Posted: Sun May 18, 2008 1:46 pm Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
I am in a graphing mood today. A couple of weeks ago, we developed a little inventory model for summer. Time to check in on how close we were.
Here is the production part of the model, compared to actual production:
and we can see from this that we are about two weeks behind the trajectory we used in the model for the gearing up of the refinery system for unleaded production.
Here is the "demand" part of the model:
which is based on that little formula for "balance" that we use every week. This one is a week or so off, but not too bad.
Here are the imports as they are now, compared to 2007 for this period:
As usual, they are crazy erratic. last week way down, previous couple of weeks way up.
And here is the inventory model as we set it up a couple of weeks ago, with various levels of imports
At the time we set this up with production increasing at about the same rate as demand, we calculated that we would be able to maintain a fairly stable inventory with imports of about 1.1 mbpd.
But, production is lagging behind what we thought. Temporarily this is being offset by a roughly offsetting amount of extra imports from wherever.
As the demand increases, which it will starting in the next couple of weeks, either the refiners will gear up, or the imports will have to keep coming, in order to maintain inventory stability.
Our accuracy a couple of weeks ago was not especially good because of the refineries continuing to sleep in, and the demand being a week or so off of last year's pace.
The real test will be about two weeks from now, when the memorial day numbers come in.
Joined: Oct 23, 2004 Posts: 5507 Location: New Jersey
Posted: Sun May 18, 2008 7:22 pm Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
Gandalf_the_White wrote:
FreddyH wrote:
Again today, the rhetoric reflects far too much expectation wrt consumer demand destruction. Only 6% of the CPI is comprised of home fuel oil/propane and transporation fuels. One could argue that even another 50% increase still won't HURT. More is spent by familites dining out each month...
Off topic: food is up 4% YOY in usa & 0.6% in canada
The impact of oil on the consumer goes far beyond the 6% people spend on gasoline. The price of oil touches every aspect of consumption in America. We are probably looking at prices for over 90% of what we buy being affected by oil prices. Doubling the price oil is probably the equivalent of 25% inflation when the total impact is considered. Only the upper middle class and above can ignore what is currently happening with prices and that is a very small pecentage of the American population. This is why John McCain will have no chance of winning this year unless the gays drag the democratic party into a fight over gay rights, which will galvanize the Christian right into taking a political stand again.
I believe you are about correct concerning the doubling of the price of oil over the last year. However with our economy having so much capital stock (buildings, equipment) built with an embedded oil price much cheaper, as well as with the lagged effect of various product stockpiles and inertia in raising prices, the full effect of the doubling may take up to two years. Heck prices may not even yet fully reflect oil going from $30 to $60.
When you consider that the Fed/Government use inflationary methods to offset the effect of higher energy prices, who knows were we stop?
Joined: Oct 23, 2004 Posts: 5507 Location: New Jersey
Posted: Sun May 18, 2008 7:28 pm Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
pup55 wrote:
As the demand increases, which it will starting in the next couple of weeks, either the refiners will gear up, or the imports will have to keep coming, in order to maintain inventory stability.
Our accuracy a couple of weeks ago was not especially good because of the refineries continuing to sleep in, and the demand being a week or so off of last year's pace.
The real test will be about two weeks from now, when the memorial day numbers come in.
Thanks for the great analysis and graphs.
Refiners have recently increased diesel output by 3 to 5%, by changing refinery operations, at the expense of gasoline. I may be off here, but that appears to mean a drop of gasoline output of 2%.
The refiners may stick with above normal diesel production for some time, as many countries - such as Chile, South Africa, China - have increased diesel demand due to power problems.
That small loss in gasoline output may eventually result in some problems down the line.
Memorial Day is also the start date for "summer blend" gasoline. We should finally see if those blending products that built up gasoline inventories are the right kind needed for the summer.
Based on the above, I'm going to forecast based on the seasonality and last year's precedence, and let the chips fall where they may.
For crude oil imports, about 10.2 mbpd, which is about the average for the last four weeks. For unleaded imports, 1.2, also close to the four week moving average.
I think a little higher refinery utilization this week, about 87%, and resultant inputs into refineries at a little more than 15.
Distillate production about half that of unleaded production, which is what it is running.
If you back-work from all of this, given some reasonable demand assumptions, you get a little drawdown in unleaded (during the season when we really need to be significantly building), and about even in crude oil and distillates.
What could go wrong with these forecasts: variable imports, as usual, and the possibility that the refiners got a burst of energy and ran the units last week. Other than that I should be fairly close. Most of these numbers are at or near "even". Anything within .7 inventory change is just about roundoff error for this calculation, any of these sub-estimates being off by more than .1 and it could turn the calculation the other way directionally.
We are still pretty close to even in all of this. The problem with this is, as suggested above, we really need to be building up during this time, and this will lead us into problems later.
Posted: Tue May 20, 2008 4:58 am Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
nth wrote:
Why will refined products go to China over California?
China's retail prices are quite low compare to California.
Actually, China is an exporter of refined products. I don't know if the earthquake changes anything.
With China (and other developing countries) the retail prices mean very little. China spends a huge amounts of money to maintain price controls for consumer oil products, and, as the price of oil has increased, the money spent by the goverment has increased instead of consumer prices. The case is very similar in other developing countries.
These price controls are also a major reason why the high oil prices seem to have so little effect on the consumption. The increase in consumption in the developing countries should be the component that would respond first to the increase of price of oil. However, since the price controls shield the increase from the actual consumers, it is having no effect.
Posted: Tue May 20, 2008 9:10 am Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
Quote:
Forecasts in a Reuters preliminary poll on U.S. petroleum inventory data due out on Wednesday called for a 600,000-barrel rise in crude stocks, a 500,000-barrel gain in gasoline stocks and a 1.3-million-barrel build in distillate stocks.
Posted: Wed May 21, 2008 6:35 am Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
Quote:
Distillate stockpiles, which including heating oil and diesel, are 11 percent lower than a year ago. A weekly Energy Department report tomorrow may show that inventories rose 1.35 million barrels last week, according to the median of estimates from 15 analysts surveyed by Bloomberg News.
Analysts expect oil stockpiles grew last week by 900,000 barrels, according to a survey by Platts, the energy research arm of McGraw-Hill Cos. For the week ended May 9, crude-oil inventories rose by 200,000 barrels, or 0.1 percent, to 325.8 million barrels, which were 4.3 percent below year-ago levels.
Meanwhile, gasoline inventories fell by 1.7 million barrels, or 0.8 percent, to 210.2 million barrels, which were 5.9 percent above year-ago levels. Analysts expect stockpiles of the motor fuel grew by 500,000 barrels last week.
Quote:
Analysts expect distillate stocks rose by about 1.5 million barrels last week.
Joined: Sep 16, 2004 Posts: 4280 Location: Southwest WI
Posted: Wed May 21, 2008 9:39 am Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
Gas down 800K.
Some reason their stupid site doesn't work. I think we killed it
Huge drop in crude. Should be fun to see what the markets do in response _________________ "Oil is going up because we use too much oil, and the capacity to replace reserves is dwindling"
-President Bush 11/07/07
Joined: Apr 05, 2005 Posts: 1620 Location: Springsteen Country (NJ)
Posted: Wed May 21, 2008 9:41 am Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
This is probably bullish, huh?
Quote:
Summary of Weekly Petroleum Data for the Week Ending May 16, 2008
U.S. crude oil refinery inputs averaged nearly 15.1 million barrels per day
during the week ending May 16,up 29,000 barrels per day from the previous week's
average. Refineries operated at 87.9 percent of their operable capacity last
week. Gasoline production moved higher compared to the previous week, averaging
9.0 million barrels per day. Distillate fuel production decreased last week,
averaging 4.3 million barrels per day.
U.S. crude oil imports averaged 9.2 million barrels per day last week, down 696
thousand barrels per day from the previous week. Over the last four weeks, crude
oil imports have averaged 10.0 million barrels per day, 238 thousand barrels per
day below the same four-week period last year. Total motor gasoline imports
(including both finished gasoline and gasoline blending components) last week
averaged 1.1 million barrels per day. Distillate fuel imports averaged 198
thousand barrels per day last week.
U.S. commercial crude oil inventories (excluding those in the Strategic
Petroleum Reserve) decreased by 5.4 million barrels from the previous week. At
320.4 million barrels, U.S. crude oil inventories are in the middle of the
average range for this time of year. Total motor gasoline inventories decreased
by 0.8 million barrels last week, and are in the lower half of the average
range. Finished gasoline inventories increased last week while gasoline blending
components inventories decreased during this same time. Distillate fuel
inventories increased by 0.7 million barrels, and are in the lower half of the
average range for this time of year. Propane/propylene inventories increased by
2.7 million barrels last week but remain near the bottom of the average range.
Total commercial petroleum inventories decreased by 0.4 million barrels last
week, and are in the lower half of the average range for this time of year.
Total products supplied over the last four-week period has averaged 20.3 million
barrels per day, down by 1.3 percent compared to the similar period last year.
Over the last four weeks, motor gasoline demand has averaged 9.3 million barrels
per day, down by 0.4 percent from the same period last year. Distillate fuel
demand has averaged nearly 4.2 million barrels per day over the last four weeks,
up 0.7 percent from the same period last year. Jet fuel demand is 5.6 percent
lower over the last four weeks compared to the same four-week period last year.
_________________ Joe P. United Political Debate
"Only when the last tree is cut; only when the last river is polluted; only when the last fish is caught; only then will they realize that you cannot eat money." - Cree Indian Proverb
Those of us who follow this stuff every week know what happened on this, it will be interesting to see how long it takes the talking heads to figure it out, if ever.
The crude oil inputs to refineries was just what we thought, the drain in inventory is 100% due to the lower imports this week than over the last couple of weeks. Even though there is quite a bit of crude oil around, this should rattle the hell out of the markets, if they are being logical today.
The unleaded situation is much the same. We only imported 1.1 mbpd last week, and we all know that we need 1.2 or so to maintain a stable inventory if the demand is about like we think it will be, and this, in addition to a friendly but not excessive level of refinery production led us to the little bit of a drain in inventory, which was also unanticipated by the "experts".
In distillates, we were really interested in was the continued strong demand, and also, note that the net imports were less than .2 mbpd. This combination led us to a smaller build in inventory than the so-called "experts" had predicted.
So I think it is time to get out the popcorn and watch the fun as the market digests this.
Posted: Wed May 21, 2008 10:34 am Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
Great job Pup. It seems the market has responded to this. It hit 132 a barrel not too long ago. Is it me or over the last few months peak oil theory is no longer a fringe belief? Its bad when you start seeing Peak Oil in the ticker line.
Joined: Oct 23, 2004 Posts: 5507 Location: New Jersey
Posted: Wed May 21, 2008 7:20 pm Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
Thanks pup. Now some quick comments.
Oil imports to date have averaged about 9.7 mbpd. I still believe we will see level of 9.5 mbpd over the next month. A few weeks of higher levels earlier this month probably was a fluke caused by re-routing shipments intended for France but did not make it there because of a strike.
Gasoline imports appear to have been negatively affected by the British refinery strike and a slowdown of Nigerian crude to the Caribbean. So gasoline imports may be less than seasonal normal levels - which is not good as finished gasoline supplies fall steadily behind last year's numbers.
Diesel fuel exports continue out of the US, but are not counted correctly in the weekly report.
If I had to guess, the first actual shortage this year will show up in diesel - because of many problems in the world where diesel is being used more heavily for utilities (mostly electrical generation).
It may be possible to avoid local shortages, but I think the odds now favor at least some type of US regional problem before the end of 2008.
edit: spelling
Last edited by DantesPeak on Wed May 21, 2008 9:55 pm; edited 1 time in total
Posted: Wed May 21, 2008 8:52 pm Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
.
Well .....Dante your brow is covered with laurels
[ So I think it is time to get out the popcorn and watch the fun as the market digests this. ]
The comments on the time lag until hight oil prices work their way to the inflation index is good stuff , the slashing by the reserve bank of the official interests rates will push the same way .
I think we are heading for a massive bout of stagflation .
You cannot post new topics in this forum You cannot reply to topics in this forum You cannot edit your posts in this forum You cannot delete your posts in this forum You cannot vote in polls in this forum
News
Discussions
Resources
Members
Forum FAQ
Search
Usergroups
Profile
Log in to check your private messages
Log in
