U.S. production remained flat and imports rose by 300 Mb/d, bringing total supply to 18.9 MMb/d, while refinery demand was flat and exports shot up by 700 Mb/d, bringing total demand up to 21.8 MMb/d. Usually, when the supply/demand balance is this much out of whack, unaccounted-for volumes spike, but not last week. Instead, unaccounted-for volumes sank by 1.9 MMb/d to just 500 Mb/d of undefined supplies, and with nothing else to blunt the impact, inventories plunged by more than 17 MMbbl (2.45 MMb/d), the largest single-week drop on record. If that 700-Mb/d jump in exports seems high, considering exports were already at 4.6 MMb/d in last week’s data, you’d be right, as the 5.3-MMb/d exiting the Gulf Coast marks the third-largest volume on record. When you have a market with stubborn supply growth and booming demand, prices rise. West Texas Intermediate (WTI) closed above $80/bbl for the first time since mid-April last Thursday, and has narrowed the WTI-Brent adjusted spread to an average of just $4.14/bbl.
Featured Articles
What's Going On? - Bullish EIA Storage Report Signals a Big Shift in the U.S. Natural Gas Market
The U.S. Energy Information Administration (EIA) on Thursday (June 9) reported a surprisingly bullish 65-Bcf injection for the week ended June 3—that was 8.0 Bcf below our Natgas Billboard estimate and more than 10 Bcf below the Bloomberg industry average assessment. In response, the CME/NYMEX Henry Hub July natural gas contract screamed about 15 cents higher following the report to a settle of $2.617/MMBtu, the highest daily settle for the prompt month in nearly 9 months. Thursday’s gains extended a rally that began on May 31 (2016) just after the July contract rolled to the front of the futures curve. It’s likely the rally was initially spurred by market participants looking to cover their short positions. But in the past week, an increasingly bullish fundamental picture has emerged prompting us to raise our price outlook (in our June 10 NATGAS Billboard report). In today’s blog, we analyze the fundamentals behind rising natural gas prices.
Tops Drop - Prices Popping, Crude Oil Tank Tops Keep Dropping Down in Cushing
Russia’s war on Ukraine turbocharged global crude oil prices and spurred price volatility the likes of which we haven’t seen since COVID hit two years ago. The price of WTI at the Cushing hub in Oklahoma — the delivery point for CME/NYMEX futures contracts — has gone nuts, and the forward curve is indicating the steepest backwardation ever. In other words, the market is telling traders in all-caps, “SELL, SELL, SELL! Sell any crude you can get your hands on. It’s going to be worth far less in the future.” So anyone with barrels in storage there for non-operational reasons is pulling them out, and fast! In today’s RBN blog, we look at the recent spike in global crude oil prices and what it means for inventories at the U.S.’s most liquid oil hub.
How Much More Can I Take - How Long Until Crude Oil and Refined Products Storage Maxes Out?
The global economic shut-down caused by COVID continues to wreak havoc on U.S. markets. Last week, the dynamics that resulted in negative prices for NYMEX WTI thrust crude oil, and, more specifically, storage at Cushing, OK, into the national spotlight. The extraordinary imbalance in U.S. crude oil supply and demand has been pushing record volumes of oil into storage at the Cushing crude hub and tankage along the Gulf Coast. The same fundamental factors have also driven a surge in stocks of refined products like gasoline and diesel. Now the questions on everybody’s mind are, how long until storage tanks are completely full and what will that mean? Today, we’ll discuss recent trends and consider what record storage builds mean for the oil patch.
