Crude supplies remained strong with production and imports adding 13.2 MMb/d and 6.5 MMb/d, respectively, to domestic markets. Domestic demand has been on the rise with refinery input increasing 100 Mb/d to 15.5 MMb/d as we clear the peak of maintenance season. Exports have also shifted into high gear as more than 204 MMbbl (4.87 MMb/d on average) have departed U.S. shores over the past six weeks, equal to about two-thirds of what was withdrawn from the Strategic Petroleum Reserve (SPR) over the past 2.5 years. Additionally, crude prices hit their lowest point since July as traders have grown increasingly concerned about markets being oversupplied. It looks like OPEC+ supply cuts alone won’t support an $80/bbl price without material demand increases.
Featured Articles
What a Fool Believes - Will Crude Oil Hit $100 a Barrel?
After the crude oil price crash in the spring of 2020 and flat-at-$40/bbl oil last summer and early fall, prices for both WTI and Brent have been increasing steadily the past several months, and now stand at a kind-of-remarkable $75/bbl. This rise has been driven by a combination of demand recovery and supply restraint from both OPEC+ and U.S. producers — which begs the questions: what’s next on the supply and demand fronts, and how much more will oil prices increase from here? There’s been a lot of chatter lately that we might see $100/bbl crude prices sometime soon, and there are a lot of interested parties — many of whom don’t normally see eye-to-eye — who, for one reason or another, see their interests converge around the $100/bbl mark. The only problem is, it’s not showing up in the forward curve. Today, we look at the potential for “Benjamin-a-barrel” oil and how it might play out.
Road to Nowhere, Part 2 - Oil Prices Have Moved Lower With SPR Releases, But Production Still Lags
The swift increases in crude oil and gasoline prices that followed Russia’s invasion of Ukraine in February — and the sanctions that were implemented soon thereafter — spurred a lot of concern that the U.S. and global economies would go into a tailspin. In response, government officials here and abroad turned to their strategic reserves as a way to quickly balance the market and rein in prices while buying time for additional oil production to come online. But U.S. production growth and rig activity have hit a wall since June, when releases from the Strategic Petroleum Reserve (SPR) started to pick up steam, reducing the prospects for a significant output increase this year. In today’s RBN blog, we examine the changes in the market since the major withdrawals were announced, how the hoped-for bridge to higher oil production has so far failed to materialize, and why it’s unlikely the government will turn to the SPR if prices spike again soon.
All I Need to Get By?, Part 2 - A Flood of SPR Releases May Test U.S. Crude Export Capacity
Brace yourself for it. Over the next few weeks, there’s a good chance that a tsunami of crude oil will be released from the U.S. Strategic Petroleum Reserve (SPR), and it’s likely that much (if not most) of that oil will be piped to Gulf Coast export docks and loaded onto supertankers. If that happens, the export capacity of crude-handling terminals from Corpus Christi to coastal Louisiana will be stress-tested on their ability to send out much larger volumes than they’re used to dealing with. And that’s only the beginning. Over the next year or two, while U.S. E&Ps ratchet up production in response to higher prices as Europeans and others scramble to replace Russian crude oil, Gulf Coast export terminals may well be called upon to load and ship out even more oil (in addition to refined products) on a regular basis. In today’s RBN blog, we discuss the impending SPR releases and the ability of Gulf Coast ports and individual terminals to handle increasing volumes.
