Crude Oil Output, Gasoline Demand Fall
- Gasoline price could break the buck
- Global demand under pressure
- U.S. refining capacity reaches 18 million barrels daily
- Natural gas storage reporting will go to a five-region plan
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 www.eia.doe.gov
The Matrix
Seasonal imperatives are being expressed in the most recent data released by the Energy Information Administration. Gasoline demand is growing softer, a bearish indicator for price.
Refinery usage has been falling as well as planned maintenance for the autumn gets underway, ostensibly bullish. And domestic crude oil production, the linchpin of American energy independence, falls again, consistent with the new measuring standards of EIA. This might be seen as bullish, but there is plenty of foreign crude available to fill the gap. Outside the United States, production has been steady.
China has become the growth indicator for the global economy. Here too, indicators for the auto, shipping and aviation sectors are failing notwithstanding the boost to growth from lower prices. And with China becoming an uncertain bet for the future, the prospects for a more bullish crude oil price remain poor.
Looking beyond the impact of refinery turnarounds this autumn, U.S. refining capacity has surpassed eighteen million barrels daily for the first time. Press sources say that the nation has added nearly three million barrels per day of capacity since 1994. And as crude oil supplies continue to benefit from increasing efficiency, the prospect for more products grows, bearish for price. Some observers believe that the Gulf Coast will host 9.5 million barrels daily of capacity by the end of 2016.
Distillate fuel oil stocks continue to grow. The EIA puts gains at over one million barrels in its most recent report. Inventories have grown in each of the past sixteen weekly reports and had added more than 23 million barrels over that time. The United States now has forty one days of distillate supply available, a number not seen since January18, 2013.
Technical analysis of the distillate fuel oil price chart suggests that recent strength has been the result of a relief rally. Prices should start now to retreat.
Supply/Demand Balances
Supply/demand data in the United States for the week ending September 11, 2015 were released by the Energy Information Administration.
Total commercial stocks of petroleum increased 3.2 million net barrels during the week ending September 4, 2015.
Builds were reported in stocks of RBOB, K-jet fuel, distillates, propane, and other oils. Draws were reported in stocks of fuel ethanol and residual fuel oil.
Crude oil supplies in the United States increased to 458.0 million barrels, a build of 2.6 million barrels.
Crude oil supplies increased in three of the five PAD Districts. PADD 2 (Midwest) stocks grew 0.4 million barrels, PADD 3 (Gulf Coast) stocks increased 2.7 million barrels, and PADD 5 (West Coast) stocks grew 0.3 million barrels. PADD 1 (East Coast) stocks decreased 0.9 million barrels. PADD 4 (Rockies) stocks were unchanged from the previous report week.
Cushing, Oklahoma inventories decreased to 56.4 million barrels, a draw of 0.9 million barrels.
Domestic crude oil production decreased 83,000 barrels daily to 9.135 million barrels per day.
Crude oil imports averaged 7.459 million barrels per day, a daily decrease of 0.396 million barrels.
Refineries used 90.9 per cent of capacity, a decrease of 1.9 percentage points from the previous report week.
Crude oil inputs to refineries decreased 279,000 barrels daily; there were 16.110 million barrels per day of crude oil run to facilities. Gross inputs, which include blending stocks, fell 305,000 barrels to 16.368 million barrels daily.
Total petroleum product inventories saw an increase of 0.6 million barrels. Gasoline stocks grew 0.4 million barrels; total stocks are 214.5 million barrels.
Total product demand fell 0.457 million barrels daily to 19.795 million barrels per day.
Demand for gasoline decreased 421,000 barrels per day to 9.017 million barrels daily.
Distillate fuel oil supply increased 1.0 million barrels. Government data show this is the sixteenth consecutive weekly build in distillate inventories. Stocks are 150.9 million barrels. National demand was reported at 3.565 million barrels per day during the report week. This was a weekly decrease of 0.196 million barrels daily.
Propane added 0.2 million barrels to supply. There are 96.6 million barrels in storage. Current demand is estimated at 1.164 million barrels per day, an increase of 46,000 barrels daily from the previous report week.
Natural Gas
According to the EIA:
Net storage injection is higher than the five-year average, but lower than last year’s build for the report week. The net injection reported for the week ending September 4 was 68 billion cubic feet (Bcf), down from 94 Bcf the previous week. This injection compares with the five-year average increase of 63 Bcf for the week and last year’s increase of 90 Bcf. Working gas inventories for the report week totaled 3,261 Bcf, 473 Bcf (17%) higher than last year at this time and 127 Bcf (4%) higher than the five-year (2010-14) average.
EIA forecasts that end-of-October natural gas inventories will reach 3,840 Bcf, 35 Bcf (0.9%) higher than the five-year average for that time… There are currently eight more weeks in the injection season, which traditionally runs from April 1 through October 31. In order to reach 3,840 Bcf, injections need to average 72 Bcf per week through the end of October. EIA’s forecast for the end-of-October inventory level is above the five-year (2010-14) average peak storage value of 3,805 Bcf. To reach the five-year average peak value, weekly injections through the end of October would need to average 68 Bcf.
EIA will change the regional breakdown of working gas storage to five areas from the current three. This is intended to reflect changes in major production areas that have developed in recent years. The South Central region held the most storage over the past five years.
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