U.S. Adds 7 Million Barrels to Oil Stocks

  1. Crude oil stocks grow 5 million barrels; products add 2 million
  2. Refinery use recovers after autumn turnaround
  3. Gasoline exports have doubled compared with last year
  4. Natural gas stocks reach 4 Tcf, an all-time high
Al pic 2009_cropped

Sincerely,
Alan Levine, Chairman of Powerhouse
 
2016-11-21_11-42-44
 
 
 
 
 
 
 
 
 
 
 
 
 

The Matrix

Conflicting visions of geopolitics and economics continue to roil oil markets. The Energy Information Administration (EIA) reported that crude stocks rose by more than 5 million barrels during the week ending November 11, 2016. This reflected a recovery in imports of nearly 1 million barrels daily during the week. About three-quarters of the gain in weekly crude oil imports arrived on the East Coast.

Increases in refinery operations led to gains in product stocks of nearly 2 million barrels. And as more facilities return to service, more product should be available, pressuring prices lower. November and December tend, in any case, toward lower prices as year-end tax considerations are brought to bear.

Refinery capacity in the United States is now 18.4 million barrels per day. Refinery use was estimated to be 89.2% in the weekly report. At its recent low, on October 14, use was put at 85%. This has translated into a 750,000-barrel daily increase in crude oil inputs—leading to gains in product production, a bearish indicator.

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Growth in product inventories developed despite the impressive expansion of product exports. During the report week, exports ran at 4.8 million barrels daily. Last year at this time, exports were 3.7 million barrels per day—a gain of 29%. Gasoline outflows—about 1 million barrels daily most recently—have more than doubled in a year.

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The countervailing, bullish force facing oil prices is the impending OPEC, non-OPEC price freeze/cut. The Russian energy minister reportedly suggested that OPEC was close to reaching a deal with that country. There were no details, but that did not stop nervous bulls from pumping up prices.

The effort to craft any kind of output control deal has been significantly over-hyped. If history is any guide, any agreement to freeze/cut production will not be sustained, if for no other reason than the absence of any enforcement mechanism.

 

Supply/Demand Balances

Supply/demand data in the United States for the week ending November 11, 2016 were released by the Energy Information Administration.

Total commercial stocks of petroleum increased 7.1 million barrels during the week ending November 11, 2016.

Increases were reported in stocks of gasoline, K-jet fuel, distillates, residual fuels and propane. Other oils and fuel ethanol stocks fell.

Commercial crude oil supplies in the United States increased to 490.3 million barrels, a build of 5.3 million barrels.

Crude oil supplies increased in three of the five PAD Districts. PAD District 1 (East Coast) crude oil stocks fell 0.8 million barrels, PAD District 2 (Midwest) crude oil stocks grew 1.0 million barrels. PADD 4 (Rockies) crude oil stocks fell 0.1 million barrels, and PADD 5 (West Coast) stocks increased 0.2 million barrels. PADD 3 (Gulf Coast) crude stocks added 4.9 million barrels.

Cushing, Oklahoma, inventories added 0.7 million barrels to the previous report week at 59.2 million barrels.

Domestic crude oil production fell 11,000 barrels daily to 8.681 million barrels per day.

Crude oil imports averaged 8.423 million barrels per day, a daily gain of 0.981 million barrels. Exports rose 71,000 barrels daily to 481,000 barrels per day.

Refineries used 89.2% of capacity, an increase of 1.1 percentage points from the previous report week.

Crude oil inputs to refineries increased 309,000 barrels daily. There were 16.126 million barrels per day of crude oil run to facilities. Gross inputs, which include blending stocks, increased 401,000 barrels daily to 16.449 million barrels daily.

Total petroleum product inventories saw an increase of 1.8 million barrels from the previous report week.

Gasoline stocks added 0.7 million barrels; total stocks are 221.7 million barrels.

Demand for gasoline increased 146,000 barrels per day to 9.359 million barrels daily.

Total product demand fell 841,000 barrels daily to 19.349 million barrels per day.

Distillate fuel oil supply increased 0.3 million barrels; total stocks are 148.9 million barrels. National distillate demand was reported at 3.944 million barrels per day during the report week. This was a weekly decline of 100,000 barrels daily.

Propane stocks rose 1.2 million barrels to 100.8 million barrels. Current demand is estimated at 1.140 million barrels per day, an increase of 162,000 barrels daily from the previous report week.

 

Natural Gas

According to the Energy Information Administration:

Continued early heating season injections push working gas storage to record levels. Net injections into storage totaled 30 billion cubic feet (Bcf), compared with the five-year (2011  – 2015) average net injection of 3 Bcf and last year’s net injections of 26 Bcf during the same week. For the second week in a row, net injections into storage exceeded the five-year average.

Unseasonably mild temperatures mitigated consumption of natural gas and contributed to considerably larger-than-average net injections. Working gas stocks total 4,047 Bcf, an all-time high, and are 216 Bcf higher than the five-year average and 51 Bcf higher than last year at this time.

Notwithstanding adequate stocks and a bearish weather outlook, some analysts are bullish. They point to U.S. production down about 2 Bcf per day compared with last year. They also point to low completion rate despite a growing natural gas rig count.

 

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