US crude oil inventories drew -3.739Mbbls last week the EIA reported, the bigger story was US petroleum inventories fell by 11.453mb w/w to 1,597.425mb last week. That is three consecutive weeks of greater than 10 million barrels crude + refined products stock draws in the U.S. Gasoline seasonal stocks now the lowest since 2014. Crude oil maintained their bid after OPEC+ announced a surprise over 1 million barrel per day crude oil production cut on Sunday which they confirmed at their scheduled JMMC.
The futures market was already primed to take prices higher after WTI crude oil closed with a bullish hammer Friday on WTI crude KnovaWave commented, along with copper, suggesting demand above $64 and a rebound after the energy sector headed lower as markets were jolted in March by swift breakdowns in the U.S. banking system.
WTI crude oil futures have continued to rise up to $74.00/bbl after they settled Friday at $69.26 up $3.47 or 2.32% for the week surviving a low of $64.36 last Monday and seeing a high of $71.67 flirting between technical levels.
Sentiment has been improving with the headwinds from three major bank failures in the US and Credit Suisse falling. Concerns grow that more aggressive tightening from the Federal Reserve would dent economic growth and curb demand.
The energy complex rose across the board last week. WTI futures rose +9.26% on the week, Brent rose +7.19%, gasoline rose +4.92% and heating oil rose +2.22%.
The Russia, India and China mix
Russia said they would cut production by 500kbbls in March just as Russia launched its heaviest bombardment on southern Ukraine since the start of the war, as officials warned Moscow’s major offensive had ‘definitely’ started. There is a clear use of oil as a weapon by Putin. India and China being Russia’s main customers are not filling the demand void. Not hard to join the dots.
EU’s sanctions on Russian refined products were implemented Feb. 5. The ban follows a similar price cap on crude shipments introduced last year. European countries have pushed to lower the crude price cap ($60) on Moscow even further, but the Biden administration said it was inclined to oppose the move.
Futures have been ignoring large US builds and have chosen hope with China opening up rather than negative morose from China’s economic implosion and the Central Bank maelstrom. Europe has been addressing energy dependance on Russia since the Ukraine invasion. President Vladimir Putin said Russia would immediately stop oil supply to countries that support the G7 members price cap on exports of Russian oil.
Since the cap, if not before Russian exports have been redirected to India and China in particular. Russian crude exports into India rose by 260kbd m/m in December to a record 1.2mbd. January exports are on-track to nearly 1.3mbd of Russian crude. Russian Exports to China were 70kbd in December, down nearly 27%m/m. We have seen Malaysia increase exports well beyond its own output to China. In turn China has exported products such as distillates back to Europe.
Around The Barrel Contents
Click on the links below to navigate to the relevant section.
- DOE & API Petroleum Storage Forecast Matrix
- Crude Oil Quick Summary
- Weekly DoE US Petroleum Storage Report Breakdown
- API Crude Inventories
- Cushing Oil Stocks
- Crude Imports
- Crude Exports
- Gasoline
- Rig Watch
- Crude Oil Production
- Weather
- WTI Crude Oil Futures Technical Analysis
- DCOT Report
- Option Volatility and Gamma
- Key EIA and CME Dates
The risks of global recession threaten the demand picture and with higher rates push the likelihood of a meaningful recession higher. In 2023 the market has in the background the obtuse geopolitical framework framed by Russia’s Ukraine invasion, Germany’s inept energy policy, and Iran and China pursuing aggressive directions.
The soaring US dollar had a significant impact on commodity futures which has since reversed with the USD back at 7-month lows. Through it all demand and supply issues are the underlying guide.
The Week Ahead
DOE Weekly Petroleum Status Report Forecast
- via TradersCommunity.com
- Report Date 3/29/23
- Release Time: Wednesday, April 5, 2023, at 10:30 A.M. (ET)
Highlights
- Crude EIA -3.739M Exp -2.400M Prior -7.489M API -4.346M
- Cushing EIA -.0970M Exp -1.873M Prior -1.632M API -1.035M
- Gasoline EIA -4.119M Exp -1.700M Prior -2.904M API -3.970M
- Distillate EIA -3.632M Exp -0.500M Prior -1.550M API -3.693M
- Refinery Utilization -0.70% to 89.6% Exp -0.3%
- Production UNCHkbbls to 12,200kbpd (13.10 ATH)
- SPR release -400k (Lowest Since 1983)
- NB: Crude oil supply adjustment 3/31/3 fell 0.885mbpd w/w to 0.918mbpd – EIA
- US petroleum inventories (crude, SPR, refined products) fell by 11.453mb w/w to 1,597.425mb last week
Note in bbls *exp = Reuters poll estimates adjusted for API shift, except Cushing
Stocks have been building rather stoically in 2023, specifically at the Cushing WTI futures Hub.
Energy Price Matrix
With prices and volumes falling CME Group, the largest U.S. derivatives exchange operator, said it will reduce its maintenance margin requirement by about 9% for NYMEX West Texas Intermediate crude futures deliveries between April and June after the close of business Friday.
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.
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
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
API Crude Oil Inventories
US petroleum (Crude, SPR, oil products) inventories in million barrels (EIA)
US petroleum inventories (crude, SPR, refined products) fell by 11.453mb w/w to 1,597.425mb last week – 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 -0.404Mbbls taken from the SPR into the crude oil market.
US SPR crude inventories unchanged w/w at 371.6mb Jan 13, 2023. Sour unchanged w/w at 203.0mb Sweet unchanged w/w at 168.6mb
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.
API Cushing Stocks
Weekly Update via RonH Data @Ronh999
Closer Look at Cushing with DigStic Data @DigStic
US Oil Import Export
Imports
US crude imports by origin in kbpd (incl w/w change)
- Canada +1023 to 3980
- Mexico +379 to 920
- Saudi Arabia +286 to 514
- Colombia -198 to 71
- Iraq +207 to 345
- Ecuador -38 to 80
- Nigeria +198 to 302
- Brazil -6 to 139
- Libya -18 to 14
Exports
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
US consumers bought 390.4 million gallons of gasoline per day last week. That is +30.8 mil YoY.
US consumers spent $1,365.2 million dollars per day for gasoline last week. That is $-134.4 mil YoY
US avg retail price for gasoline was $3.497 last week. That is -0.673 YoY.
Rig Watch
Baker Hughes Weekly North American Rigs Report
- US Baker Hughes Rig Count 31-Mar: 755 (prev 758)
- Rotary Gas Rigs: 160 (prev 162)
- Rotary Oil Rigs: 592 (est 590; prev 593)
US Oil Rigs w/w changes by key shale basins
- Permian -1 to 347
- Eagle Ford unchanged at 62
- Williston unchanged at 42
- Cana Woodford unchanged at 31
- DJ Niobrara unchanged at 18
US oil rigs and frac spread (Baker Hughes/Primary Vision)
Canada Rigs
- Canada Rotary Drilling Rigs 24 March 10, 2023
- Canada averaged 248 active drilling rigs this week according to data from the Canadian Association of Energy Contractors. Of those rigs, 30% are drilling for natural gas, 49% are drilling for oil, 7% for other (helium, hydrogen, geothermal, lithium, or potash), and 14% are moving.
- Drilling activity by province is 75% in Alberta, 14% in Saskatchewan, 9% in BC, and 2% in Manitoba.
- Precision Drilling holds the majority of the Canadian market share with 30%, Ensign Drilling with 21%, Savanna Drilling with 12%, Horizon Drilling with 7%, Stampede Drilling with 5%, and Akita Drilling with 5%.29dk2902lhttps://boereport.com/29dk2902l.html
- BOE Report
International oil rigs ex North America
International oil rigs ex North America +7 m/m to 703 in February via Baker Hughes
- Kuwait +8
- Iraq +5
- Colombia +3
- Ecuador +3
- Argentina +2
- Oman -2
- Vietnam -2
- Brazil -2
- Mexico -3
- Saudi Arabia -5
- Turkey -6
US Oil Production
US crude production changed benchmark March 15, 2023:
US Oil Field Production -UNCH bpd to 12.20mbpd (New Benchmark adj)
“North Dakota’s Bakken shale field — once the largest and busiest American shale patch — is showing signs of age, threatening to hold back US oil production as the world thirsts for more crude. Mature wells that are producing more gas than expected are hurting crude output from the Bakken, the Energy Information Administration said… The deteriorating performance was a main reason the agency cut its estimate for 2024 US oil output to 12.65 million barrels a day from an earlier projection of 12.8 million… Even at the lowered estimate for next year, US output would still set a record, surpassing the 12.3 million barrels a day produced in 2019.”
February 7 – Bloomberg (Sheela Tobben)
OPEC Crude Oil Production
OPEC’s crudeoil output rose 120k b/d last month: 40kbd drops in Angola and Iran being more than offset by increases from Nigeria (+80kbp), Libya (40kbp), UAE (40kbp) and Venezuela (30kbp). Minor if any adjustments seen by the others, incl. KSA 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 reduced their net-length inBrent crude oil futures and options by 63,459 contracts to 169,925 in the week ending March 21 via ICE
- Long-only positions fell by 42,880
- Short-only positions rose by 20,579
- other reportables net-length fell by 758
Money managers reduced their net-length in WTI crude oil futures and options by 52,672 contracts to 71,302 in the week ending March 21 via CFTC
- Long-only positions fell by 8,121
- Short-only positions rose by 44,551
- other reportables net-length fell by 12,451
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 March 21 2023
COT on Commodities
In energy, the 5% crude oil rally supported a 42k lots increase in the WTI long to 113k, the bulk being short covering. Selling of Brent extended into a third week (-9k to 161k, an 11-wk low). Buying of RBOB (+40%) and ULSD (+47%) while natgas buying cut the short to just 5k via Ole S Hansen @Ole_S_Hansen
Money managers in commodities covering the wk to March 28, BCOM rose 1.6% and the dollar softened, saw broad buying led by WTI, gasoline, natgas, gold silver, corn and cocoa. Selling concentrated in soybeans. via Ole S Hansen @Ole_S_Hansen
via Ole S Hansen @Ole_S_Hansen
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
NYMEX LO = Crude Oil Options First 3 Months (Live Link)
NYMEX LO & ICE North Sea Brent BRN Crude Oil Options (Live Link)
NYMEX LO NYMEX OH NYMEX OB Options (Live Link)
NYMEX LO NYMEX OB Options (Live Link)
Energy Earnings Highlights for Q4 2022
Key EIA and CME Dates for WTI Crude Oil
Key EIA and CME Dates For WTI Crude Oil
From The TradersCommunity US Research Desk