Oil Prices Hold Support

  1. RBOB prices holding; gas cracks, not so much
  2. OPEC reports remarkable rate of compliance
  3. Declining foreign crude oil stocks include Iran’s long-term waterborne storage
  4. Natural gas end-of-heating-season storage third highest in 10 years


Al pic 2009_cropped

Alan Levine, Chairman of Powerhouse


The Matrix

New supplies of domestic crude oil, a modest resurgence of U.S. imports of crude oil and softening demand for petroleum products have not proven to be enough to stem the rise in domestic oil prices that began around March 22.

Gasoline prices are showing strength but gasoline crack spreads have been not so assertive. The June gasoline crack spread struggled over $20.50 early in April and has since lost ground. Technical analysis indicates that June crack spread prices have retreated enough to reduce the likelihood of new highs.



The OPEC-non-OPEC cuts are also contributing to the strength in prices.  Press reports are suggesting that OPEC cuts are even more than agreed on and non-OPEC participants are being more cooperative as well.

OPEC members with agreed restrictions reportedly produced 29.757 million barrels daily in March. This works out to 104% less output than initially agreed to. Non-OPEC producers are seen as less compliant. This reflects staged implantation by Russia, the largest non-OPEC cooperator.

Crude oil stocks outside of the United States have generally been seen as falling marginally. There have been bullish crude oil supply developments. Iran has been able to reduce the volume of oil it has had stored at sea for years. Ironically, production constraints in Iran have limited growth in exports. Nigerian crude oil reportedly has been sold from the countries remotely held storage in South Africa to Asia, the United States and Europe.

These bullish features overseas stand in contrast to the United States where crude oil stocks are on the rise. Lower refinery use and sustained imports have created the growth in U.S. supplies.



Supply/Demand Balances

Supply/demand data in the United States for the week ending April 7, 2017, were released by the Energy Information Administration (EIA).

Total commercial stocks of petroleum decreased 4.7 million barrels during the week ending April 7, 2017.

Draws were reported in stocks of gasoline, fuel ethanol, distillates and propane. There were builds in stocks of K-jet fuel, residual fuel oil and other oils.

Commercial crude oil supplies in the United States decreased to 533.4 million barrels, a draw of 2.2 million barrels.

Crude oil supplies decreased in four of the five PAD Districts. PAD District 1 (East Coast) crude oil stocks fell 0.1 million barrels, PADD 3 (Gulf Coast) stocks retreated 3.8 million barrels, PADD 4 (Rockies) crude oil stocks declined 0.3 million barrels and PADD 5 (West Coast) stocks decreased 0.2 million barrels. A build of 2.2 million barrels of crude oil stocks was reported at PAD District 2 (Midwest).

Cushing, Oklahoma, inventories increased 0.3 million barrels from the previous report week to 69.1 million barrels.

Domestic crude oil production increased 36,000 barrels daily to 9.235 million barrels per day.

Crude oil imports averaged 7.878 million barrels per day, a daily increase of 28,000 barrels. Exports grew 114,000 barrels daily to 689,000 million barrels per day.

Refineries used 91.0% of capacity, an increase of 0.2 percentage points from the previous report week.

Crude oil inputs to refineries increased 268,000 barrels daily; there were 16.697 million barrels per day of crude oil run to facilities. Gross inputs, which include blending stocks, grew 142,000 barrels daily to 16.945 million barrels daily.

Total petroleum product inventories saw a decrease of 2.6 million barrels from the previous report week.

Gasoline stocks decreased 3.0 million barrels; total stocks are 236.1 million barrels.

Demand for gasoline grew 30,000 barrels per day to 9.275 million barrels daily.

Total product demand increased 177,000 barrels daily to 19.897 million barrels per day.

Distillate fuel oil supply fell 2.2 million barrels to 150.2 million barrels. National distillate demand was reported at 4.635 million barrels per day during the report week. This was a weekly increase of 537,000 barrels daily.



Propane stocks fell 1.2 million barrels to 40.4 million barrels. Current demand is estimated at 1.158 million barrels per day, a decrease of 37,000 barrels daily from the previous report week.


Natural Gas

According to the EIA:

Warmer temperatures during the first storage week of the injection season result in net injections into working gas storage. Net injections into storage totaled 10 Bcf, compared with the five-year (2012 – 2016) average net injection of 12 Bcf and last year’s net withdrawal of 1 Bcf during the same week. Working gas stocks totaled 2,061 Bcf, which is 263 Bcf more than the five-year average and 416 Bcf less than last year at this time.

Working natural gas in storage as of March 31, the traditional end of the heating season, totaled 2,051 Bcf, according to EIA data released on April 6. Although this total is 265 Bcf (15%) higher than the five-year (2012 – 2016) end-of-season average, stocks were 427 Bcf (17%) lower than last year’s record end-of-season high. This year, natural gas stocks end heating season at the third highest level in 10 years.



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