Put Your Headline Here -- October 3, 2018

Weekly EIA petroleum report: link here.

• wow! US crude oil inventories increased by most I have seen in the two years I have followed
• US crude oil inventories up a whopping 8.0 million bbls
• refiners are operating at 90.4% of their operable capacity
• crude oil imports keep increasing; up 10.2% more than the same four-week period one year ago
• WTI up almost 1%; OPEC up over 2% but let's see what WTI/OPEC basket does by the end of the day
• at 404.0 million bbls, US crude oil inventories at five-year average; my threshold is 400 million bbls; the five-year average includes the Saud Surge, 2014 - 2016
• gasoline? awash in gasoline -- inventories decreased by half a million bbls, but gasoline inventories still 7% above five-year average for this time of year
• gasoline and distillate production right on target: 10.0 and 5.0 respectively
• 30-second speech: refiners at 90% capacity (autumn maintenance; switch over to winter grades) simply means that inventory built up; once we get to 97% capacity, the inventories will start to drop
• this happened back in March -- same thing -- spring maintenance; switch over to summer blends
• by the way, Cushing inventories were getting so low, some thought some tanks would bottom out (previously posted)

Bottom line: not to worry:

• NOG: up almost 3%
• OAS: up half a percent
  JAG: up 1.6%
• COP: flat to slightly negative
  CVX: up 0.4%
• RDS-B: up 0.3%
• ENB: up 1.23%
• EPD: up 0.7%

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The Road To Canada

Another record? From Rigzone -- Canadian oil pain grows as crude discount to WTI hits $40. Wow.

Canadian heavy crude’s discount to West Texas Intermediate futures increased to the widest in almost five years, raising the specter of local oil producers curtailing operations.

Western Canadian Select’s discount for November fell $1.25 to $40.75 a barrel Tuesday, the biggest since November 2013. The plunge came as new supply from Suncor Energy Inc.’s Fort Hills mine helps to fill pipelines to capacity.

“If you get this sustained wide differential, you are going to see these guys start to ramp down production,” Mike Walls, a Genscape Inc.

When discounts widened to $30 a barrel early this year on the back of a pipeline outage, companies including Cenovus Energy Inc. and Canadian Natural Resources Ltd. said they were cutting some production or starting maintenance earlier than planned. Yet, with oil sands maintenance soon to wind down and further maintenance not planned until next spring, there is “no relief valve for the next two to four months,” according to Walls.

Other grades of Canadian crude are also suffering.

While increasing volumes of oil are being shifted onto rail cars, the pickup in crude-by-rail has been slow.

Exports rose one percent in July from June to 207,000 barrels a day. Cenovus said last month it signed oil-by-rail agreements to ship about 100,000 barrels a day on tracks but the agreements won’t go into full effect until the second quarter next year.

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Slump? What Slump?

What others are saying:

Turkey: imploding. Inflation rate -- 25% -- today's report. Erdogan has a plan. Raid companies who increase prices.