Crude oil production remained at 13.2 MMb/d but overall supplies took a hit as crude oil imports fell by 700 Mb/d to 5.8 MMb/d. This alone would have been a significant shift in the supply/demand balance but demand also shot up with refinery input growing by 500 Mb/d to 16 MMb/d while exports remained at 4.8 MMb/d. This means total supplies were 19 MMb/d and total demand was nearly 21 MMb/d for a net supply deficit of 1.3 MMb/d. Surprisingly, this resulted in a 1.6 MMbbl-increase in crude oil inventories, thanks to nearly 1.3 MMb/d in unaccounted for volumes. The average weekly price for January WTI crude oil increased slightly last week even as the OPEC+ meeting that was expected to either extend or increase voluntary supply cuts was delayed and last week’s Weekly Petroleum Status Report (WPSR) showed a large build in crude oil inventories.
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One Piece at a Time - U.S. Crude Oil Supply/Demand Balances, Inventories and Pricing
Last week, crude oil prices dropped below $50/bbl, in part due to continued increases in U.S. crude oil inventories, and fell further over the next few days. Then yesterday, prices perked up by $1.14 to $48.86/bbl; again one of the factors was the weekly inventory number from the Energy Information Administration which showed inventories down by a fraction of a percentage point for the week. The market seems to react spontaneously to changes in that crude-stocks statistic. Up is bearish, down is bullish. These days even a very modest decline in inventories is bullish. But serious analysis requires a more detailed, more nuanced understanding of why crude oil inventories behave as they do. Were inventories driven up by higher production or lower refinery runs? By higher imports? By lower exports? The reasons behind the inventory change are more important than the change itself. Today we continue our series on the modeling of U.S. crude oil supply and demand, and the sourcing of input data used in those calculations.
The Rise and Fall of Crude Supply - Shale Crude Production, Inventories and Imports
It looks like a combination of shale crude oil production and inventory drawdowns have been backing out crude oil imports over the past two months. Gulf Coast refineries are leading the way to crank up utilization, increase diesel exports and pull crude oil inventories down from the stratosphere. A lot of this activity seems to be bypassing Cushing. Meanwhile the Gulf Coast is at the center of two big events this week – a tropical storm and a huge refinery fire. Today we continue our analysis of crude inventories.
A Crude Balancing Act – How US Supplies Add Up
Every Wednesday energy markets eagerly anticipate the EIA Weekly Petroleum Supply Report release. Its contents frequently sway the market. Last Wednesday the biggest surprise was a 500 Mb/d reduction in crude imports. Today we start a two part analysis of EIA crude inventory data.
