Energy Prospectus

From OilPrice.com

Oil prices climbed this week as U.S. inventories tightened and the risk of Iran reaching a new deal and bringing extra crude online decreased.

Friday, July 30th, 2021

Crude prices drew hefty support this week from U.S. inventory dynamics, with commercial stocks falling to their lowest since January 2020 and indications that the tightening is set to continue. Concurrently, the markets have seemingly got accustomed to the idea that there will not be any Iranian cliff-hanger as President-elect Raisi is to be sworn into office next week, mitigating erstwhile concerns that Tehran might flood the market with incremental barrels. COVID headwinds persist, however, as several European countries see rising Delta variant cases.

EU Fails to Replenish Gas Storage. European countries are struggling to replenish their gas reserves amid exorbitantly high LNG prices and limited availability of pipeline supplies, with total EU gas reserves standing at a mere 616 TWh, equivalent to some 63 billion cubic meters, the lowest level since 2015. < HIGH DEMAND for U.S. LNG is going to keep U.S. natural gas and NGL prices high and keep ngas in U.S. storage below the 5-year average heading into the winter heating season.

Summary of Weekly Petroleum Data for the week ending July 23, 2021

U.S. crude oil refinery inputs averaged 15.9 million barrels per day during the week ending July 23, 2021 which was 132,000 barrels per day less than the previous week’s average. Refineries operated at 91.1% of their operable capacity last week. < As long as U.S. refiners operate at more than 90% of capacity, we should see weekly declines in U.S. crude oil inventories. Tropical storm activity can and does impact net imports of crude on a weekly basis.
Gasoline production increased last week, averaging 9.8 million barrels per day.
Distillate fuel production decreased last week, averaging 4.7 million barrels per day.

U.S. crude oil imports averaged 6.5 million barrels per day last week, decreased by 0.6 million barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 6.4 million barrels per day, 6.9% more than the same four-week period last year.
Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 909,000 barrels per day, and distillate fuel imports averaged 188,000 barrels per day.

> U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 4.1 million barrels from the previous week. At 435.6 million barrels, U.S. crude oil inventories are about 7% below the five year average for this time of year.
> Total motor gasoline inventories decreased by 2.3 million barrels last week and are about 0% below the five year average for this time of year. Finished gasoline and blending components inventories both decreased last week.
> Distillate fuel inventories decreased by 3.1 million barrels last week and are about 7% below the five year average for this time of year.
> Propane/propylene inventories increased by 1.9 million barrels last week and are about 14% below the five year average for this time of year. < This is very bullish for our gassers as low propane inventories will keep upward pressure on NGL prices.
> Total commercial petroleum inventories decreased by 6.5 million barrels last week.

Total products supplied over the last four-week period averaged 20.6 million barrels a day, up by 12.6% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.5 million barrels a day, up by 9.1% from the same period last year.
Distillate fuel product supplied averaged 3.8 million barrels a day over the past four weeks, up by 12.6% from the same period last year.
Jet fuel product supplied was up 39.4% compared with the same four week period last year.