Oil Storage Report - October 13
Posted: Thu Oct 13, 2016 11:32 am
The U.S. Energy Information Administration said in its weekly report that crude oil inventories rose by 4.900 million barrels in the week ended October 7. Market analysts' expected a crude-stock increase of 0.65 million barrels, while the American Petroleum Institute late Wednesday reported a supply build of 2.7 million barrels.
The reports came out one day later than usual due to Monday's Columbus Day holiday.
Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, fell by 1.318 million barrels last week, the EIA said. Total U.S. crude oil inventories stood at 474.0 million barrels as of last week, according to press release which, as of this week, no longer includes crude oil lease stocks.
The report also showed that gasoline inventories fell by 1.900 million barrels, compared to expectations for a decline of 1.491 million barrels, while distillate stockpiles dropped by 3.700 million barrels, compared to forecasts for a decrease of 1.593 million.
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My Take:
Tropical storm activity has been responsible for the wild moves in the weekly oil storage reports and that is likely to continue as another storm is now brewing that could grow to a hurricane next week. The center is further south and could enter the Gulf of Mexico. See daily updates at: http://www.weatherbell.com/premium/
What happens is that tankers stay away when tropical storms are in the area and then they rush to unload when there is a break in the weather. Keep in mind that we import 60 to 80 million barrels of crude oil each week and it does not come ashore in a steady stream, which IMO is why investors should take these weekly storage reports with a grain of salt.
IMO the big drop in storage at Cushing is bullish. U.S. oil production has been on decline since mid-2015, although the rate of decline has slowed down. Outside of the Permian Basin and SCOOP/STACK there is not a lot of drilling activity. More DUCs are being completed as companies will want to get those locations moved to "proved" reserves in their year-end reserve reports.
The drops in gasoline and distillate stockpiles is also bullish. Refiners are now reducing the amount of gasoline they produce and increasing the amount of heating oil they produce. A lot of homes in the Northeast still heat with oil.
Note that EIA has dropped the inclusion of lease level oil storage from the weekly reports. Those numbers were total BS anyway as the EIA has absolutely no way of knowing what lease level storage is at any point in time. My SWAG is that the numbers they were using were too high because so many of the high rate horizontal wells are tied directly to pipeline gathering systems anyway.
There is a major storm moving into the Northwest, so if you live in Washington or Oregon you should watch the daily updates at the Weatherbell link above.
The reports came out one day later than usual due to Monday's Columbus Day holiday.
Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, fell by 1.318 million barrels last week, the EIA said. Total U.S. crude oil inventories stood at 474.0 million barrels as of last week, according to press release which, as of this week, no longer includes crude oil lease stocks.
The report also showed that gasoline inventories fell by 1.900 million barrels, compared to expectations for a decline of 1.491 million barrels, while distillate stockpiles dropped by 3.700 million barrels, compared to forecasts for a decrease of 1.593 million.
-------------------------------------
My Take:
Tropical storm activity has been responsible for the wild moves in the weekly oil storage reports and that is likely to continue as another storm is now brewing that could grow to a hurricane next week. The center is further south and could enter the Gulf of Mexico. See daily updates at: http://www.weatherbell.com/premium/
What happens is that tankers stay away when tropical storms are in the area and then they rush to unload when there is a break in the weather. Keep in mind that we import 60 to 80 million barrels of crude oil each week and it does not come ashore in a steady stream, which IMO is why investors should take these weekly storage reports with a grain of salt.
IMO the big drop in storage at Cushing is bullish. U.S. oil production has been on decline since mid-2015, although the rate of decline has slowed down. Outside of the Permian Basin and SCOOP/STACK there is not a lot of drilling activity. More DUCs are being completed as companies will want to get those locations moved to "proved" reserves in their year-end reserve reports.
The drops in gasoline and distillate stockpiles is also bullish. Refiners are now reducing the amount of gasoline they produce and increasing the amount of heating oil they produce. A lot of homes in the Northeast still heat with oil.
Note that EIA has dropped the inclusion of lease level oil storage from the weekly reports. Those numbers were total BS anyway as the EIA has absolutely no way of knowing what lease level storage is at any point in time. My SWAG is that the numbers they were using were too high because so many of the high rate horizontal wells are tied directly to pipeline gathering systems anyway.
There is a major storm moving into the Northwest, so if you live in Washington or Oregon you should watch the daily updates at the Weatherbell link above.