Around The Barrel – Crude Oil and Gasoline Stocks Lower as US Dollar Impacts Pricing

The soaring US dollar has had a significant impact on commodity futures, however under the engine demand and supply issues are paramount. EIA reported crude oil stocks fell -215Kbbls with help from -4.575Mbbls from the SPR into the crude oil market, lowest since August 1984. Cushing stocks rose +692Kbbl. Gasoline stocks -2.422Mbbl. Production fell 100k to 12.0 mil b/d off the highest since March 2020. Imports were down 0.5 mm bopd and exports were up 1.1 mm bopd from last week.

This week’s markets have continued on with last week’s theme of panic in commodity markets as the US dollar soared, with moments of violence, the British Pound hovers around 37-year lows. A huge predicament for the global leveraged speculating community that is awash with energy derivatives with less and less liquidity. Energy complex futures have suffered sharp losses on concerns about a global slowdown.

The geopolitical framework for Crude Oil is becoming more 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.

Cushing Storage Tanks
Cushing Storage Tanks

Crude oil futures prices have swung sharply between risk off selling, Russia, KSA and US policies. US CPI remains elevated with aggressive hawkish central banks are leading a persistently sharper economic slowdown and strengthening the USD.

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.

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

Risk in oil prices comes from demand and supply, it used to be straight forward but with wars, sanctions and a supply chain mess it isn’t so easy. Libya is adding to the supply risk as clashes between militias spark concern the OPEC nation that has two rival governments is descending into another full-blown conflict. Iraq is also breaking into anarchy. More kindling on Russia’s President Putin threatening the world with rants over world energy and food supply as he continues his attack and bombardment of Ukraine. The headline risk around the EU phasing out Russian oil by year end overhangs.

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 sabers about continues to fester. Meanwhile in the US SPR sales continues.

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 month, 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 9/21/21
  • Release Time: Wednesday, September 28, 2022, at 9:30 A.M. (ET)
  • Crude EIA -215K Exp +2321k Prior +1.141M API +4.150M
  • Cushing EIA +692K Exp +283k Prior +343K API +0.357M
  • Gasoline EIA -2.422M Exp +482k Prior +1.570M API -1.048M
  • Distillate EIA -2.891M Exp +1657k Prior +1.230M API +0.438M
  • Refinery Utilization 3.00% to 90.60% Exp -1.3%
  • Production -100k to 12,000kbpd (13.10 ATH)
  • SPR release 4.57 million barrels

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

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.

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 -93 to 3775
  • Mexico -257 to 598
  • Saudi Arabia -67 to 422
  • Colombia -140 to 72
  • Iraq +82 to 202
  • Ecuador -128 to 191
  • Brazil +97 to 299
  • Trinidad and Tobago +51 to 51

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

American gross exports of crude oil and refined petroleum products last week surpassed the 11m b/d mark for the first time ever. Truly, the US has become the gas station to the world @JavierBlas

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US exports of crude and refined products in mbpd (EIA) – another week above 10mbpd

US Gasoline Consumers

Input to Refineries

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US consumers bought +370.6 million gallons of gasoline per day last week. That is -24.1 mil YoY.

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US consumers spent $1,375.5 million dollars per day for gasoline last week. That is $+122.1 mil YoY.

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US avg retail price for gasoline was $3.711 last week. That is +0.536 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 23-Sep: 764 (prev 763)
  • – Rotary Gas Rigs: 160 (prev 162)
  • – Rotary Oil Rigs: 602 (prev 599)

US Oil Rigs w/w changes by key shale basins

  • Permian +2 to 339
  • Eagle Ford unchanged at 66
  • Williston -1 to 39
  • Cana Woodford +2 to 25
  • DJ Niobrara unchanged at 17
US oil rigs and frac spread (Baker Hughes/Primary Vision)
via @staunovo

Canada Rigs

  • Canada averaged 216 active drilling rigs this week according to data from the Canadian Association of Energy Contractors. Of those rigs, 28% are drilling for natural gas, 60% are drilling for oil, 4% for other (helium, hydrogen, geothermal, lithium, or potash), and 8% are moving.
  • Drilling activity by province is 71% in Alberta, 19% in Saskatchewan, 8% in BC, and 2% in Manitoba. Precision Drilling holds the majority of the Canadian market share with 29%, Ensign Drilling with 25%, Savanna Drilling with 13%, Horizon with 6%, and Stampede Drilling with 5%. 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 +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 -100k kbpd to 12.00 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: Measuring oil 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. From there down in 3 waves, completing a C or IV? Support wasn’t found until 0-8. Support is previous lows and Tenkan. Resistance Kijun and 50dma which it needs close above for a rally to get legs.

Weekly: WTI crude Oil futures have plunged more than 30% off the June highs. Despite a steep weekly sell-off and a range of nearly 11%, oil continues to trade just above the key critical zone for the fifth-consecutive week. WTI traded over $94bbl just short of the tenkan after reversing off last Tuesdays $86.53Bbl the lowest settle since January 25, only to retest that level this week. WTI spat back under the 50wma. 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. Resistance Weekly Tenkan & Kijun and Murrey Math levels and previous breaks (off monthly)

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…….

The focus remains 85.61-88.01a 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 17,461 contracts to 171,819 in the week ending August 30 – ICE

  • Long-only positions rose by 21,183
  • Short-only positions rose by 3,722
  • other reportables net-length rose by 3,677

Money managers reduced their net-length in WTI crude oil futures and options by 10,719 contracts to 1727,712 in the week ending August 30 – CFTC

  • Long-only positions fell by 1,722
  • Short-only positions fell by 8,997
  • other reportables net-length fell by 9,251
Aggregated open interest in Brent and WTI in million contracts 8 31 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 August 30

COT on Commodities

Money managers bought crude oil, both WTI (+8k) and brent (+5.6k), for a second week with the comb long reaching an eight-week high at 355k. The gas oil long slumped 30% to a 22-month low while in NY the ULSD length was cut by 17% to 15.7k

COT on commodities week to Sept 20 when energy and precious metal weakness drove a 2.3% slump in the BCOM index. Selling led by gold gasoil and sugar being partially offset by demand for among others crudeoil soymeal corn and platinum 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 Q2 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