Weekly US Petroleum and NG Supply Reports 2007-08

[DantesPeak]

Well put chuck6877. Coming up short on oil and gasoline supplies means that some will suffer, and for them it will be doom and gloom.

As for myself, I am not here to predict the price of oil day to day, although I admit to saying sometimes the energy markets have underpriced oil and gasoline and/or are irrational. But we do have another thread and Mr. Bill for those who do want to figure out day to day price changes.

[pup55]

Prediction
Unleaded 4-May
Beginnning Inv mbbl 193.1
Imports Wk/Day 8.4 1.2
Production Wk/Day 62.3 8.9
Available 263.8
Balance Wk/Day 71.1 10.15
Ending Inv Mbbl 192.8
Stated Usage MBPD 9.3
Predicted Change -0.3



Distillates Prediction 4-May
Beginnning Inv mbbl 117.1
Imports Wk/Day 2.31 0.33
Production Wk/Day 28.7 4.1
Available 148.11
Balance Wk/Day 31.1 4.44
Ending Inv Mbbl 117.0
Stated Usage MBPD 4.1
Predicted Change -0.1


Crude Oil Prediction 4-May
Beginning Inventory 335.6
Domestic Prod 36.12 5.16
Imports 70.7 10.1
Total Available 442.42
Provided to Refineries 106.4 15.2
Ending Inventory 336.02
Predicted Change 0.42

Forecast time.

Unleaded: We will go with what we said last week which was that unleaded will be at 9.2 mbpd production by the end of the month, and a linear path between last week and there, so 8.9 this week up from 8.8 last week. Imports: we will stick with 1.2, same as the last two weeks. That leaves demand, which kind of tricky this time of year due to the lull in travel that happens before memorial day. I think a little higher demand than last week. Based on all of this, we should see a small drawdown tomorrow, which is not good, because this is the time of year we should be building inventory. Last year at this time we started to get "the surge" in imports, as much as 1.6 mbpd through the entire month of May, which helped us out all summer. There is no real suggestion that the Queen rode over here on a tanker of unleaded for the Derby this weekend, however.

Distillates: I can't see where imports, production and usage will be much different from last week. We might accidentally get in some more imports, but this will probably be where it is going to be. In a week or the gradual summertime increases noted above will start and we will have to adjust this.

Crude oil: I am having a hard time predicting the imports. For the latter part of March and early April, imports were averaging 10.0 mbpd, but last week they jumped up to 10.3 making my crude oil forecast way out of whack. I am adjusting this to 10.15 this week because I think there is no compelling reason to import crude with inventories this high. The domestic production will be about what it was last week, and the crude oil supplied to refineries will reflect the increased gasoline production, so we will be basically even in inventory, my number says a little draw.

The fun is just beginning.

Gasoline stockpiles increased 150,000 barrels in the week ended May 4 from 193.1 million barrels the prior week, according to the median of responses by 16 analysts before an Energy Department report. It would be the first increase in 13 weeks

``We are still awaiting an increase in gasoline stocks,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``It would be hard to bet on an increase after being disappointed so many times.''

Bloomberg

[shortonoil]

pup55 said:

Prediction
Unleaded 4-May
Beginnning Inv mbbl 193.1
Imports Wk/Day 8.4 1.2
Production Wk/Day 62.3 8.9
Available 263.8
Balance Wk/Day 71.1 10.15
Ending Inv Mbbl 192.8
Stated Usage MBPD 9.3
Predicted Change -0.3

Thanks pup, if this site could provide one very significant contribution to humanity, it would be to clone yourself and the few others here who contribute so much.

My calculations show a decrease this week of .5 mb, which is very close to yours. I agree that demand is the wild card, the effect on demand from the crazy weather we have seen throughout the middle central and eastern part of the country makes it hard to estimate. I guess we will find out tomorrow.

Again, I will reiterate my opinion, that for the month of May, we will see a decrease in gasoline stocks equal to 5.0 mb; which will bring inventory to about 188 mb going into June. This could change if weather conditions seriously affect demand.

chuck6877 said:

here we go again with the negativity, there is always a silver/profitable lining,,, why don;' you buy some oil futures or oil stocks and take it easy with the doom and gloom ??

I gave up trying to amass any additional money, about three years ago, when the realization hit me that such efforts will probably be merely a fool’s errand. I have concentrated on developing what I hope will be a sustainable standard of living during the inevitable readjustment. I can see how one attached to our present way of life and its associated ramifications and perceived benefits could find my view as doom and gloom.

That is not how I interpret it. I look at my evaluation as another analysis of another system. If this particular system, after being closely scrutinized, appears to be in danger of collapsing from various stresses, I must regard it as a system that is in danger of collapsing. Only when I am working in the garden or chasing my chickens, do I feel an emotional attachment to my analysis. The rest of the time it is but a bit of work to steer my life, and the life of the people who are close to me.

If I am in error, I will have lost very little, but a few more rather worthless Chinese do-dads. If I am not in error, but continue to proceed on the route most followed, I will eventually have lost everything.

[pup55]

Analysts surveyed by Dow Jones Newswires expected gasoline stocks to rise by 370,000 barrels last week, on average, in a weekly report to be released Wednesday by the U.S. Energy Department

.

Yahoo

Weekly U.S. fuel stocks data were to be released on Wednesday. Gasoline inventories were expected to have snapped a 12-week string of declines last week, rising by 300,000 barrels, a Reuters poll of 13 analysts found. Crude stocks were also expected to have risen again. [EIA/S]

Reuters

[strider3700]

I agree with Pup on everything except imports. I'm thinking this is the week for it to pop up to 1.3 - giving us a very minor increase. Next week should be back down to the 1.2 area. If it's not this week I expect it next week

[DantesPeak]

Much attention in the oil market remains focused on US gasoline, which has surged dramatically in recent weeks providing support for crude oil prices around the world. While predictions are that US gasoline stocks will finally start to recover from the slide of the last 12 weeks as refinery runs pick up, any easing of the tightness in downstream oil markets will probably only be temporary. Spare refinery capacity remains scarce worldwide, making it hard for the market to adjust easily to the kinds of strains that reappear every spring in the US gasoline market. And with most of the world's new refinery capacity coming on stream in Asia over the next few years, even an emerging global surplus in capacity will do little to ease strains in the Atlantic Basin, where Europe is likely to remain as short of middle distillates as the US is short of gasoline. Tom Wallin, New York

Energy Intelligence
[sent by email, no link]

[pup55]

Bloomberg

Crude-oil supplies rose 875,000 barrels, according to the survey. Gasoline stockpiles increased 150,000 barrels, according to the median of survey responses. The department is scheduled to release its weekly report on petroleum inventories at 10:30 a.m. in Washington

[Pablo2079]

The gasoline inventory didn't grow as much as was expected. I believe they were looking for at least a 250k barrel increase.

[Lore]

Just got the report off of CNBC... Gas up 400,000/b, Oil up 5.6 m/b, utilization up .7, what happened?

[pup55]

Unleaded 4-May
Beginning Inv 193.1
Imports 8.4 1.2
Production 62.3 8.9
Available 263.8
Ending Inv 193.5
Balance 70.3
Balance/day 10.04
Stated Usage 9.3
Actual Change 0.4
Deviation from Forecast 0.8

Distillates 4-May
Beginning Inv 117.1
Imports 2.289 0.327
Production 29.4 4.2
Available 148.789
Ending Inv 118.8
Balance 29.989
Balance/day 4.28
Stated Usage 4.3
Actual Change 1.7
Deviation from Forecast 1.8

Crude Oil 4-May
Beginning Inv 335.6
Production 35.826 5.118
Imports 77 11
Total Available 448.426
Provided to Ref 107.1 15.3
Ending Inventory 341.2
Actual Change 5.6
Deviation from Forecast 5.18

pup55 Experts Actual
Crude Oil 0.42 0.875 5.6
Unleaded -0.3 0.15 0.4
Distillates -0.1 0 1.7

The unleaded numbers came in exactly what we said except for demand, which was slightly lower than the 10.15 we predicted, but this is pretty close for some guy on the internet. Note that the imports came in at 1.2, so we are apparently not being flooded by imports yet.

The main surprise on this is the inexplicable importing of 11 million barrels of crude oil per day, which caused the crude oil inventory to sky, since the actual refinery utilization was not high enough to use it up.

The distillates inventory rose by .7 more than I thought because the refiners produced an extra .1 mbpd, no doubt an artifact of the higher refinery utilization.

So, with the exception of the crude oil imports, this is pretty much what we predicted, and no change to the previous idea that the gasoline inventory situation is still quite tight.

[frankthetank]

Summary of Weekly Petroleum Data for the Week Ending May 4, 2007

U.S. crude oil refinery inputs averaged 15.3 million barrels per day during the
week ending May 4, up 174,000 barrels per day from the previous week's average.
Refineries operated at 89.0 percent of their operable capacity last week.
Gasoline production increased compared to the previous week, averaging over 8.9
million barrels per day, while distillate fuel production also increased,
averaging 4.2 million barrels per day.

U.S. crude oil imports averaged 11.0 million barrels per day last week, up
727,000 barrels per day from the previous week. Over the last four weeks, crude
oil imports have averaged 10.3 million barrels per day, or 457,000 barrels per
day more than averaged over the same four-week period last year. Total motor
gasoline imports (including both finished gasoline and gasoline blending
components) last week averaged over 1.2 million barrels per day. Distillate fuel
imports averaged 327,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic
Petroleum Reserve) jumped by 5.6 million barrels compared to the previous week.
At 341.2 million barrels, U.S. crude oil inventories are just below the upper
end of the average range for this time of year. Total motor gasoline
inventories increased by 0.4 million barrels last week, but remain well below
the lower end of the average range. Distillate fuel inventories rose by 1.7
million barrels per day, and are at the upper end of the average range for this
time of year. Heating oil inventories (high-sulfur) fell slightly last week, but
diesel fuel inventories (the sum of ultra-low and low-sulfur) inventories
reported an increase. Propane/propylene inventories increased by 0.8 million
barrels last week. Total commercial petroleum inventories climbed by 6.3
million barrels last week, and are in the middle of the average range for this
time of year.

Total products supplied over the last four-week period has averaged nearly 20.9
million barrels per day, or 3.3 percent above the same period last year. Over
the last four weeks, motor gasoline demand has averaged nearly 9.3 million
barrels per day, or 1.0 percent above the same period last year. Distillate
fuel demand has averaged nearly 4.3 million barrels per day over the last four
weeks, up 5.2 percent compared to the same period last year. Jet fuel demand is
down 1.1 percent over the last four weeks compared to the same four-week period
last year.

The tables that follow display the latest U.S. Petroleum Balance Sheet and the
most recent 4 weeks of Weekly Petroleum Status Report data.

[frankthetank]

Why import so much extra oil? Do they expect a ramp up of refineries?

[JoeW]

From Nymex.com: RBOB has already dropped under $2.20 after the report was released.

[UncoveringTruths]

It's just enough to give everyone a false sense of security. If the price drops before memorial weekend look out consumption and we will be back in the situation we were in last week or worse.

Have they put up the Hurricane shield for the Gulf of Mexico yet?

The good news though is we get more prep time.

[pup55]

Here is an updated inventory model. If things continue to go like they are, namely production increasing linearly up to 9.2 mbpd, and imports continuing at 1.2 mbpd, we should continue to see a slight build in inventory for the next five or six weeks. When the summer demand starts to kick in, this modest inventory build will start to go the other way.

As for this crude oil import issue, we have noted before that it is not unusual for the crude oil imports to be really variable from week to week. Frank's explanation is as good as any: in anticipation of the summer demand ramp-up and/or hurricane season they imported crude oil. Also note that we had originally scheduled to start to fill up the additional SPR volume starting this week, but they changed their mind a couple of weeks ago, so maybe some of this crude oil was in anticipation of the SPR.

Thus far the crude oil market has sold off on this news, which I suppose is what we would expect. RBOB is pretty stable right now at $2.20 which is also what we would expect.

[strider3700]

Here's the updated supply graph


This does nothing to lower my doomerosity meter. We are now 11.5 million barrels behind where we where last year and 20 million barrels behind 2005's pre katrina stockpile.

The reason I'm looking for an extra 100,000/day of unleaded being imported is I expect a token effort by TPTB to provide one good week in the middle of this slide to give the reporters something to shop why Pups projection model isn't going to happen. Your standard this week is great so everything else will be fine because we'll just repeat this miracle week if we need to.

[DantesPeak]

Thanks pup55, especially for your projection graphs.

Crude oil imports were surprising and unexplained, and were concentrated along the West Coast. Possibly this may have had to do with the near shortage situation that existed there in the first part of April, but then again, the API does not show any significant increase in crude stocks during the last few weeks.

Meanwhile gasoline inventories with their pathetic gain remain at a critically low level, and it appears that supply shortages still loom in the future if current growth rates in demand continue through the summer. With gasoline inventories in Europe getting rather lean, imports approaching Spring 2006 year levels appear impossible. Imports of 1.2 million bpd or slightly higher may be the best we can expect over the rest of May.

Based on current US demand, expected refinery utilization, and imports, we may avoid outright shortages for the Memorial Day holiday [end of May], but the basic situation will only grow worse over time as the main summer driving continues on.

[sneak]

Pup and Dante, thank you both for your fine efforts. Much appreciated by many around here..

Pup, can you give us all an insight into how you see this summer playing out based on this latest data? Does this slight build stave off the major problems we've been talking about over the last few weeks? Or do you see major supply problems for gasoline just around the corner?

Thanks again for making a complex situation (relatively) simple...

[ChadP]

Ministry of Truth version: Gasoline inventories have increased to 193.5 million barrels as new supplies rush in to provide ample supplies for the summer driving season.

I wonder how many MSM reports (will) look just like that.

On a more serious note - how do the latest refinery issues affect our chances of getting up to 9.2m/day? There were a couple of failures late last week IIRC...

[pup55]

Does this slight build stave off the major problems we've been talking about over the last few weeks?

Per the above model, we are now getting into a period before memorial day where the demand is relatively stable, and the refineries are ramping up production for the driving season. The minor increase in inventory this week did not do anything to affect this over the long term.

Or do you see major supply problems for gasoline just around the corner?

We have made it through the first little bottleneck with only a couple of shortage reports. This was about three weeks ago when production was down around 8.1 mbpd and there was some question as to whether the industry could ramp up production. What happened is that they have gone from 8.1 to 8.9 in about four weeks, and demand has remained relatively flat, so, thanks to the 1.2 mbpd imports we are getting, we are keeping even with the demand, which is running at 10.1 or 10.2 (note that this is the "balance" demand not to be confused with "products supplied" on the report).

The next 3-6 weeks should be a little building period: Demand will still not be at its maximum, and the refiners should be coming on line, there is still plenty of crude oil around, so this should allow the inventory to build. If this does not happen, there are going to be serious problems later on, because we do not have the capacity at peak demand (late July and early August) to keep up with everybody getting into the family truckster and heading out on their family road trip to see Cousin Eddie.

By the middle of the summer, if things continue like they are, the nominal "products supplied" as defined by the EIA will be at about 9.7-9.8 mbpd at the highest point, which will make the "balance demand" up to almost 10.6-10.7 mbpd. The sooner it gets that high, and the longer it stays there, the faster the remaining inventory will draw down, barring some production miracle or a flood of imports. This will still come down to the question of how low the inventory can get before problems start to happen. We saw two weeks ago at 193 million barrels a couple of spot shortages happen, so toward the end of August when the inventory is down into the high 180's this could be an even more serious problem.

I am ready to say that for the short term, the chances of supply shortages developing between now and mid-July are lower than they were three weeks ago. After that, though, things are going to get tight again. We will know more in about three weeks. Keep in mind this is the opinion of some guy on the internet so subject to a wide cone of uncertainty.

Of course, if a hurricane hits, and one of these big refineries along the gulf coast that Strider listed the other day has to shut down for a few days, or that strike in Antwerp happens and we cannot get our full supply of imports, this makes the situation all the more critical, and the probability will increase proportionately.

how do the latest refinery issues affect our chances of getting up to 9.2m/day?

These type of incidents are fairly common and although an indication of the terrible condition of the refinery system, are not typically the end of the world, because they are little guys and do not amount to too much production. I think that list the other day was pretty good: The BP plant in Texas City, and the two Exxon plants in Baton Rouge and Baytown, and one or two more, if those giant plants go down, that becomes a problem.