Wednesday, November 8, 2017

US Crude Oil Inventories Increased -- Oh, Oh -- The Red Queen Has Not Fallen Off Her Treadmill -- November 8, 2017

US crude oil inventory: has been released. Oh-oh. The numbers: +2.2, -3.3, and +9.6. Oh-oh. WTI: $56.60 -- dropped about 60 cents after report released.

CNBC is reporting that -- surprise, surprise, surprise --
  • US crude oil inventories surprisingly increased by 2.2 million bbls; now at 457.1 million bbls
  • US gasoline inventories dropped 3.3 million bbls; and,
  • US produced a record 9.6 million bopd -- the Red Queen has not fallen off her treadmill
From the report (linked above), in addition to numbers above:
  • refinery inputs up almost 300,000 bopd, but still operating below 90% capacity (89.6%)
  • gasoline production actually decreased last week; averaging 10.2 million bbls/day
  • distillate fuel increased last week; averaging 5.2 million bbls/day
  • crude oil imports averaging slightly more than last year
Comments: tea leaves suggest US production will continue to increase (seasonally adjusted) --
  • US operators are targeting $27-oil as their breakeven point
  • with Brent oil at $64 and narrowing WTI-Brent spread, operators are hedging their oil (probably putting their floor at $56 - transportation costs)
  • no indication that crude oil demand will decrease over the short term
  • OPEC extends cuts; has been losing market share in Asia
  • even CLR has announced first shipment of Bakken oil to Pacific
  • US infrastructure in place
Re-balancing: due to the "surprising increase of a 2.2 million-bbl increase in US crude oil inventories, the number of weeks to "re-balance" has increased from 38 weeks (previously) to 42 weeks (currently).

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
51
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
Week 18
August 30, 2017
5.4
457.8
27
Week 19
September 7, 2017
-4.6
462.4
32
Week 20
September 13, 2017
-5.9
468.2
39
Week 21
September 20, 2017
-4.6
472.8
46
Week 22
September 27, 2017
1.8
471.0
46
Week 23
October 4, 2017
6.0
465.0
41
Week 24
October 12, 2017
2.8
462.2
40
Week 25
October 18, 2017
5.7
456.5
37
Week 26
October 25, 2017
-0.9
457.3
39
Week 27
November 1, 2017
2.4
454.9
38
Week 28
November 8, 2017
-2.2
457.1
42

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