Around The Barrel – Crude Oil and Gasoline Draw as Refinery Utilization Rises 1.70%

EIA last week reported crude oil stocks fell -3.115M with help from -1.926Mbbls from the SPR into the crude oil market, lowest level since May 1984. Cushing stocks rose +1.267M. Gasoline stocks fell -1.257M. Production fell 100k to 11.90 mil b/d off the highest since March 2020. US exports are up 19% to 161.9 million barrels YTD over the same period in 2021 (up 19%). Energy eyes on earning season with increased production leading to beats at the three major energy service providers, Halliburton saw 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.

Exxon Record Profits

Volatility returned to crude oil markets after OPEC+ ministers decided to cut production 2mbpd at the November production policy meeting and the US announced more SPR releases. The OPEC+ deal took the side of Russia, pitting the cartel against the US and EU. Since then, it has morphed into a war of words with the US with President Biden requested the cut to be done after the US midterm elections. Crude oil futures prices have swung sharply between risk off selling, Russia, KSA and US policies.

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. 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 o 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

Energy prices remain the biggest upward contributor for input inflation. In Germany in July, it was up 105.0% vs. 86.1% in June, namely the distribution of natural gas (163.8%) and electricity (125.4%). Hot geopolitical tensions with China and Russia’s Putin rattling their sabres about continues to fester. Meanwhile in the US SPR sales continues. US CPI remains elevated with aggressive hawkish central banks are leading a persistently sharper economic slowdown and strengthening the USD.

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

We are heading it third quarter earnings season. Big oil reported huge Q2 numbers with Aramco, $XOM, $CVX, $PSX, $SHEL, $BP, $OXY and Permian supremo $FANG all posting record or thereabouts profits. Central banks are aggressively raising rates, how will that affect demand? Oil continues to bustle on geopolitics.

The crude oil market overhead pressure comes with the threat of demand destruction with recession fears brought on by rising interest rates. In the past months, the Federal Reserve, Bank of England, ECB, Swiss National Bank, Bank of Canada, RBNZ, RBA, South Korea, Brazil and Mexico Central Banks have all raised interest rates.

DOE Weekly Petroleum Status Report Forecast

  • via TradersCommunity.com
  • Report Date 10/26/21
  • Release Time: Wednesday, November 3, 2022, at 9:30 A.M. (ET)
  • Crude EIA -3.115M Exp +0.725M Prior +2.588M API -6.530M
  • Cushing EIA +1.267M Exp +0.993M Prior +667K API +0.883M
  • Gasoline EIA -1.257M Exp -2.014M Prior -1.478M API -2.640M
  • Distillate EIA -0.427M Exp +0.524M Prior +170K API +0.865M
  • Refinery Utilization +1.70% to 90.60% Exp -0.3%
  • Production-100k to 11,900kbpd (13.10 ATH)
  • SPR release -1.926 million barrels

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

US crude stocks In SPR fell to lowest since October 1984 Another SPR release of 4.6 mm barrels putting stocks at 442,471 (in thousands) -28.8% from a year ago.

Update: PADD 3 Refinery Utilization


US Crude Oil Quick Look

We are watching the crack spreads as we saw in the earnings reports from the majors these all tightened in the past month as this chart via @pearkes

Declining open interest in crude oil futures and options driven by commercial and non-commercial traders via @eiagov

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.

East Coast diesel and heating oil inventories at fresh 32-year low (only data since 1990). The pricing hub of New York Harbor is virtually dry as oil prices continue to fluctuate with geopolitical elements and demand headwinds such as soaring interest rates, China’s COVID lockdowns, SPR releases consequences deepening all in the price matrix.

via Giovanni Staunovo? @staunovo

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The recent drop in gasoline and diesel prices at the pumps may have run its course for now with crude oil trading up and refinery margins showing signs of hitting a through

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)

If Washington sticks to its current pace, the reserve will shrink to a 40-year low of 358 million barrels by the end of October, when the releases are due to stop Bloomberg reported.

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 -73 to 3410
  • Mexico +239 to 748
  • Saudi Arabia +208 to 533
  • Colombia +3 to 218
  • Iraq -86 to 134
  • Ecuador -201
  • Nigeria +39 to 81
  • Brazil -60 to 212
  • Libya +39 to 129

Exports

At 1.782 mb/d (+355 kb/d m/m), Russian crude cargoes are increasingly heading to Asia, with loadings for India assessed at 633 kb/d (+310 kb/d) and direct exports to China at 812 kb/d (+129 kb/d) so far in April

US crude and refined product exports at record 11.426mbpd last week – EIA

US exports of crude and refined products in mbpd (EIA) – Record High ~11.4 million b/d.
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US Gasoline Consumers

Input to Refineries

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US consumers bought +363.7 million gallons of gasoline per day last week. That is -35.4 mil YoY.

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US consumers spent $1,361.0 million dollars per day for gasoline last week. That is $+7.9 mil YoY.

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US avg retail price for gasoline was $3.742 last week. That is +0.352 YoY.

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US East coast diesel inventories 32 Year Lows

New York harbor, we have a problem: US East coast diesel inventories are now at the lowest **absolute** level in at least 32 years (not just seasonal), per EIA data released. The Eastern seaboard is running on diesel fumes via. Javier Blas@JavierBlas


Rig Watch

Baker Hughes Weekly North American Rigs Report

  • US Baker Hughes Rig Count 28-Oct: 768 (prev 771)
  • Rotary Gas Rigs: 156 (prev 157)
  • Rotary Oil Rigs: 610 (est 614; prev 612)

US Oil Rigs w/w changes by key shale basins

  • Permian +2 to 343
  • Eagle Ford -1 to 66
  • Williston -1 to 39
  • Cana Woodford +2 to 28
  • DJ Niobrara unchanged at 20
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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Permian Basin Rigs

Canada Rigs

  • Canada Rotary Drilling Rigs 21 Oct 2022
  • 212 with 145 Oil & 67 NatGas
  • +2 weekly (+1 oil +1 Gas), +46 yearly (+47 oil – 1 gas)

International oil rigs ex North America

International oil rigs ex North America +5 m/m to 660 in August (Baker Hughes)

  • Norway, Algeria, Mexico, off China +3
  • Abu Dhabi, Brazil +2
  • Kuwait, Pakistan -2
  • Australia -3 Indonesia -4
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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 to 11.90 mbpd (New Benchmark adj)

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OPEC Crude Oil Production

OPEC crude oil production rose 0.6k b/d to 29.64m b/d last month with volatile Libya seeing a 380k b/d jump with KSA (+180) and UAE (+150) adding to the total. Nigeria (-70) and Venz (-160) offset an otherwise strong month that saw Covid-curbs reversed 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 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% with impulse, having plunged more than 30% off the June highs. WTI completed 3 waves and powered through the tenkan and 50 wma, 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 28,574 contracts to 205,451 in the week ending October 25 via ICE

  • Long-only positions rose by 26,921
  • Short-only positions fell by 1,653
  • other reportables net-length rose by 238

Money managers increased their net-length in WTI crude oil futures and options by 5,879 contracts to 181,929 in the week ending October 25 via CFTC

  • Long-only positions rose by 4,833
  • Short-only positions fell by 1,046
  • other reportables net-length fell by 10,015
Aggregated open interest in Brent and WTI in million contracts 9 8 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 October 25

COT on Commodities

Specs cut their WTI (-32.6k to 176k) and Brent (-24.3k to 176.9k) crudeoil longs in the week to Oct 18, thereby reversing the bulk of the OPEC+ led buying. Driven by longs (-42k) bailing out and some fresh short selling (+15k). Natgas shorts added as price slumped 13%

Money managers in commodities covering the wk to Oct 18 saw funds turn net sellers as the BCOM dropped 3.2%. Led by crudeoil, corn, coffee and gold, the latter together with silver and copper seeing positions flip back to a net short 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


Key EIA and CME Dates for WTI Crude Oil

Key EIA and CME Dates For WTI Crude Oil

From The TradersCommunity US Research Desk