Around The Barrel – Crude Oil and Gasoline Traders Outlook

EIA reported a crude build of +3.165Mbbls. Gasoline stocks rose +1.299M, the most since January 19. Distillate drew -1.185Mbbls in inventories. The WTI Futures Hub at Cushing stocks rose with a 2.107Mbbls build. Domestic US oil production was unchanged at 13.1mbpd just off the all-time high 13.3mbpd. Refinery utilization rose +0.9% to 82.4%. There was +700Mbbls added to SPR inventory WoW. Coming into the end of the quarter the slow rise of oil price volatility continues in a tight range since it broke out of a flag pattern to the topside.

The continuing dominating themes are playing out, Chinese economic mess with geopolitical noise, currency shifts, KSA and Russia manipulation attempts and Mid East threats.  Brent crude trades over $87 and WTI over $82 with Russia’s war on Ukraine increasingly focuses on attacks on energy installations, the Israel-Gaza conflict has become more entrenched.  OPEC+ said it sees no need for any policy changes during next week’s planned Joint Ministerial Monitoring Committee (JMMC) meeting. Russia for its part has ordered Russian oil companies to comply with lower production.

Oil Outlook Messy

In addition to the geopolitical background, we have a continuing asset rally with stock indices at record highs in the US and elsewhere.  Goldman Sachs in a note said commodity demand would increase this year, driven by interest rate cuts by central banks, with potential returns as high as 15%.  Analysts are forecasting tighter supply with recession worries, the latest the SNB cutting rates and lowering growth estimates.  The Fed in its latest FOMC dot plot stuck to tentative plans for rate cuts this summer. The strong US dollar has had a significant impact on commodity futures, however under the engine demand and supply issues are the underlying guide.

Around The Barrel Contents

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

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

Geopolitical Watch

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.

Russia and Ukraine energy tit for tat

  • A Ukrainian drone attack on Russia’s Kuibyshev oil refinery in Samara, gutted one refining unit reducing capacity by half Reuters reported. According to Reuters in the first quarter of this year, Ukraine attacked seven Russian refineries, taking nearly 400,000 barrels per day of capacity offline.
  • Russia attacked an underground natural gas storage site in Ukraine, though supplies have not been disrupted, according to Kyiv.
  • DTEK, Ukraine’s largest energy producer, is running at 50% capacity, forcing it to suspend electricity exports, according to Ukraine’s energy ministry.

Middle East

The prices continue to pump and fail on continuing Middle East supply disruption threats. U.S. forces launched more strikes against Iran-backed Houthi militants who continue to target Red Sea shipping with missile and drone attacks. The Houthis and friends are adding a bigger risk factor to Mid-Eastern oil which is making energy exports from the U.S., Norway and Australia more attractive.

The geopolitical risk from the Israel-Hamas conflict to effect oil production and transportation in the Middle East has been moved to shipping lanes. The Levant is not a significant oil producing region and is unlikely to impact oil supply in the short term, it the ally risk and possible flow on. Traders’ eyes are on Iran with their backing of Hamas and the Biden’ Administration softening stance there prior to the attack.

Baltimore Bridge Collapse

The F. S. Key bridge collapse over the port of Baltimore after a ship ran into it has blocked all of the terminals within the harbor, this adds another element to oil and product pricing, mainly limited to transportation costs at first glance.   

The port is a significant distribution hub for petroleum products in the Central Atlantic (PADD1B) via articulated tug-barges, not large tankers arriving from overseas. Baltimore has connections to Colonial Pipeline, which carries motor gasoline, diesel, and jet fuel to New York Harbor from the Gulf Coast. It is also connected to refineries in the Philadelphia area via the Chesapeake and Delaware Canal.

The port of Baltimore is the 22nd largest “import” port for petroleum products. The port of Baltimore primarily “imports” asphalt and biodiesel. The asphalt primarily from Canada, and the biodiesel primarily from Europe. 

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 o price cap on exports of Russian oil.

DOE Weekly Petroleum Status Report Forecast

  • via TradersCommunity.com
  • Report Date 3/21/24
  • Release Time: Wednesday, March 27, 2024, at 9:30 A.M. (ET)
  • Crude EIA +3.165M Exp M Prior -1.952M API +9.337M
  • Cushing EIA +2.107M Exp M Prior -0.18M API +2.392M
  • Gasoline EIA +1.299M Exp M Prior -3.310M API -4.437M
  • Distillate EIA -1.185M Exp M Prior +0.624M API +0.531M
  • Refinery Utilization +0.9% to % Exp +0.9%
  • Production UNCH kbpd at 13.00mbpd (13.10 ATH)
  • SPR rose by ~0.7mb w/w to 363.0mb last week

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

EIA reported a crude build of +3.165Mbbls. Gasoline stocks rose +1.299M. Distillate drew -1.185Mbbls in inventories. The WTI Futures Hub at Cushing stocks rose with a +2.107Mbbls build. Domestic US oil production was unchanged at 13.1mbpd just off the all-time high 13.3mbpd. Refinery utilization rose +0.9% to 82.4%. There was +700Mbbls added to SPR inventory WoW.


US Crude Oil Quick Look

Weekly DoE US Petroleum Storage Report Breakdown

Weekly Storage via DOE

with RonH Data ‏@Ronh

  Via RonH at Ron H Public Tableau Link

API Crude Oil Inventories

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

March 25, 2024, US SPR crude inventories rose by ~0.7mb w/w to 363.0mb last week
Sour up by ~0.8mb to 219.3mb
Sweet unchanged at 143.8mb

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

US Oil Import Export

Imports

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

  • Canada -83 to 3652
  • Mexico +172 to 525
  • Saudi Arabia +84 to 338
  • Colombia -146 to 143
  • Iraq -8 to 244
  • Ecuador -138 to 9
  • Nigeria +158 to 215
  • Brazil +116 to 230
  • Libya +88 to 88
  • Mar 27, 2024

Exports

US Gasoline Consumers

Input to Refineries

US consumers bought 366.0 million gallons of gasoline per day last week. That is -18.1 mil YoY.

US consumers spent $1,289.5 million dollars per day for gasoline last week. That is $-24.4 mil YoY..

US avg retail price for gasoline was $3.523 last week. That is +0.102 YoY.


Rig Watch

Baker Hughes Weekly North American Rigs Report

  • US Baker Hughes Rig Count 18-Nov: 782 (prev 779)
  • Rotary Gas Rigs: 157 (prev 155)
  • Rotary Oil Rigs: 623 (prev 622)

US Oil Rigs w/w changes by key shale basins

  • Permian -2 to 345
  • Eagle Ford unchanged at 66 Williston +1 to 42
  • Cana Woodford +1 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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US oil rigs and frac spread (Baker Hughes/Primary Vision)

Canada Rigs

  • Canada Rotary Drilling Rigs 29 Oct 2022
  • Of those rigs, 29% are drilling for natural gas, 56% are drilling for oil, 3% for other (helium, hydrogen, geothermal, lithium, or potash), and 12% are moving.
  • Drilling activity by province is 72% in Alberta, 19% in Saskatchewan, 7% in BC, and 2% in Manitoba.
  • Precision Drilling holds the majority of the Canadian market share with 30%, Ensign Drilling with 22%, Savanna Drilling with 12%, Horizon Drilling with 6%, and Stampede Drilling with 6%.

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 Oil Field Production UNCH kbpd 13.10 mbpd (New Benchmark adj)

OPEC Crude Oil Production

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 in Brent crude oil futures and options by 29,537 contracts to 208,550 in the week ending November 15 via ICE

  • Long-only positions fell by 23,303
  • Short-only positions rose by 6,234
  • other reportables net-length fell by 1,904

Money managers reduced their net-length in #WTI crude oil futures and options by 21,978 contracts to 191,833 in the week ending November 15 via CFTC

  • Long-only positions fell by 15,423
  • Short-only positions rose by 6,555
Aggregated open interest in Brent and WTI in million contracts 11 15 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 November 15

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 wk to Nov 15 saw speculators make major changes as the US dollar and yields dropped and recession risks rose. Crude oil soybeans corn and cattle sold with buying concentrated in gold copper sugar and cococa 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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Key EIA and CME Dates for WTI Crude Oil

Key EIA and CME Dates For WTI Crude Oil

From The TradersCommunity US Research Desk