Energy Prospectus

CRUDE OIL INVENTORY/’000 bbls (Week Ended 12/18/15)

Current: 484,780
Actual Build/(Withdrawal): (5,877)
Economist Average Estimate: 1,363
Previous: 490,657
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My guess is that part of this is a "correction" of last week's big build, which made no sense to me. REMEMBER, EIA's weekly reports at nothing more than SWAG's based primarily on formulas. This is especially true when it comes to weekly production numbers.

The weekly storage reports includes up to 100 million bbls of "field level" and pipeline fill. EIA has ZERO knowledge when it comes to field level storage. EIA has now direct knowledge of what is going on in the field. The states report actual production, which is only accurate 90-days after month-end. Even then the "actuals" are changed several times as operators file amended reports.

In October, EIA admitted to overstating U.S. production by 300,000 BOPD in Q2.

If the weather turns colder in the East, we will see a sharp increase in heating oil demand.

The U.S. Energy Information Administration said in its weekly report that crude oil inventories decreased by 5.9 million barrels in the week ended December 18. Market analysts' expected a crude-stock gain of 1.1 million barrels, while the American Petroleum Institute late Tuesday reported a supply drop of 3.6 million barrels.

Gasoline inventories increased by 1.1 million barrels, compared to expectations for a gain of 1.4 million barrels, while distillate stockpiles fell by 0.7 million barrels.

U.S. crude (WTI) has been firmer relative to Brent recently, on signs that the U.S. oil market is likely to grow tighter following Congress' decision to lift a 40-year old ban on domestic oil exports, while a global glut gets worse in 2016 due to soaring production in Saudi Arabia and Russia.

Oversupply issue will be exacerbated further once Iran returns to the global oil market early next year after western-imposed sanctions are lifted. Analysts say the country could quickly ramp up production by around 500,000 barrels, adding to the glut of oil that has sent prices tumbling.

Market experts predict Brent's premium over U.S. crude to flip into a discount in the coming weeks. The gap between the two benchmarks is down over 95% since its 2015 peak reached earlier in the year.