, up by 61.5% from the same period last year.
Distillate fuel product supplied averaged 3.9 million barrels a day over the past four weeks, up by 15.9% from the same period last year.
Jet fuel product supplied was up 62.9% compared with the same four week period last year.
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Small build in crude oil probably causes a bit of drop in oil prices, but low gasoline inventories is bullish. Demand for transportation fuels is holding up and should increase in May. Propane shortage keeps upward pressure on NGL prices.

AEGIS Notes: "Oil Prices were up five minutes following the announcement, to $61.88, from $61.81 just before 9:30am. Inventories for the US are now at a deficit of 10.601 MBbls to last year and a surplus of 7.82 MBbls to the five-year average."

Energy Report: Wobbly
By Phil Flynn (Apr 21, 2021 09:30AM ET, an hour before the EIA report came out)

Just as oil looked poised to break out and run, Covid 19 realities sunk in as demand fears started to raise their ugly head. A surge in cases in India and an announcement that Prime Minister Modi was going to give a speech addressing the issue caused oil bulls to panic. Even though Prime Minister Modi vowed not to shut down the economy he warned that India faces a coronavirus “storm” that could overwhelm its health system.

It did not help that at about the same time as the announcement about the speech came out, then a report about the Johnson & Johnson (NYSE:JNJ) vaccine. Fox News reported that a European Union regulator has recommended that the JNJ COVID-19 vaccine should include a warning about unusual blood clots with low platelets. The European Medicines Agency (EMA) safety committee (PRAC) said the events should be listed as very rare side effects of the vaccine. However, the committee noted that “based on the currently available evidence, specific risk factors have not been confirmed.” It also said that “the reported combination of blood clots and low blood platelets is very rare, and the overall benefits of COVID-19 Vaccine Janssen in preventing COVID-19 outweigh the risks of side effects.”

Some traders also freaked out on a report that the House Judiciary Committee is going after OPEC again. Reuters reported that they passed a bill to open the OPEC oil production group and countries working with it to lawsuits for collusion in boosting petroleum prices, but it was uncertain whether the full chamber would consider the legislation. The so-called NOPEC bill, introduced by Representative Steve Chabot, a Republican, passed on a voice vote in the House Judiciary Committee. It would allow the U.S. Justice Department to bring anti-trust lawsuits against oil-producing countries in the Organization of the Petroleum Exporting Countries. Similar bills to pressure OPEC when oil prices are on the rise have appeared in Congress without success for more than 20 years.

So why would oil traders think that this bill has a better chance of going anywhere? That remains to be seen. Yet it was another factor that conspired to yesterday’s sell-off.

Then came the American Petroleum Institute (API) report that was less than bullish. The API said that Crude supply increased by 436,000 barrels versus expectations for a 2.975-million-barrel drawdown. Still, we did see supply in the Cushing Oklahoma delivery point fall by 1.286 million barrels which suggests decent demand. Gasoline supply reportedly fell by 1.617 million barrels a sign that the US economy is starting to reopen but distillates increased by 655.000 barrels.

Yet despite oil weakness, the inflation play is at hand. Manufacturers are raising the prices of everything from Coca-Cola (NYSE:KO), diapers, and paper products as the commodity super cycle start to bite into your paycheck. Oil prices while struggling are still $100 a barrel above their negative price a year ago and despite this consolidation is poised to breakout higher.