Last week EIA reported crude oil stocks rose 3.925Mbbls with help of -3.600Mbbls from the SPR into the crude oil market, lowest level since May 1984. Cushing stocks fell -0.923Mbbls. Gasoline stocks fell -0.899Mbbls. Production rose 200k to 12.10 mil b/d off the highest since March 2020. US exports slowed by 0.4m b/d to 3.5m b/d. Refinery demand rose for a second week to 92.1% utilization coming out of maintenance season with implied gasoline demand rising 0.35 mm bpd w/w
Chatter in energy rooms has increased around America’s shortage of diesel supplies on hand putting pressure on suppliers to get more into the fuel supply with U.S. refining capacity having fallen over the past few years.
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.
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.
- 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
- Rig Watch
- Crude Oil Production
- WTI Crude Oil Futures Technical Analysis
- DCOT Report
- Option Volatility and Gamma
- 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 11/3/21
- Release Time: Wednesday, November 9, 2022, at 9:30 A.M. (ET)
- Crude EIA +3.925MM Exp +0.725M Prior -3.115M API +5.618M
- Cushing EIA -0.923M Exp -0.993M Prior +1.267M API -1.848M
- Gasoline EIA -0.899M Exp -2.014M Prior -1.257M API +2.553M
- Distillate EIA -0.521M Exp +0.524M Prior -0.427M API -1.773M
- Refinery Utilization +1.50% to 92.1% Exp +0.9%
- Production +200k to 12,100kbpd (13.10 ATH)
- SPR release -3.600 million barrels
Note in bbls *exp = Reuters poll est adjusted for API shift, except Cushing
NB: US crude production: This week’s domestic crude oil production estimate incorporates a re-benchmarking that raised estimated volumes by 137,000 barrels per day, which is about 1.1% of this week’s estimated production total. – EIA
US crude stocks In SPR fell to lowest since October 1984 Another SPR release of 3.6 mm barrels, SPR inventories are down ~ 197.5m bbls YTD
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
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
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
Weekly Update via RonH Data @Ronh999
Closer Look at Cushing with DigStic Data @DigStic
US Oil Import Export
US crude imports by origin in kbpd (incl w/w change)
- Canada -175 to 3235
- Mexico -245 to 503
- Saudi Arabia -14 to 519
- Colombia +123 to 341
- Iraq +369 to 503
- Ecuador +102 to 102
- Nigeria +38 to 119
- Brazil -72 to 140
- Libya -88 to 41
US crude and refined product exports at record 11.426mbpd last week – EIA
US Gasoline Consumers
Input to Refineries
US consumers bought +378.5 million gallons of gasoline per day last week. That is -10.4 mil YoY
US consumers spent $1,436.6 million dollars per day for gasoline last week. That is $+110.6 mil YoY.
US avg retail price for gasoline was $3.796 last week. That is +0.386 YoY.
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
Baker Hughes Weekly North American Rigs Report
- US Baker Hughes Rig Count 04-Nov: 770 (prev 768)
- Rotary Gas Rigs: 155 (Prev 156)
- Rotary Oil Rigs: 613 (Prev 610)
US Oil Rigs w/w changes by key shale basins
- Permian unchanged at 343
- Eagle Word unchanged at 66
- Williston +2 to 41
- Cana Woodford unchanged at 28
- DJ Niobrara unchanged at 20
US oil rigs and frac spread (Baker Hughes/Primary Vision)
- 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
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 +200 kbpd to 12.10 mbpd (New Benchmark adj)
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
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 22,214 contracts to 227,665 in the week ending November 1
- Long-only positions rose by 26,290
- Short-only positions rose by 4,076
Money managers increased their net-length in WTI crude oil futures and options by 16,115 contracts to 198,044 in the week ending November 1 via CFTC
- Long-only positions rose by 14,311
- Short-only positions fell by 1,804
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 1
COT on Commodities
Specs raised bullish bets on WTI (+16k) and Brent (+22k) crudeoil to 426k lots, an 18-week high, in week to Nov 1. Primarily driven by fresh longs as OPEC+ production cuts drove prices higher by +3%. Small profit taking in gas oil and gasoline and buying of ULSD (HO_f)
Money managers in commodities covering the wk to Nov 1 saw specs add length for a second week, driven by crudeoil, natgas, copper, soybeans and corn. In addition to gold, all four softs were sold led by sugar and coffee 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
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