FWIW
The American Petroleum Institute Tuesday reported a bigger-than-expected fall U.S. crude stocks of 2.72 million barrels in the latest week.
The Energy Information Administration is due to release official inventories later in the session.
The EIA is expected to report a fall in U.S. crude stocks of 2.1 million barrels.
The last few weeks, API and EIA have reported much different numbers for oil inventory increases and decreases.
Tropical Storm Cindy will have a big impact on next week's report as she is keeping a lot of imports on ships at sea. Tankers avoid the GOM during tropical storms and so should you.
Crude Oil Prices - June 21
Crude Oil Prices - June 21
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Crude Oil Prices - June 21
EIA says ....
The Energy Information Agency said crude inventories fell by 2.451 million barrels after a drop of 1.661 million the previous week.
Crude inventories were forecast to fall by 2.106 million barrels.
Gasoline stocks unexpectedly fell by 578,000 barrels after a rise of 2.096 million barrels the previous week.
Gasoline inventories were expected to rise by 443,000 barrels.
The Energy Information Agency said crude inventories fell by 2.451 million barrels after a drop of 1.661 million the previous week.
Crude inventories were forecast to fall by 2.106 million barrels.
Gasoline stocks unexpectedly fell by 578,000 barrels after a rise of 2.096 million barrels the previous week.
Gasoline inventories were expected to rise by 443,000 barrels.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Crude Oil Prices - June 21
So what is this telling us? Nothing, at the moment, indicates that share prices will start rising again.
Re: Crude Oil Prices - June 21
Eventually (which can take much longer than investors would like), the rate of decline in oil inventories should accelerate. Why, because demand for oil accelerates in Q3 each year. See IEA's monthly "Oil Market Report".
In the EIA weekly reports I have been watching the slowdown in U.S. production growth and I am sending out a Flash Alert on that topic shortly. I am of the opinion that all of the concern over rising U.S. oil production is a fear that is overblown, which is the case with most fears.
I believe the current pullback in oil prices is because of the increase in production from Libya and Nigeria. Those countries are "hell holes", so that production can drop again at anytime. Plus, the Middle East neighbors are not getting along so well these days. I was surprised that the market ignored Iran sending missiles over Iraq into Syria.
The oil traders that are LONG obviously don't have much confidence in the weekly EIA reports. I think they are setting their stop loss limits very tight each Wednesday and when the report comes out if there is one bit of bad news a few sellers can set off a landslide of programed sales. This week it was a build in distillate fuel oil. Crude oil and gasoline were down more than expected.
The selloff today was on big volume, so it may have washed out the weak hands among the longs. Buyers did move in at the $42.25 level, which is a bit of encouragement (not much).
Watch the daily video update by Alan Knuckman at this link: http://www.cmegroup.com/trading/energy/ ... crude.html
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On a brighter note.... low oil prices are actually bullish for my view that we are heading to a MUCH TIGHTER natural gas market by the end of Q3. Why? ... because if we do not see a big increase in associated gas production in Texas soon, the natural gas storage level is almost sure to dip below the 5-year average before the start of next winter's heating season. From mid-July to mid-Sept we should see a big increase in natural gas demand.
It will be interesting to see how Tropical Storm Cindy impacts next week's storage reports for both oil and gas. Cindy is not a wind event. It is a rain event. There is going to be lots of flooding across a wide area of the Gulf Coast. I have lived in the Houston area for 23 years and I have seen a lot more damage down by slow moving tropical storms that drop feet of rain than by rapidly moving hurricanes. Cindy is hitting an area that has a lot of energy sector infrastructure.
In the EIA weekly reports I have been watching the slowdown in U.S. production growth and I am sending out a Flash Alert on that topic shortly. I am of the opinion that all of the concern over rising U.S. oil production is a fear that is overblown, which is the case with most fears.
I believe the current pullback in oil prices is because of the increase in production from Libya and Nigeria. Those countries are "hell holes", so that production can drop again at anytime. Plus, the Middle East neighbors are not getting along so well these days. I was surprised that the market ignored Iran sending missiles over Iraq into Syria.
The oil traders that are LONG obviously don't have much confidence in the weekly EIA reports. I think they are setting their stop loss limits very tight each Wednesday and when the report comes out if there is one bit of bad news a few sellers can set off a landslide of programed sales. This week it was a build in distillate fuel oil. Crude oil and gasoline were down more than expected.
The selloff today was on big volume, so it may have washed out the weak hands among the longs. Buyers did move in at the $42.25 level, which is a bit of encouragement (not much).
Watch the daily video update by Alan Knuckman at this link: http://www.cmegroup.com/trading/energy/ ... crude.html
----------------------
On a brighter note.... low oil prices are actually bullish for my view that we are heading to a MUCH TIGHTER natural gas market by the end of Q3. Why? ... because if we do not see a big increase in associated gas production in Texas soon, the natural gas storage level is almost sure to dip below the 5-year average before the start of next winter's heating season. From mid-July to mid-Sept we should see a big increase in natural gas demand.
It will be interesting to see how Tropical Storm Cindy impacts next week's storage reports for both oil and gas. Cindy is not a wind event. It is a rain event. There is going to be lots of flooding across a wide area of the Gulf Coast. I have lived in the Houston area for 23 years and I have seen a lot more damage down by slow moving tropical storms that drop feet of rain than by rapidly moving hurricanes. Cindy is hitting an area that has a lot of energy sector infrastructure.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Crude Oil Prices - June 21
"With concerns over 2018 supply/demand imbalances weighing on oil prices, we see the nascent recovery offshore as likely to fade at <$50/bbl oil prices. We lower our order intake forecasts, reduce earnings and price targets, and downgrade Subsea 7 to Equal-weight. 2018 oil supply overhang in the way of 2019/20 recovery: We see oil prices under downward pressure due to concerns over a supply overhang in 2018. As outlined in OPEC's Extended Cut – Between a Rock and a Hard Place, we expect 1.1mbpd of non-OPEC volume growth potentially combining with the 1.2mbpd of OPEC production currently sidelined until end 1Q18 to overwhelm the 1.4mbpd of demand growth we forecast in 2018. We still expect oil markets to tighten as the tailwind of production from projects sanctioned back to 2012 dries up in 2019/20. But we acknowledge that the market is unlikely to pay for 2019/20 oil tightness and delayed recovery in upstream activity in the near term while uncertainty over 2018 persists." - Morgan Stanley on Offshore Service Companies
I do not agree with the assumption that OPEC will not extend their production agreement. The already have a meeting scheduled for November to discuss it. There is NO WAY that OPEC wants another big dip in oil prices. - Dan
I do not agree with the assumption that OPEC will not extend their production agreement. The already have a meeting scheduled for November to discuss it. There is NO WAY that OPEC wants another big dip in oil prices. - Dan
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Crude Oil Prices - June 21
Evan Calio – Morgan Stanley
June 21, 2017 7:27 AM GMT
Investor focus shifts to an oil price required to slow US oil growth. We believe $40-45/bbl WTI would slow 2018 US growth from consensus 1mmbpd to ~500Mbpd YoY. Expect confirmation as E&Ps approach budgeting season in Sept.
"The return of downside scenarios. Investor focus has shifted to oil prices required to slow US growth as the expected 2018 imbalance has trumped nearer-term inventory focus. Recent data on worldwide crude loadings, increased floating storage and softer gasoline demand have also exacerbated the balancing risks. Further, given the lower commodity prices quarter-to-date vs. Street, investors are focused on lower price deck comps, circa 1Q16, as they assess the negative revision risks and relative value on the strip and lower. We ran $40 and $45 price decks to assess micro and macro impacts as the cyclical rebalancing extends.
What oil price makes US growth slow? US shale and shale-focused operators have positively surprised across the board cycle-to-date with: better well productivity, higher efficiency gains, willingness to outspend cash flows, and ability to fund outspends with asset sales. All of these factors have contributed to more robust growth at lower-than-expected oil price levels. However, the oil price remains the primary determinant of US production growth. We believe a $40-45/bbl WTI price, 5%-15% below current 2018 strip, will lower 2018 US oil production growth to ~500Mbbld (vs. consensus' ~1MMbbld). On consensus supply and demand figures, the US can grow up to ~600Mbbld (avg/avg) to allow oil markets to balance in 2018 (assuming no extension of OPEC cuts beyond March). We believe this is achievable on ~$45/bbl."
June 21, 2017 7:27 AM GMT
Investor focus shifts to an oil price required to slow US oil growth. We believe $40-45/bbl WTI would slow 2018 US growth from consensus 1mmbpd to ~500Mbpd YoY. Expect confirmation as E&Ps approach budgeting season in Sept.
"The return of downside scenarios. Investor focus has shifted to oil prices required to slow US growth as the expected 2018 imbalance has trumped nearer-term inventory focus. Recent data on worldwide crude loadings, increased floating storage and softer gasoline demand have also exacerbated the balancing risks. Further, given the lower commodity prices quarter-to-date vs. Street, investors are focused on lower price deck comps, circa 1Q16, as they assess the negative revision risks and relative value on the strip and lower. We ran $40 and $45 price decks to assess micro and macro impacts as the cyclical rebalancing extends.
What oil price makes US growth slow? US shale and shale-focused operators have positively surprised across the board cycle-to-date with: better well productivity, higher efficiency gains, willingness to outspend cash flows, and ability to fund outspends with asset sales. All of these factors have contributed to more robust growth at lower-than-expected oil price levels. However, the oil price remains the primary determinant of US production growth. We believe a $40-45/bbl WTI price, 5%-15% below current 2018 strip, will lower 2018 US oil production growth to ~500Mbbld (vs. consensus' ~1MMbbld). On consensus supply and demand figures, the US can grow up to ~600Mbbld (avg/avg) to allow oil markets to balance in 2018 (assuming no extension of OPEC cuts beyond March). We believe this is achievable on ~$45/bbl."
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Crude Oil Prices - June 21
This is interesting ... Sent to me by a guy that owns a lot of EOG stock
"EOG reported that the EIA projections for U.S. production growth could not be met due to the lack of frac crews. They project only a 400,000 barrel/day increase by the end of 18."
"EOG reported that the EIA projections for U.S. production growth could not be met due to the lack of frac crews. They project only a 400,000 barrel/day increase by the end of 18."
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group