Weekly Petroleum Report -- EIA; WTI Plunges -- August 15, 2018

NOTE: it looks like the NDIC Director's cut release date has changed to tomorrow, Thursday, August 16, 2018, at 3:00 p.m. Link here.

Now, back to the weekly petroleum report. You should be sitting down before going further.

Link here. See also this post.

• US crude oil inventories: increased by a whopping 6.8 million bbls
• WTI after the report: wow, down about 3.4%; falls $2.30; falls below the $66 support level; trading at $64.76; 
• bad news for US shale operators: it is interesting to note that rig count has fallen steadily in the Bakken for the past couple of weeks; indicator that terminals/refineries were "full"?
• really, really bad news for Saudi; needs $70 oil is what they say; in fact, they probably need $80 oil  
• US refinery operating capacity: 98.1% -- wow
• think about that: refineries are working at 98.1% capacity and yet, inventories rose by a whopping 6.8 million bbls
• there seems to be a disconnect between what the EIA is telling us about US production (EIA says US production is falling) and what the producers are seeing
• imports? up a huge amount -- up by over one million bbls -- total imports right at 9.0 million bbls -- I haven't seen an increase this big in quite some time; what gives? 
• over the past four weeks, crude oil imports averaged about 8.1 million bopd, almost 1% more than the same four-week period last year; why? 
• why? of course, the report doesn't say why, but this is what I think is going on -- US refineries are optimized for heavy oil; the US produces almost exclusively light oil (how did this happen? President Obama can tell you, but I digress); the refineries are operating at 98.1% capacity; that's a lot of oil -- a lot of light oil, but they need heavy oil to balance out the barbell -- the mix of heavy oil / light oil that the refineries-optimized-for-heavy-oil can actually refine
• I tracked inventories for about a year when producers / Saudi Arabia said they were going to cut back on supply -- at that time, they started at 450 million bbls in US crude oil inventory and reduced it towards 400 million bbls; today it stands at 414.2 million bbls
• the old threshold was 350 million bbls (below that, bullish for oil traders; above that, bearish for oil traders
• I set the new number at 400 million bbls (below that, bullish for oil traders; above that, bearish for oil traders
• clearly, very, very bearish right now -- and it's the height of the driving season in the US
• if gasoline prices are not falling in your neighborhood, the refineries are making out like bandits
• production: magic numbers are about 10.5 and 5.0 respectively; this week, 10.2 million bbls for gasoline; 5.3 million bbls for distillate fuel 
• see SeekingAlpha report here

Gasoline demand:

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Notes to the Granddaughters

My wife -- your grandmother -- has signed up for a financial management course. It's a free course. Won't cost her a thing. She says she doesn't know anything about managing money. Actually she does quite well. I will be her instructor. The financial management course will be to show her where our assets are and how to access them after I die ... which, of course, could be sooner than later.

On the bike ride home today I got to thinking about investing, something I've enjoyed doing since 1984.

Good, bad, or indifferent, it's been very, very enjoyable.

When it comes to home finances, I think folks go through four phases: pre-savings phase; savings phase; investing phase; spending phase. Obviously there may be bits and pieces in each and overlap between the phases, but the "heading" suggests the focus. I assume there are books on this.

Wow, wow, wow -- google "savings phase" "investing phase" "spending phase" -- and this is the first hit: Personal Investment Crash Course, a screenshot from the introduction:

So, nothing new under the sun. I'm impressed that I came up with that on my own. The author of that book calls my "pre-savings phase" the "earnings phase." The writer was obviously an optimist. The writer was also not a faux socialist. I don't think faux socialists have an "earnings phase."

I think "pre-savings" stage is a better handle. Infants, many teenagers, many millennials (by definition?), and most faux socialists never have an earnings stage.

My designations allow for infants and faux socialists to be included from the beginning. Some faux socialists will skip the first two phases and go directly to the investing phase (e.g., those who inherit huge estates) or to the spending phase (e.,g, those who inherit huge estates but prefer not to become active investors).

Everybody can be in a pre-savings phase at some point in their lives. Some infants may never grow up to be earners -- for many different reasons -- but they can be in the pre-savings group. It's not a given that they are in a pre-earnings phase; that suggests all infants grow up to become earners. Obviously that is not the case.

I can imagine, also, a fair number of Americans never reach the savings phase. From that group, even a smaller number reach the investing stage. For the purpose of this discussion I am talking about active investors, not those who are accidental (and often unknowing) investors. In that latter group are those who have no interest in investing and no investments outside of their pension plan provided by their employer.

And finally there is the spending stage. I have never fully moved from the investment stage to the spending stage. For me, I think that would be impossible. I enjoy investing too much. I suppose 80% of my investments [including military pension; social security; 401(k)] are professionally managed; in some cases I am using the term "professionally" very loosely. Perhaps better said, some of my investments are managed by others; they are on auto-pilot; I have no control over them; they are what they are.

My wife has lived with me all these years and has gone through the same phases with me. For much of her life, although a professional white collar individual, she was not employed outside the home and did not earn money as such. She spent money but that was mostly for family needs and she, psychologically, alongside me, felt she was with me in the saver's stage early in our life together, and then seamlessly transitioned into the investment stage.

Her parents were not particularly well off, and the combination of her experiences as a child (a family with almost not money; part of the pre-savings group for most of their lives) and her life with me, for the most part, in the investment phase, she has never (nor have I) moved into the spending phase.

I doubt I will ever move into the spending phase.

However, assuming I die before my wife, she will have the option of staying in the investment stage or move to the spending phase.

Our finances are such, that I feel strongly she needs to move to the spending stage. That does not mean she quits all investing. She will need a financial advisor and a tax accountant after I die. She and the other two will still have to manage her investments.

My focus during our financial management course will be to instruct her how to transition into the spending phase. She will tell me, "no problem." LOL.

For me, it could be quite a learning experience, but I've already come up with some tools that will help her. I can't wait to get started.