US Oil Inventories To Tighten -- SeekingAlpha Contributor -- May 29, 2019

Updates

Later, 2:23 p.m. CT: see comments as well as this stand-alone post regarding HGLs.

Original Post 

I suppose we will see the US crude oil inventory numbers a day later than usual due to the Monday holiday. If so, the API data will come out today; the EIA data tomorrow, Thursday, May 30, 2019.

From SeekingAlpha, earlier this week, predicting EIA numbers this week, this is from HFI Research:

• The tale of two oil markets is starting to get more attention from the sell-side community with two excellent reports from Raymond James and RBC (in the report).
• Everything points to lower US crude storage, as Brent-WTI Houston shot up indicating higher crude exports and 3-2-1 crack spread indicating higher refinery throughput.
• There was no SPR this week, so our estimate would be -3.4 to -5.4 mbbls for this week's EIA crude storage report.
• Global oil-on-water is also trending lower, while floating storage is at the lowest level excluding Iran (30 mbbls) and Venezuela (15 mbbls).
• We are projecting US crude storage to drop below 380 mbbls by year-end.

[Side note: note the abbreviation for "million." This is quite non-standard. Generally, volumes in this context are abbreviated "mm" for "thousand-thousand" or million.]

So, again, the contributor suggests a draw of around 5 million bbls when EIA reports later this week. But look at this: the contributor suggests that by the end of the year, US crude oil inventories will drop to below 380 million bbls. If so, that would be amazing.

A new term for me: "oil-on-water" -- oil in transit.

A new term for me: the "3-2-1 crack spread": The 3:2:1 crack spread approximates the product yield at a typical U.S. refinery: for every three barrels of crude oil the refinery processes, it makes two barrels of gasoline and one barrel of distillate fuel.

An old concept: floating storage.

Note: as long as we're looking at new terms, here's an acronym I had not seen before. Again, on twitter today, and it appears most folks have not heard of it; I had not: HGL, hydrocarbon gas liquids: link here.

From a supply-side perspective, HGL constitutes liquids produced at both natural gas processing plants (natural gas plant liquids, or NGPL) and refineries (liquefied refinery gases, or LRG). From a demand-side perspective, HGL is marketed as natural gas liquids (NGL) and refinery olefins. From a chemistry perspective, HGL includes the alkanes (paraffins) – ethane, propane, normal butane, isobutane, and natural gasoline (equivalent to pentanes plus and nearly chemically identical to plant condensates) – and the alkenes (olefins) – ethylene, propylene, butylene, and isobutylene. However, HGL does not include liquefied natural gas (LNG) or aromatics.

As defined above, HGL captures the complete set of gas liquids marketed by midstream and downstream companies. Production of HGL by natural gas processing plants, fractionators, refineries, condensate splitters, and other facilities can be surveyed and analyzed with consumption data to build a clearer HGL picture. Figure 1 provides a simplified view of supply, demand, and chemistry of HGL.

This taxonomy was developed to clarify which elements to include when retrieving data from EIA reports, to highlight refinery olefins, and to define more specifically NGL, LRG, and condensate terms used loosely in many publically-available reports.

For example, from a tweet:

The database shows approximately 3.2 million b/d of HGL pipeline capacity is also set to be added in just 2019. FYI - "HGL" is the EIA term for things like Propane, Ethane, Butane, etc.

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