Around The Barrel – US Crude Production Hits Highest Since April 2020 as President Biden Ramps Up Blame Game on Big Oil

The crude oil market has become even more of a political minefield, which only distorts the market further. The response from US President Biden and his Democrats is a continued attack on US energy companies and draining it’s SPR to its lowest level since January 1987. Factoring in SPR crude oil stocks fell -5.8 mil bbls including a -7.7 mil bbls SPR draw. Production grew 100k b/d to 12.0 mil b/d the highest since April 2020. Of note refinery utilization in PADD3 (Gulf Coast) is at 96.5% so am not sure where the US Energy Secretary’s math and threats to US producers is calculated on. These moves have not alleviated gasoline prices or product shortage anxiety.

The headline risk around the EU phasing out Russian oil by year end overhangs. EIA reported US Crude last week grew +1956Kbbl (incl: -826K draw at Cushing). Gasoline stocks drew – 710kbbl. Utilization fell -0.50% to 93.7%

Cushing Storage Tanks
Cushing Storage Tanks

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.

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.

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 head of Trafigura has warned that the oil market could reach a ‘parabolic state’ this year with prices surging to record highs and triggering a slowdown in economic growth. Jeremy Weir, chief executive of the commodity trader, said that energy markets were in a ‘critical’ state as sanctions on Russia’s oil exports following its invasion of Ukraine had exacerbated already tight supplies created by years of under-investment. ‘We have got a critical situation,’ Weir told the FT Global Boardroom conference… ‘I really think we have a problem for the next six months . . . once it gets to these parabolic states, markets can move and they can spike quite a lot.’” June 8 – Financial Times (David Sheppard and Tom Wilson)

DOE Weekly Petroleum Status Report Forecast

  • via TradersCommunity.com
  • Report Date 6/8/21
  • Release Time: Wednesday, June 15, 2022, at 10:30 A.M. (ET)
  • Crude EIA +1956K Exp -1190k Prior +2025K API +736k
  • Cushing EIA -826K Exp -916k Prior -1593K API -1067k
  • Gasoline EIA -710K Exp -482k Prior -812K API -2159k
  • Distillate EIA +725 Exp +1657k Prior +2592K API +234k
  • Refinery Utilization -0.50% to 93.7% Exp -0.3%
  • Refinery utilization in PADD3 (Gulf Coast) 96.5%
  • Production +100k 12,000kbpd (13.10 ATH)

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

Update: PADD 3 Refinery Utilization



US Crude Oil Quick Look

On a 4-week avg basis, @EIAgov continues to peg US oil demand at a record high for this time of the year. The latest data puts demand at 21.64m b/d, highest ever for late January, and the highest in absolute terms since Aug 2019 (Chart is 20 years of seasonal data) via @JavierBlas Bloomberg

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via Giovanni Staunovo? @staunovo

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Rising crude oil AND rising refinery margins have pushed gasoline to a record high price and diesel near the late April record

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.

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 -209 to 3394
  • Mexico -103 to 608
  • Saudi Arabia +332 to 681
  • Colombia +149 to 292
  • Iraq +359 to 555
  • Ecuador -32 to 227
  • Brazil +164 to 206
  • Russia unchanged at 0
  • Nigeria -13 to 181
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

Exports

US crude and oil export exports were at 10.576mbpd last week – just marginally below the record level of 10.600mbpd reached mid April (EIA)

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US Gasoline Consumers

Input to Refineries

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US consumers bought +381.9 million gallons of gasoline per day last week. That is -11.2 mil YoY.

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US consumers spent $1,911.8 million dollars per day for gasoline last week. That is $+705.3 mil YoY

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US avg retail price for gasoline was $5.006 last week. That is +1.937 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 10-Jun: 733 (prev 727)
  • Rotary Gas Rigs: 151 (prev 151)
  • Rotary Oil Rigs: 580 (prev 574)

U.S. oil rigs unchanged after it fell two to 574 last week, their first decline in 10 weeks, gas rigs remained unchanged at 151 their highest since September 2019.

For the month, the oil rig count rose for a record 21 months in a row, while the gas rig count was up for a ninth month in a row, the most since May 2017.

US Oil Rigs w/w changes by key shale basins

  • Permian +3 to 344
  • Eagle Ford +2 to 59
  • Williston unchanged at 27
  • Cana Woodford unchanged at 27
  • DJ Niobrara unchanged at 15
US oil rigs and frac spread (Baker Hughes/Primary Vision)
via @staunovo

Canada Rigs

  • Canada averaged 95 active drilling rigs this week according to data from the Canadian Association of Energy Contractors. Of those rigs, 39% are drilling for natural gas, 49% are drilling for oil, 2% for other (helium, hydrogen, geothermal, or potash), and 10% are moving.
  • Drilling activity by province is 78% in Alberta, 9% in Saskatchewan, 7% in BC, and 6% elsewhere. Precision Drilling holds the majority of the Canadian market share with 34%, Ensign Drilling with 24%, Savanna Drilling with 12%, and Akita Drilling with 6% via Camtrader

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

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Permian Basin Rigs

International oil rigs ex North America

International oil rigs ex North America down 4 m/m to 644 in April (Baker Hughes)

  • Abud Dhabi +5
  • Norway, Argentina +3
  • Egypt, Algeria, Brazil -3
  • Libya -8
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US Oil Production

US crude production changed benchmark May 11, 2022: Domestic crude oil production estimate incorporates a re-benchmarking that affected estimated volumes by less than 50,000 barrels per day, which is about 0.1% of this week’s estimated production total. via EIA

US Oil Field Production +100k kbpd to 12.00 mbpd (New Benchmark adj)

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Weather Watch

Gulf of Mexico


WTI Crude Oil Futures Technical Analysis

via KnovaWave @KnovaWave

US Crude Oil (WTI)

Daily:

Another big week for oil, after hitting our initial 8/8 target retest completing either a iii of (5) or (v) of 5 as marked. From there we saw a grinding ABC or 1 of 3 higher and MM recalculation higher to almost +2/8 and 161.8% Fib retest. We are in a completive mode with this impulse, it’s a question of degree on the topside, use the Murrey math 240/60 grid.

On the way up potent WTI price action indicative of 3rd wave energy highlighted by spits of the Tenkan to new highs. Recall prior to this move the completion in 5 waves (iii or i) saw heavy selling with eventual confluence kiss of death with 50dma at the top of the cloud. From there down in 3 waves, completing a C or IV? Support wasn’t found until 0-8. From there we have accelerated higher through the cloud twist. Support Kijun and Tenkan. Closed above 50dma with grid above

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. Support is previous lows, Murrey Math levels and Fib cluster. Support is the 50dma, kijun, tenkan and prev high confluence.

Weekly: WTI crude Oil futures continued higher after corrected the sell off to the Kijun. That was after it’s measured move reversed from 7-year highs and regained them right to the top of the weekly channel with the downside open. Risk support is the grid. Long term 61.8% target fueled the spit of a spit by ABC bull flag after rebalanced Chikou sated the 5 waves. Support previous high and Weekly Tenkan & Kijun which closed turning up under the 100% to give next impulse clue after holding above 50wma after regaining energy above Tenkan and Kijun. Resistance the Murrey Math levels and previous breaks (off monthly)

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 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 18,536 contracts to 228,793 in the week ending June 7

Long-only positions rose by 16,136
Short-only positions fell by 2,220

other reportables net-length fell by 3,474

– ICE

Money managers increased their net-length in WTI crude oil futures and options by 1,676 contracts to 284,879 in the week ending June 7

Long-only positions rose by 3,427
Short-only positions rose by 1,751

other reportables net-length fell by 3,010

– CFTC

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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 May 31

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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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Among the most traded option strikes in this week in WTI and Brent we find an increased demand for > $100 strikes via @Ole_S_Hansen

Key EIA and CME Dates for WTI Crude Oil

Key EIA and CME Dates For WTI Crude Oil

From The TradersCommunity US Research Desk