The Market And Energy Page, T+215 -- August 23, 2017 -- Time To Re-Balance: 29 Weeks

Weekly re-balancing report: US crude oil reserves declined by 3.3 million bbls this past week. My estimate for re-balancing, if the decline stays on pace (average over past 17 weeks): 29 weeks. From my perspective, this is much more quickly than I would have predicted just a few months ago. This takes us to the end of the year. I had expected the re-balancing to take us well into 2018, if ever.

Again, for newbies: I define re-balancing as having 350 million bbls of US crude oil in storage (does not include the SPR), or about 22 days of storage.

Week	Date	Drawdown	Storage	Weeks to RB
Week 0	Apr 26, 2017		529.0	180
Week 1	May 3, 2017	0.9	528.0	198
Week 2	May 10, 2017	6	522.0	50
Week 3	May 17, 2017	1.8	520.2	59
Week 4	May 24, 2017	4.4	515.8	51
Week 5	May 31, 2017	6.4	509.9	41
Week 6	June 7, 2017	-3.3	513.2	60
Week 7	June 14, 2017	1.7	511.5	57
Week 8	June 21, 2017	2.5	509.0	62
Week 9	June 28, 2017	-0.2	509.2	71
Week 10	July 6, 2017	6.3	502.9	58
Week 11	July 12, 2017	7.6	495.3	47
Week 12	July 19, 2017	4.7	490.6	43
Week 13	July 26, 2017	7.2	483.4	38
Week 14	August 2, 2017	1.5	481.9	34
Week 15	August 9, 2017	6.5	475.4	35
Week 16	August 16, 2017	8.9	466.5	30
Week 17	August 23, 2017	3.3	463.2	29

After the report was released, WTI went back above $48, but just barely.

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Gasoline Demand

EIA will post the graph later today, or tomorrow, but based on the weekly report, it appears "we" did not set a new record for "gasoline demand." The record was set last year, but we are coming close.

From the report:

Total products supplied over the last four-week period averaged over 21.0 million barrels per day, up by 1.4% from the same period last year.

Gasoline demand: Over the last four weeks, motor gasoline product supplied averaged 9.7 million barrels per day, down by 0.4% from the same period last year.

Distillate fuel product supplied averaged over 4.2 million barrels per day over the last four weeks, up by 14.4% from the same period last year. Jet fuel product supplied is up 1.3% compared to the same four-week period last year.

That was the four-week average: 9.7 million b/d of gasoline deliveries.

Unless I missed it, the report does not provide gasoline deliveries for the past week. It's very possible, with the four-week average down by only 0.4% from last year, the weekly gasoline demand will exceed that for the same week one year ago.

The best indication for weekly gasoline demand might be these data points:

• gasoline production increased last week, averaging about 10.6 million barrels per day 
• total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 555,000 barrels per day 
• total motor gasoline inventories decreased by 1.2 million barrels last week, but are near the upper limit of the average range. Finished gasoline inventories increased while blending components inventories decreased last week

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Odds And Ends

Making America great!. LG Electronics to build factory in Michigan for EV parts. Data points:

• WSJ article -- so pretty sure it's not fake news
• LG Electronics, Seoul, South Korea
• $25 million factory for EV car parts
• Detroit suburb of Hazel Park, MI
• will produce battery packs for EVs
• will expand into other key components later
• the company began supplying parts to GM's Chevrolet Bolt EV last year -- those parts produced mostly in its South Korea plant

Not necessarily good news. Warren Buffett spotted this, jumped on it, but it appears Sempra outbid him. But it's not good news for the utility industry. Merger activity in the sector suggests utilities are struggling. The fittest will survive. By the way, apparently Sempra and Warren were not buying the entire Oncor business; a contributor over at SeekingAlpha (posted earlier/elsewhere) suggests that Sempra and (I assume) Warren are/were just bidding on the unregulated part of the business: the "wires and pipes" as they say. If true, neither Sempra nor Warren wanted to put up with retail customers. See this article on Vectren, sent to me by a reader. Thank you. [Note: a SeekingAlpha contributor said that Sempra was only buying the "wires and pipes." I do not know if that is accurate. The slide show provided by Sempra regarding this deal did not suggest that, at least as I read the slides, but I may be wrong.]

Expensive: by the way, the Sempra deal appears to be more expensive than the headline would suggest: $9.3 billion for the buyout does not include $9 billion in debt that the company has. Of course, I assume, both Sempra and Warren could re-finance that debt at very low interest rates.