Focus On Fracking -- March 19, 2023

Link here.

The lede:

• oil prices fell to a 15-month low on the biggest weekly drop since the pandemic hit; 
• oil drilling is at a 9-month low; 
• global oil production exceeded demand by 620,000 barrels per day in February, despite OPEC production that was 927,000 barrels per day below their reduced quota

Meanwhile, with regard to the "fudge factor":

Meanwhile, US oil refineries reported they were processing an average of 15,398,000 barrels of crude per day during the week ending March 10th, an average of 430,000 more barrels per day than the amount of oil that our refineries processed during the prior week, while over the same period the EIA’s surveys indicated that an average of 221,000 barrels of oil per day were being added to the supplies of oil stored in the US.

So, based on that reported & estimated data, the crude oil figures provided by the EIA for the week ending March 10th appear to indicate that our total working supply of oil from net imports and from oilfield production was 2,230,000 barrels per day less than what was added to storage plus our oil refineries reported they used during the week.

To account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a [+2,230,000] barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet in order to make the reported data for the daily supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil,” thus suggesting there was an omission or error of that magnitude in this week’s oil supply & demand figures that we have just transcribed.....

Furthermore, since last week’s “unaccounted for crude oil” was at [-384,000] barrels per day, that means there was a 2,614,000 barrel per day difference between this week's balance sheet error and the EIA's crude oil balance sheet error from a week ago, and hence the changes to supply and demand from that week to this one that are indicated by this week's report are off by that much, thus rendering any such comparisons nonsensical....

However, since most everyone treats these weekly EIA reports as precise, and since these weekly figures often drive oil pricing, and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it's published, and just as it's watched & believed to be reasonably accurate by most everyone in the industry...(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….(NB: there is also a more recent twitter thread from an EIA administrator addressing these errors, and what they hope to do about it).