Crude oil stocks rose ten million barrels according to EIA.

A plan to ease the situation in Ukraine has been developed by international community.

Cushing, OK crude oil stocks resume drain because of new pipeline in the area

Natural gas injection season starting slower than expected.

Al pic 2009_cropped

Alan Levine
Chairman, Powerhouse


Table covers crude oil and principal products.  Other products, including residual fuel oil and “other oils” are not shown, and changes in the stocks of these products are reflected in “Total Petroleum Products.” Statistics Source: Energy Information Administration “Weekly Petroleum Status Report” available at

The Matrix

The holiday-shortened week just ended was notable for the continued strength of WTI crude oil prices notwithstanding dramatic increases in crude oil inventories and apparent easing in international tensions.  Commercial stocks of crude oil increased ten million barrels according to EIA.

Ukrainian calm may be starting to return. Foreign ministers from that country, Russia, the European Union and the United States agreed on a plan to ease the situation. The plan calls for disarming groups in Ukraine, the return of government buildings occupied  and a national dialogue on giving greater power to regional authorities. Analysis of the situation suggests that escalating violence was designed to bring about a negotiation aimed at political neutralization of Ukraine.

Supply/Demand Balances

Supply/demand data for the week ending April 11, 2014 were released by the Energy Information Administration. 

Total commercial stocks of oil rose 14.5 million barrels.  Commercial crude oil supplies rose 10.0 million barrels during the report week. (Stocks in the Strategic Petroleum Reserve fell 600,000 barrels. This was an EIA market test seeking to sell that crude.)  About half of the gain was on the Gulf Coast, the increase probably reflecting continued transfer of crude oil from Cushing, OK and recovery of shipping in the Houston Ship Channel. TransCanada’s Marketlink Pipeline started up. It will ultimately carry 700,000 barrels per day of crude oil from Cushing to Houston. Refinery maintenance also inhibited processing of crude oil.

PADD III crude oil stocks rose 5.2 million barrels. As noted last week, there is much debate over the amount of crude oil storage capacity on the Gulf Coast. EIA puts total working crude oil storage in the region at 273.3 million barrels. That would put current storage at 75 per cent of capacity. Current crude oil stocks are 207.2 million barrels according to EIA.

Cushing, OK stocks resumed their decline. There are now 26.8 million barrels of crude oil in inventory. Notwithstanding the shift of stock to the Gulf Coast, there has been a massive expansion of U.S. crude oil inventory. EIA points out that PADD III crude oil stocks have risen at a weekly rate of over five million barrels weekly since January 10th.  If the same rate is maintained, Gulf Coast storage could reach its maximum this summer.

Nationally, crude oil imports rose 959,000 barrels daily to 8.3 million barrels daily. PADD III crude oil imports reached 3.8 million barrels per day, an increase of 160,000 barrels daily for the week. Imports to the Midwest rose 222,000 barrels daily. The West Coast accounted for the bulk of the increase in imports. PADD V imported 1.6 million barrels of crude oil daily during the report week.

Gasoline stocks fell only 100,000 barrels daily to 210.3 million barrels during the report week. Only modest changes were seen on the East, West and Gulf Coasts.  Weekly demand fell 380,000 barrels daily for the week. Over a longer horizon, the average of the past four weeks is 8.8 million barrels per day, 4.6 per cent higher than last year at this time.

Distillate fuel oil supplies fell by 1.3 million barrels during the week to 111.9 million barrels. Supplies in the U.S. lag last year’s levels by 3.3 million barrels. The shortfall is far greater than the 2012 level of 129.0 million barrels. East Coast storage was unchanged at 32.2million barrels. Distillate fuel oil demand rose to 4.2 million barrels daily.

Propane inventories added 800,000 barrels in the U.S. PADD II stocks themselves accounted for almost all of the gain. Propane demand was unchanged at one million barrels per day.


Natural Gas

According to the EIA: The net injection reported for the week ending April 11 was 24 Bcf, 13 Bcf smaller than the 5-year average net injection of 37 Bcf and 1 Bcf smaller than last year’s net injection of 25 Bcf. Working gas inventories totaled 850 Bcf, 850 Bcf (50.0%) less than last year at this time, 1,010 Bcf (54.3%) below the 5-year (2009-13) average, and 777 Bcf (47.8%) below the 5-year observed minimum.

For the second straight week, the storage build was lower than market expectations. Market expectations called for a build of 35 Bcf. When the EIA storage report was released at 10:30 a.m., the price for the May natural gas futures contract rose 17 cents to $4.69/MMBtu on the Nymex.

Futures trading involves significant risk and is not suitable for everyone. Transactions in securities futures, commodity and index futures and options on future markets carry a high degree of risk. The amount of initial margin is small relative to the value of the futures contract, meaning that transactions are heavily “leveraged”. A relatively small market movement will have a proportionately larger impact on the funds you have deposited or will have to deposit: this may work against you as well as for you. You may sustain a total loss of initial margin funds and any additional funds deposited with the clearing firm to maintain your position. If the market moves against your position or margin levels are increased, you may be called upon to pay substantial additional funds on short notice to maintain your position. If you fail to comply with a request for additional funds within the time prescribed, your position may be liquidated at a loss and you will be liable for any resulting deficit. Past performance may not be indicative of future results. This is not an offer to invest in any investment program.Vol. PH 03 NO. 16

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