DOE Statistics for the Week Ending Jan. 3, 2013
The Matrix
The Energy Information Administration expects the rate of growth of US crude oil production to slow in 2015.
Output is expected to increase one million barrels daily in 2014 and then slow to a growth of 750,000 barrels daily in 2015.
EIA is also looking for a gain in global oil demand, rising to 92.96 million barrels per day in 2015. This would be a record and might result in an increase in OPEC output for the first time three years.
Libya remains a challenge to analysis. The country is dividing along geographic lines, with reports of naval fire on ships approaching the eastern port of Es Sidr. Other ports have been seized by eastern federalists.In the broader US economy, employment ended 2013 on a sour note.
The US added 74,000 new jobs in December, the smallest monthly increase in three years and well down from the 200,000 new jobs created in each of the prior two months.The unemployment rate fell to 6.7 per cent in December, a decline of three tenths of a percentage point from November. The irony is that the drop reflected more a reduction in the workforce – fewer people were looking for work – rather than a larger increase in those employed.
All has not been negative on the economic front. American exports of goods and services rose to a second consecutive monthly high. The Commerce Department said that exports reached $194.9 billion in November. This has narrowed the US trade deficit and has enhanced prospects for new jobs and an expanding economy. Gains reflected stronger global demand for automotive and capital goods.
Imports fell to $229.1 billion in November. This reflects the continuing large drop in imports of crude oil, a benefit of emerging US energy independence.
US Supply/Demand Balances
The first week of 2014 showed far less volatility that the week before. Prices moved generally lower. RBOB was largely unchanged while heating lost almost two cents per gallon. A barrel of crude oil lost $1.78 for the first four days of the week.
Declining prices in January are not unusual and lower product prices were consistent with DOE supply data. Gasoline added 6.2 million barrels to stocks. The gain was 2.2 million barrels on the East Coast. Weekly gasoline demand plummeted more than 600,000 barrels daily during the week ending January 3, 2014. Weekly data are notoriously variable. More stable four week comparisons tell a different story. On this basis, gasoline demand was running 8.840 million barrels daily, 4.8 per cent higher than last year at this time.
Distillate fuel oil stocks moved 5.8 million barrels higher. The gain was particularly large on the East Coast. Demand numbers fell nearly 300 thousand barrels per day to three million barrels daily. But annual comparisons were more favorable. Year on year, distillate demand grew 2.3 per cent.
The increase in stocks in light of recent cold weather is evidence of significant changes in distillate usage. Distillate demand is less informed by heating requirements. Transportation figures into demand more importantly than in the past. Icy roads discourage driving.
Production of crude oil continues to top the eight million barrels daily level. Nonetheless, crude oil stocks fell 2.7 million barrels per day. Stocks of crude oil fell 2.7 million barrels, continuing inventory erosion that began during the week ending November 22nd 360.6 million barrels, a reduction of 30.8 million barrels. with crude oil supplies at 391.4 million barrels. Most recently, stocks were at 360.6 million barrels, a reduction of 30.8 million barrels.
Natural Gas
Gas storage had a larger-than-average net withdrawal. The net withdrawal reported for the week ending January 3 was 157 Bcf, 26 Bcf larger than the 5-year average, but smaller than last year’s net withdrawal of 191 Bcf. Current inventories totaling 2,817 Bcf are 528 Bcf (15.8%) less than last year at this time, and 315 Bcf (10.1%) below the 5-year (2009-13) average.
David Thompson notes that the technical situation for prompt-month NYMEX natural gas futures is at a critical point. Price action has stalled after the dynamic rally period that lasted from early November through mid-December. There has been a dramatic compression of volatility. This dynamic typically presages a significant price move. The closing price on 01/08/14 drove the RSI to the critical 50 level. This indicates that the bulls have ceded control of the market to the bears.
Sincerely,
Alan Levine
Chairman, Powerhouse
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. 02
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