Around The Barrel – Crude Oil Builds with Refinery Utilization Down 12.4% Due to Arctic Freeze

EIA reported a build of +1.694Mbbls in crude, gasoline dropped -0.346M bbl. Total oil and fuel exports 10.55MMbpd, production was 100kbbls higher. Refinery utilization fell 12.4% for the week ending 12/31 due to arctic freeze. Weekly refinery runs fell by 2.329mbpd w/w to 13.820mbpd. US total crude oil inventories (both commercial and the Strategic Petroleum Reserve) have fallen to a 36-year low, dropping below the previous bottom set in 2001. US benchmark crude oil futures have sold off since the start of 2023 to under $73bbl after WTI oil futures closed the year at $80.56bbl, up 7.62% for 2022, well off those Ukranian invasion highs around $130 but at a level that producers and consumers appear to be comfortable with.

The negative morose from China’s economic implosion and the Central Bank maelstrom continuing to roil market sentiment as risks of global recession threaten the demand picture with higher rates pushing the likelihood of a meaningful recession higher.

Oil Outlook Messy

The geopolitical framework for Crude Oil remains volatile as Russia, Germany, Iran and China pursue aggressive directions. Germany in an attempt to achieve some energy independence seized the German unit of Russian oil major Rosneft PJSC a few months ago. Readdressing the dependance to Russia and the disaster that has come since the Ukraine invasion has been a slow and indecisive one by Germany. Geopolitical risks remain after President Vladimir Putin said Russia would immediately stop oil supply to countries that support the G7 members price cap on exports of Russian oil.

Around The Barrel Contents

Click on the links below to navigate to the relevant section.

  1. DOE & API Petroleum Storage Forecast Matrix
  2. Crude Oil Quick Summary
  3. Weekly DoE US Petroleum Storage Report Breakdown
  4. API Crude Inventories
  5. Cushing Oil Stocks
  6. Crude Imports
  7. Crude Exports
  8. Gasoline
  9. Rig Watch
  10. Crude Oil Production
  11. Weather
  12. WTI Crude Oil Futures Technical Analysis
  13. DCOT Report
  14. Option Volatility and Gamma
  15. Key EIA and CME Dates

The soaring US dollar has had a significant impact on commodity futures, however under the engine demand and supply issues are the underlying guide.

DOE Weekly Petroleum Status Report Forecast

  • via TradersCommunity.com
  • Report Date 12/28/22
  • Release Time: Thursday, January 5, 2023, at 11:00 A.M. (ET)

Highlights

  • Crude EIA +1.694M Exp +1.17M Prior +0.718M API +3.300M
  • Cushing EIA +0.244M Exp +0.273M Prior -0.200M API +0.700M
  • Gasoline EIA -0.346M Exp -2.014M Prior -3.105M API +1.170M
  • Distillate EIA -1.427M Exp +0.524M Prior +0.282M API -2.420M
  • Refinery Utilization -12.4% to 79.6% Exp -1.9%
  • Production +100kbbls at 12,100kbpd (13.10 ATH)
  • SPR release -3.600 million barrels (Lowest Since March 1984)

Note in bbls *exp = Reuters poll estimates adjusted for API shift, except Cushing

EIA reported a build of +1.694Mbbls in crude, gasoline dropped -0.346M bbl. Total oil and fuel exports 10.55MMbpd, production was 100kbbls higher. Refinery utilization fell 12.4% for the week ending 12/31 due to arctic freeze. Weekly refinery runs fell by 2.329mbpd w/w to 13.820mbpd.

Final 2022 Inventory

  • Commercial crude oil inventories were up ~2.8m bbls
  • SPR inventories were down ~ 221.3m bbls
  • Gasoline inventories were down ~10.1m bbls
  • Distillates were down ~6.5m bbls
  • Jet Fuel inventories were down ~0.9m bbls
  • Propane was up ~14.5m bbls

We saw -2.700Mbbls taken from the SPR into the crude oil market. US crude inventories fell by 1.054mb last week (commercial: +1.694mb, SPR: -2.748mb) SPR is the lowest level since 1983 down ~ 221.3Mbbls YTD. US total crude oil inventories (both commercial and the Strategic Petroleum Reserve) have fallen to a 36-year low, dropping below the previous bottom set in 2001.

Energy Price Matrix

Energy Market Close 12 30 2022

Update: PADD 3 Refinery Utilization


US Crude Oil Quick Look

Oil prices continue to be subject to geopolitical bifurcation dynamics with sudden changes that accompanies the onset of chaos. The unexpected knock-ons continue with imperfect bifurcation with political influence and personal vagaries from world leaders such as Putin, Scholz and Biden in addition to routine crude dynamics.

via Giovanni Staunovo? @staunovo

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via Ole S Hansen @Ole_S_Hansen

Weekly DoE US Petroleum Storage Report Breakdown

Weekly Storage via DOE

with RonH Data ‏@Ronh and The Fundamental Angle ‏@BrynneKKelly

  Via RonH at Ron H Public Tableau Link

The Fundamental Angle with Brynne Kelly ‏@BrynneKKelly

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API Crude Oil Inventories

US petroleum (Crude, SPR, oil products) inventories in million barrels (EIA)

US total crude oil inventories (both commercial and the Strategic Petroleum Reserve) have fallen to a 36-year low, dropping below the previous bottom set in 2001 via Bloomberg

  • US crude stocks In SPR fell to lowest since Dec 1983.
  • We saw -2.700Mbbls taken from the SPR into the crude oil market. US crude inventories fell by 1.054mb last week (commercial: +1.694mb, SPR: -2.748mb)
  • SPR is the lowest level since 1983 down ~ 221.3Mbbls
  • US total crude oil inventories (both commercial and the Strategic Petroleum Reserve) have fallen to a 36-year low, dropping below the previous bottom set in 2001.

Cushing Oil Stocks

Cushing, OK is the hub for the most heavily traded US oil Futures contract – West Intermediate Crude – WTI so for that reason we pay special attention to the storage there.

Cushing Storage Tanks
Cushing Storage Tanks

API Cushing Stocks

API Cushing

Weekly Update via RonH Data ‏@Ronh999

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Cushing OK Crude Oil Storage Stocks

Closer Look at Cushing with DigStic Data @DigStic

US Oil Import Export

Imports

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US crude imports by origin in kbpd (incl w/w change)

  • Canada -555 to 2949
  • Mexico -153 to 428
  • Saudi Arabia +6 to 479
  • Colombia +4 to 357
  • Iraq +65 to 354
  • Ecuador -187 to 87
  • Nigeria +75 to 141
  • Brazil +179 to 219
  • Libya +90 to 90
The US was a net-petroleum exporter in October – export of crude and refined products exceeded imports by record 1.629mbpd – EIA

Exports

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US petroleum exports new record high 11.776mbpd in December (crude 4.948mbpd, products 6.828mbpd) – EIA

US exports of crude and refined products in mbpd (EIA) – Record High ~11.776 million b/d.
US crude exports rose to record 4.146mbpd in October – EIA

Top buyers of US crude in October in kbpd (total exports 4.146mbpd)

  • India 509
  • South Korea 430
  • UK 401
  • Netherland 413
  • Canada 383
  • Singapore 346
  • China 332
  • Italy 187
  • Germany 164
  • Taiwan 135
  • Spain 117

US Gasoline Consumers

Input to Refineries

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US consumers bought 315.6 million gallons of gasoline per day last week. That is -27.6 mil YoY

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US consumers spent $1,017.1 million dollars per day for gasoline last week. That is $-109.0 mil YoY.

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US avg retail price for gasoline was $3.223 last week. That is -0.058 YoY.

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Rig Watch

Baker Hughes Weekly North American Rigs Report

  • US Baker Hughes Rig Count 29-Dec: 779 (prev 779) ▲193y/y
  • Rotary Gas Rigs: 156 (prev 155)
  • Rotary Oil Rigs: 621 (est 622; prev 622) ▲141 y/y.

US Oil Rigs w/w changes by key shale basins

  • Permian +1 to 350
  • Eagle Ford unchanged at 66
  • Williston unchanged at 42
  • Cana Woodford -2 to 26
  • DJ Niobrara -1 to 17
US oil rigs and frac spread (Baker Hughes/Primary Vision)
via @staunovo

US oil rigs and frac spread (Baker Hughes/Primary Vision)

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US oil rigs and frac spread (Baker Hughes/Primary Vision)

Canada Rigs

  • Canada Rotary Drilling Rigs 16 Dec 2022
  • Canada averaged 199 active drilling rigs this week according to data from the Canadian Association of Energy Contractors.
  • Of those rigs, 33% are drilling for natural gas, 55% are drilling for oil, 5% for other (helium, hydrogen, geothermal, lithium, or potash), and 7% are moving. Drilling activity by province is 77% in Alberta, 12% in Saskatchewan, 9% in BC, and 2% in Manitoba.
  • Precision Drilling holds the majority of the Canadian market share with 34%, Ensign Drilling with 22%, Savanna Drilling with 9%, Stampede Drilling with 7%, Horizon Drilling with 6%, and Bonanza Drilling with 5%.29dk2902l
  • Canadian data should decline into year-end due to the holiday season for field staff (maybe down to 50 rigs or less).

International oil rigs ex North America

International oil rigs ex North America +10 m/m to 694 in October (Baker Hughes)

  • Oman +4
  • Argentina +3
  • Mexico +3
  • Angola +2
  • Algeria -3
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US Oil Production

US crude production changed benchmark September 14, 2022: This week’s domestic crude oil production estimate incorporates a re-benchmarking that lowered estimated volumes by 212,000 barrels per day, which is about 1.7% of this week’s estimated production total. EIA

US Oil Field Production +100 kbpd 12.10 mbpd (New Benchmark adj)

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US crude production was at 12.381mbpd in October vs 12.312mbpd in September (revised from 12.268mbpd) – EIA

OPEC Crude Oil Production

OPEC crude oil production fell by 1m b/d to 28.8m b/d last month according to a survey from Bloomberg. Led by the four Gulf producers that needed to cut according to lower baselines. Overall, the 10 producers with quotas pumped around 1m b/d below the collective target via @Ole_S_Hansen – Bloomberg Survey

Weather Watch

Gulf of Mexico


WTI Crude Oil Futures Technical Analysis

via KnovaWave @KnovaWave

US Crude Oil (WTI)

Daily: WTI Crude Oil still chopping after completing the correction in 3 waves, C at the breakup level broke out of its daily bull flag through tenkan, kijun and 50dma right to the bottom of the cloud such was the impulse. From there it has been held back & needs to break above those descending levels for higher. We are in a completive mode for bulls with this impulse, it’s a question of degree on the topside, use the Murrey math 240/60 grid. From there down in 3 waves, completing a C or IV? Support is previous lows and the bull flag. The bear case is the high was a complete 5.

Weekly: WTI crude Oil futures spat the key 61.8% last month with impulse, having plunged more than 30% off the June highs. It has however been stuck in its sphere of influence since other than a peek this week. WTI completed 3 waves and powered through the tenkan and 50wma, however they both failed to hold the retest. Risk support is the grid. Long term 61.8% target fueled the spit of a spit by ABC bull flag after rebalanced Chikou sated. Resistance Weekly Kijun, cloud and Murrey Math levels and previous breaks (off monthly). Bear case is Wave 5 complete.

The key is crowd behavior to help tell the story which in energy is often around geopolitics. A great example of why we watch ABC corrections and from here we get the energy from the break being balanced. This move that was powered by 50 dma Tenkan spit of a spit – hence the fractal energies reverberations.

These are special times, recall “After we regained the pattern 261.8% from the extreme (-$40) move. The climax of the larger acceleration lower after broke the weekly uptrend, a fractal of the sharp and all the way to all-time lows to negative pricing we have seen mirror replications.” Above we have Murrey Math time and price

What we broke…….

Crude Oil in the past quarter built a huge bull flag. We watch if the recent break was false, or we fail. Very clear pattern.

The focus remains 85.61-88.01 a region defined by the 2013 low, the 100% extension of the March decline and the 61.8.% retracement of the November advance. A break below opens up the objective 2020 yearly open and 2018 high at 75.35-76.87. This would become an area of interest for downside exhaustion and price inflection potentially. Initial weekly the 38.2% Fibonacci retracement of the June decline at 100.21. Broader bearish invalidation now lowered to the June high-week close / 61.8% retracement at 109.16-110


Crude Oil Futures Commitment of Traders

Latest ICE and CFTC Open Interest Data:

CTFC and ICE open interest:

Money managers increased their net-length in Brent crude oil futures and options by 44,170 contracts to 143,703 in the week ending December 27 via ICE

  • Long-only positions rose by 25,306
  • Short-only positions fell by 18,864
  • other reportables net-length rose by 15,532

Money managers increased their net-length in WTI crude oil futures and options by 6,826 contracts to 195,409 in the week ending December 27 via CFTC

  • Long-only positions fell by 33
  • Short-only positions fell by 6,859
  • other reportables net-length fell by 3,714
Aggregated open interest in Brent and WTI in million contracts 12 27 22
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Chart: Crude net-positioning of non-commercial accounts (=managed money and other reportables) in barrels and in US dollars (Brent and WTI futures and options combined) latest value is December 27

COT on Commodities

Specs lowered bullish crude oil bets by a comb. 52k lots to 400k, on a combination of long liquidation (-39k) and fresh short selling (+13k). All three fuel products also sold as the s/t demand outlook showed signs of softening

Money managers in commodities covering the week to Dec 27: Hedge funds went on a buying spree ahead of year end with broad demand lifting the comb long on 24 major futures contracts to a six-month high. Led by crudeoil (+51k) gold (+9k) and corn (+46k). Brent saw biggest jump in 17 mths via Ole S Hansen @Ole_S_Hansen

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via Ole S Hansen @Ole_S_Hansen

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Understanding DCOT Reports

Read Understanding Commitments of Traders Reports – COT, TFF and DCOT  to help understand the disaggregated reports (DCOT) and how they break down the reportable open interest positions into four classifications:

1. Producer/Merchant/Processor/User 2. Swap Dealers 3. Managed Money 4. Other Reportables


Crude Oil Option Volatility Watch

via commodityvol.com

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NYMEX LO = Crude Oil Options First 3 Months (Live Link)

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NYMEX LO & ICE North Sea Brent BRN Crude Oil Options (Live Link)

NYMEX LO NYMEX OH NYMEX OB Options (Live Link)

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NYMEX LO NYMEX OB Options (Live Link)

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Energy Earnings Highlights for Q3 2022

Energy earning season saw increased production and earnings with improved North American and international markets for drilling, completion, and production. In Q3 we saw big oil reporting bumper third quarter profits as the US heads into Midterm elections.  We now have had US Majors Oil giant Exxon Mobil posted a record profit, Chevron also posted a near record profit and Refiner Phillips 66 booked $5.4 billion in gains compared with $402 million during the same period last year. European majors, Shell, Europe’s largest oil company reported profits of $9.45 billion and British oil major BP PLC reported $8.2bn in earnings.


Key EIA and CME Dates for WTI Crude Oil

Key EIA and CME Dates For WTI Crude Oil

From The TradersCommunity US Research Desk