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WTI Tumbles On Biggest Crude Build In 19 Months

October 3, 2018

WTI Tumbles On Biggest Crude Build In 19 Months

Modest overnight gains following API’s data have been erased as DOE reports a massive surprise (biggest since March 2017) crude build…

“We’re right in the middle of refinery maintenance season and you’ll probably see a lot of demand coming offline,” says Michael Loewen, a commodities strategist at Scotiabank. “It might take a few market participants by surprise to see a larger build than what we are used to in crude oil inventories”

API

  • Crude +907k (+1.5mm exp)
  • Cushing +2.018mm (+800k exp) [Genscape +600k]
  • Gasoline -1.703mm
  • Distillates -1.197mm

DOE

  • Crude +7.975mm (+1.5mm exp) – highest since Mar 2017
  • Cushing +1.699mm (+800k exp) [Genscape +600k] – highest since March 2018
  • Gasoline -459k (+1.25mm exp)
  • Distillates -1.75mm

Massive crude build shocks the market…

Bloomberg notes that you can’t really pin this week’s huge crude build on refiners. Gross inputs were little changed and are the highest ever historically for this week.

US Crude production held at record highs…

 

WTI hovered risght around $74 ahead of the DOE data, then dumped…

Bloomberg Intelligence Senior Energy Analyst Vince Piazza warns that with WTI approaching $80 a barrel, we believe oil has moved too far, too fast, notwithstanding reduced Iran exports because of sanctions and declining production from Venezuela. Demand destruction remains a concern due to elevated prices and geopolitics. We also expect heightened hedging by U.S. E&Ps at current prices, while trade tensions, robust production and seasonal refinery maintenance in the U.S. add to the negative price outlook.

Australia’s oil stock coverage on record low

June 27, 2017

Australia’s oil stock coverage on record low

In prime time evening news of the Australian public broadcaster ABC TV, on 21 June 2017, the business presenter Alan Kohler tried to explain a fall in oil prices by “record oil inventories around the world”

http://www.abc.net.au/news/business/kohler-report/

Well, let’s go around the world on a map and stay where we are, in Australia. In google, type in the search word “Australian Petroleum Statistics” and you get this website:

http://www.environment.gov.au/energy/petroleum-statistics

Click on the latest issue and then on the download PDF file, in this case April 2017

http://www.environment.gov.au/system/files/resources/8b150335-1e38-48a3-9f66-daed7ddbe4bf/files/australian-petroleum-statistics-april2017.pdf

Search for the word “stocks” and that brings you to tables 6 and 7

Table 7 End of month stocks of petroleum, consumption cover

In the last column “IEA days of net imports coverage it is 89.5 days for 2010/11 and 55.2 days for 2015/17. Go to the bottom of the column and it’s 50.5 days. The year-on-year decline is 3.1%. That doesn’t look like a record now. If anything, it’s a record low. Let’s put that into a graph:

Australia_IEA_days_coverage_2010-Apr2017Fig 1: Australia’s net imports coverage in days as defined by IEA

Australia is a member of the IEA (International Energy Agency)

Turnbull_Birol_Feb2017Fig 2: Australian Prime Minster shaking hands with IEA’s Fatih Birol, Feb 2017

We check the coverage on the IEA website and find 48 days for March

…click on the above link to read the rest of the article…

Oil Prices Fall Fast On Huge Inventory Build

March 23, 2016

Oil Prices Fall Fast On Huge Inventory Build

Two hundred and twenty-two years after Josiah G. Pierson patented the rivet machine, and the oil market remains as riveting as ever. (I’m here all week, folks). After yesterday’s API report gave a flourishing hat-tip towards a large build to crude stocks and a large draw to gasoline, oil is sliding amid a stronger dollar, while gasoline is pushing higher. Here are some things to consider today:

Jumping straight into economic data, the most insights we’ve had overnight have come from Brazil. Its mid-month inflation print dropped into single digits (at +9.95 percent), but still close to a 12-year high. Meanwhile, its unemployment rate jumped to 8.2 percent, its highest level in nearly 7 years.

Economic weakness in Brazil is strongly tied to the performance of the underlying resources it is rich in. Hence, as the price of key commodities for the South American country – such as soybeans, iron ore and crude – have headed south, so has its economy. As the chart below illustrates, the fate of the state-run oil company Petrobras tracks closely with oil prices. Hence as oil prices have charged lower, it is no surprise to hear this week that Petrobras has reported its biggest ever quarterly loss of $10 billion in Q4 of 2015, due to asset write-downs amid falling oil prices.

(Click to enlarge)

We have U.S. weekly inventories on deck this morning, with last night’s humongous API crude build of 8.8 million barrels adjusting expectations ahead of today’s number. The API report also yielded a large 4.3 million barrel draw to gasoline stocks, pointing to a drop in refinery utilization (read: refinery maintenance) amid destocking from the winter to the summer blend. As we mentioned yesterday, our ClipperData showed strong crude imports last week amid a wealth of waterborne arrivals into the U.S. Gulf, tipping us off to a crude build.

…click on the above link to read the rest of the article…

BP’s Stunning Warning: “Every Oil Storage Tank Will Be Full In A Few Months”

February 10, 2016

BP’s Stunning Warning: “Every Oil Storage Tank Will Be Full In A Few Months”

It was just last week when we said that Cushing may be about to overflow in the face of an acute crude oil supply glut.

“Even the highly adaptive US storage system appears to be reaching its limits,” we wrote, before plotting Cushing capacity versus inventory levels. We also took a look at the EIA’s latest take on the subject and showed you the following chart which depicts how much higher inventory levels are today versus their five-year averages.

graph of difference in inventory levels as of January 22, 2016 to previous 5-year average, as explained in the article text

Finally, we went on to present two alarm bells that offer the best evidence yet that inventories are reaching nosebleed levels: 1) some counterparties are experiencing delays in delivering crude due to unspecified “terminalling and pump” issues (basically, it’s hard to move barrels around at this point because there’s so much oil sitting in storage); 2) the cash roll is negative.

On Wednesday, BP CEO Robert Dudley – who earlier this month reported the worst annual loss in company history – is out warning that storage tanks will be completely full by the end of H1. “We are very bearish for the first half of the year,” Dudley said at the IP Week conference in London Wednesday. “In the second half, every tank and swimming pool in the world is going to fill and fundamentals are going to kick in,” he added. “The market will start balancing in the second half of this year.”

Maybe. Or maybe excess supply will simply be dumped on the market once all the “swimming pools” are full.

If that happens, don’t be surprised to see crude crash into the teens as attempts to clear and dump excess inventory spread like wildfire across the market.

Earlier this week, the IEA called any respite for crude prices “a false dawn.” Here’s why (via The Guardian):

…click on the above link to read the rest of the article…

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