EIA reported a draw of -6.134Mbbls. Domestic US oil production figures jumped to their highest since 2020 to 12.8mbpd. The WTI Futures Hub at Cushing had a draw of -3.133Mbbls, the biggest since Oct 2021. Exports were 0.3mn b/d lower at 10.54Mbpd. Gasoline stocks rose+1.468Mbbls and distillate rose +0.945Mbbls in inventories. Refinery utilization fell -0.20% to 91.4%. With much ado about the continued weakness of the Chinese economy U.S. crude oil futures ended a streak of seven weekly gains last week. WTI and Brent crude oil futures have pulled back along with risk assets with continuing economic weakness in China and rising yields in global markets.
A factor supporting oil prices has been China, the world’s biggest oil importer is still consuming to the point Chinese product inventories are tight with gasoline stocks lower for 13 consecutive weeks. Operating oil rigs operating in the U.S. fell for the ninth time in 10 weeks to the lowest since March 2022, according to Baker Hughes.
Front-month Nymex crude futures ended the week down -2.3% to $81.25/bbl, and front-month October Brent crude was down -2.3% to $84.80/bbl for the week. Energy stocks also pulled back, The Energy Select Sector SPDR ETF (XLE) ended the week -1.2%.
The energy complex closed last week with WTI futures down -1.97% for the week. Gasoline down -5.16%, Brent down -2.32%, and heating oil rose +1.44%. (Prices w/w at 16:00 ET close)
The current WTI futures move began when it bounced off its 50-day moving average (71.29) through resistance from near its 200-day moving average (77.18).
Top 5 gainers in energy and natural resources during the past 5 days: (HHRS) +25.1%, (EOSE) +25.1%, (NPWR) +16.4%, (GSM) +15.7%, (ADSE) +9.4%.
Top 10 decliners in energy and natural resources during the past 5 days: (HE) -57.5%, (TPIC) -25.4%, (AMTX) -23.7%, (LTBR) -22.6%, (INDO) -17.7%, (VGAS) -17.3%, (TUSK) -16.7%, (SLI) -15.8%, (STEM) -15%, (BW) -14.4%.
EIA reported a draw of -5,960Mbbls. Domestic US oil production figures jumped to their highest since 2020 to 12.7mbpd. The WTI Futures Hub at Cushing had a draw of -0.837Mbbls. Gasoline stocks fell -0.262Mbbls and distillate rose +0.296Mbbls in inventories. Refinery utilization rose 0.90%. Of note we see consumer costs biting, 4-Week Avg Gasoline demand fell to 0.9% below year-ago despite lower gas prices and Covid restrictions lifted.
The key commodities continue to ignore weak data out of China that routinely triggers more calls for more policy stimulus. Concerns on the global economy deepen with the aggressive Central bank hiking as we saw with the weak global PMIs reports.
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
- Gasoline
- Rig Watch
- Crude Oil Production
- Weather
- WTI Crude Oil Futures Technical Analysis
- DCOT Report
- Option Volatility and Gamma
- Key EIA and CME Dates
The risks of global recession threaten the demand picture and with higher rates push the likelihood of a meaningful recession higher. In 2023 the market has in the background the obtuse geopolitical framework framed by Russia’s Ukraine invasion, Germany’s inept energy policy, and Iran and China pursuing aggressive directions.
The Week Ahead
DOE Weekly Petroleum Status Report Forecast
- via TradersCommunity.com
- Report Date 8/16/23
- Release Date Wednesday August 23, 2023, at 10:30 A.M
Highlights
- Crude EIA -6.134M Exp -3.000M Prior -5,960M API -2.418M
- Cushing EIA -3.133M Exp -2.156 Prior -0.837M API -2.21M
- Gasoline EIA +1.468M Exp +1.020M Prior -0.262M API +1.898M
- Distillate EIA +0.945M Exp -0.200M Prior +0.296 API -0.153M
- Refinery Utilization -0.20% to 91.4% Exp +0.5%
- Production +100kbpd to 12,800kbpd (13.10 ATH)
- SPR adds .600M (Lowest Since Aug 1983)
- NB: Crude oil supply adjustment 8/18/23 +509 day – EIA
- US petroleum inventories (crude, SPR, refined products) inventories fell by 2.400mb w/w to 1,611.727mb last week – EIA
Note in bbls *exp = Reuters poll estimates adjusted for API shift, except Cushing
EIA reported a draw of -6.134Mbbls. Domestic US oil production figures jumped to their highest since 2020 to 12.7mbpd. The WTI Futures Hub at Cushing had a draw of -3.133Mbbls. Gasoline stocks rose+1.468Mbbls and distillate rose +0.945Mbbls in inventories. Refinery utilization fell -0.20% to 91.4%. Of note we see consumer costs biting, 4-Week Avg Gasoline demand fell to 0.9% below year-ago despite lower gas prices and Covid restrictions lifted.
Energy Price Matrix
Ministry of Energy: Saudi Arabia will extend the voluntary cut of one million barrels per day for another month to include September that can be extended or extended and deepened.
Riyadh, August 03, 2023, SPA — An official source from the Ministry of Energy announced that the Kingdom of Saudi Arabia will extend the voluntary cut of one million barrels per day, which has gone into implementation in July, for another month to include the month of September that can be extended or extended and deepened. In effect, the Kingdom’s production for the month of September 2023 will be approximately 9 million barrels per day. The source also noted that this cut is in addition to the voluntary cut previously announced by the Kingdom in April 2023, which extends until the end of December 2024.
KSA Ministry of Energy 15:51 LOCAL TIME 12:51 GMT
The source confirmed that this additional voluntary cut comes to reinforce the precautionary efforts made by OPEC Plus countries with the aim of supporting the stability and balance of oil markets.
–SPA
US Crude Oil Quick Look
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.
Final 2022 Inventory
- Commercial crude oil inventories were up ~2.8m bbls
- SPR inventories were down ~ 221.3m bbls
- Gasoline inventories were down ~10.1m bbls
- Distillates were down ~6.5m bbls
- Jet Fuel inventories were down ~0.9m bbls
- Propane was up ~14.5m bbls
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
API Crude Oil Inventories
US petroleum (Crude, SPR, oil products) inventories in million barrels (EIA)
Note June 8: US Department of Energy (DoE) plans to issue a new solicitation to purchase an additional 3 million barrels of crude oil for the strategic stockpile. These barrels are scheduled for delivery in September. In August, the DoE awarded contracts for the purchase of 3 million barrels of crude oil for the Strategic Petroleum Reserve (SPR) at an average price of $73 per barrel.
US petroleum (crude, SPR, refined products) inventories fell by 2.400mb w/w to 1,611.727mb last week – EIA
US total crude oil inventories (both commercial and the Strategic Petroleum Reserve) have fallen to a 36-year low, dropping below the previous bottom set in 2001 via Bloomberg
- US crude stocks In SPR lowest since August 1983.
- US SPR crude inventories rose 0.6mb w/w to 348.4mb last week
- Sour +0.6mb w/w to 204.8mb
- Sweet unchanged w/w at 143.5mb
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
Net available tank shell storage tank capacity in Cushing stands at 98.695mb as of March, up 514kb y/y
Closer Look at Cushing with DigStic Data @DigStic
US Oil Import Export
Imports
US crude imports by origin in kbpd (incl. w/w changes)
- Canada +327 to 3832
- Mexico -121 to 780
- Saudi Arabia -64 to 221
- Colombia +215 to 290
- Iraq -21 to 283
- Ecuador -171 to 192
- Nigeria -218 to 89
- Brazil +68 to 198
- Libya +2 to 85
- 8/23/23
Exports
US crude exports surged in March according to US Customs data.
Exports to Asia hit 2MMBD for the first time as China took in almost half of those volumes. Exports to China have been depressed since 2020 and they have surged for the first time since then. @OilyticsData
The Russia, India and China mix
Russia said they would cut production by 500kbbls in March just as Russia launched its heaviest bombardment on southern Ukraine since the start of the war, as officials warned Moscow’s major offensive had ‘definitely’ started. There is a clear use of oil as a weapon by Putin. India and China being Russia’s main customers are not filling the demand void. Not hard to join the dots.
EU’s sanctions on Russian refined products were implemented Feb. 5. The ban follows a similar price cap on crude shipments introduced last year. European countries have pushed to lower the crude price cap ($60) on Moscow even further, but the Biden administration said it was inclined to oppose the move.
Futures have been ignoring large US builds and have chosen hope with China opening up rather than negative morose from China’s economic implosion and the Central Bank maelstrom. Europe has been addressing energy dependance on Russia since the Ukraine invasion. President Vladimir Putin said Russia would immediately stop oil supply to countries that support the G7 members price cap on exports of Russian oil.
Since the cap, if not before Russian exports have been redirected to India and China in particular. Russian crude exports into India rose by 260kbd m/m in December to a record 1.2mbd. January exports are on-track to nearly 1.3mbd of Russian crude. Russian Exports to China were 70kbd in December, down nearly 27%m/m. We have seen Malaysia increase exports well beyond its own output to China. In turn China has exported products such as distillates back to Europe.
US Gasoline Consumers
Input to Refineries
Update: PADD 3 Refinery Utilization
US consumers bought 374.2 million gallons of gasoline per day last week. That is +20.0 mil YoY.
US consumers spent $1,447.5 million dollars per day for gasoline last week. That is $+73.1 mil YoY.
US avg retail price for gasoline was $3.868 last week. That is -0.012 YoY.
Rig Watch
Baker Hughes Weekly North American Rigs Report
- US Baker Hughes Rig Count Aug 18: 642 (prev 654)
- Rotary Oil Rigs: 520 (prev 525)
- Rotary Gas Rigs: 117 (prev 123)
US Oil Rigs w/w changes by key shale basins
- Permian +1 to 323
- Eagle Ford unchanged at 51
- Williston -2 to 32
- Cana Woodford -3 to 17
- DJ Niobrara unchanged at 14
US oil rigs and frac spread (Baker Hughes/Primary Vision)
Canada Rigs
- Canada’s weekly rig count at162 on August 4, 2023
- Canada’s active rig count dropped to 162 on August 4, a decline of 12 rigs compared to last Friday.
- This is the fourth consecutive week that we’ve observed a week-on-week rig activity decline, although current optimism around oil prices may serve to motivate future activity.
- Alberta’s active rig count declined from 120 on July 28 to 109 this morning, a 9.2% decline, while Saskatchewan’s rig count decreased by 3. BC’s rig count held fast at 21 rigs, the same tally as last Friday.
- Number of gas rigs increased by 3 between July 28 and August 4, reaching 59 active gas rigs.
- Number of oil rigs, in contrast, dropped from 108 on July 28 to 97 today.
- The number of rigs classified as “Other” or “Unknown” decreased from 10 to 6 over the same period.
- Today’s rig utilization rate is 41.5%, a slight decrease from 41.9% at last week’s end. The total number of rigs declined from 415 to 390, a 6.0% drop. This suggests that, compared to last week, a smaller pool of rigs is being utilized slightly less efficiently overall.
- BOE Report
International oil rigs ex North America
International oil rigs ex North America -13 m/m to 722 in July via Baker Hughes
- Oman +4
- Norway, Kuwait +3
- Turkey, Egypt, Indonesia-2
- Abu Dhabi -6
- Mexico -11
US Oil Production
US Oil Field Production +100kbpd at 12.80mbpd (New Benchmark adj)
OPEC Crude Oil Production
OPEC+
Ministry of Energy: Saudi Arabia will extend the voluntary cut of one million barrels per day for another month to include September that can be extended or extended and deepened
Riyadh, August 03, 2023, SPA — An official source from the Ministry of Energy announced that the Kingdom of Saudi Arabia will extend the voluntary cut of one million barrels per day, which has gone into implementation in July, for another month to include the month of September that can be extended or extended and deepened. In effect, the Kingdom’s production for the month of September 2023 will be approximately 9 million barrels per day. The source also noted that this cut is in addition to the voluntary cut previously announced by the Kingdom in April 2023, which extends until the end of December 2024.
KSA Ministry of Energy 15:51 LOCAL TIME 12:51 GMT
The source confirmed that this additional voluntary cut comes to reinforce the precautionary efforts made by OPEC Plus countries with the aim of supporting the stability and balance of oil markets.
–SPA
June OPEC+ meeting agenda
OPEC+ meeting had some angst early with African nations wanting a change to baseline. The resolution was Saudi Arabia said Sunday it will make an additional voluntary cut of 1Mbbls of crude oil starting in July as a temporary measure initially. That came with the press conference, OPEC+ also said in a statement it will keep official production targets unchanged for the rest of this year and limit combined oil output from January-December 2024 to 40.46M bbl/day. Saudi production would be down to 9Mbbl/day, which would be its lowest output level since June 2021. In 2024 they will change they may lower with KSA taking a voluntary cut depending on baselines
- Saturday OPEC ministerial meeting starting at 13:00 CET
- Sunday OPEC+ JMMC starting at 11:00 CET
- Sunday OPEC+ ministerial meeting starting at 12:00 CET
Weather Watch
Gulf of Mexico
WTI Crude Oil Futures Technical Analysis
via KnovaWave @KnovaWave
US Crude Oil (WTI)
Daily: WTI Crude Oil tested the 77.50 (near 200dma) and option confluence back through the minor pennant resistance. The move comes after the sharp spillover emotive wave up week creating a clear break over the 50 dma, Kijun and Tenkan kiss of life. The move up came after completing the correction in 3 wave from gap fill and fail of the daily bull flag back in Oct/Nov. For bulls needs to break above those descending levels for higher. 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 is previous lows. The bear case is the high was a complete 5.
Weekly: WTI crude Oil futures simply gathered downside momentum since it spat the key 61.8% with impulse, having plunged more than $60 off the June highs. WTI was never able to take on its sphere of influence which is causing resistance now as it has bounced off the double bottom through Kijun. The overhead is 50wma for the upside. Recall WTI completed 3 waves and spat the 50wma after the since filled OPEC+ gap up underscoring its weakness. Recent lows underscore the support, no less than 5 times since April 2021. Risk support is the grid. Long term 61.8% target fueled the spit of a spit by after rebalanced Chikou sated. Resistance 50wma, Support Weekly Kijun, tenkan, 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 opened up the objective 2020 yearly open and 2018 high at 75.35-76.87 which gave away and has held on to attempts to get above. This is an area of interest for downside exhaustion and price inflection potentially.
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 19,748 contracts to 230,735 in the week ending August 15 via ICE
- Long-only positions rose by 15,834
- Short-only positions fell by 3,914
- other reportables net-length fell by 6,586
Money managers reduced their net-length in WTI crude oil futures and options by 31,339 contracts to 178,820 in the week ending August 15 via CFTC
- Long-only positions fell by 23,563
- Short-only positions rose by 7,776
- other reportables net-length rose by 14,667
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 1, 2023
COT on Commodities
COT in Oil Complex week to June 20: COT showed 19k lots of net crude oil buying led by Brent (16k). The comb. long at 297k lots was within the recent range, but during this time positions have increasingly been moved to Brent (+84k) at the expense of WTI (-53.4k). Gasoil buying lifted the net to a two-month high at 16k lots via Ole S Hansen @Ole_S_Hansen
Money managers in commodities covering the week to June 20: COT on commodities showed leverage accounts focus their buying interest on grains, copper, crude oil, natgas and sugar 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
The sharp move in WTI to $63 in May and then rebound came after ten-day volatility in oil rose the highest level since October as crude sank for a third week. It gives a good indicator of complacency and optionality out there in slow price ranges. API reported big product draws which is supportive for the cracks. The contango structure and inflation having cooled from its recent peak, but remaining stubbornly elevated adds a volatile dynamic around settlements. The US regional banking disaster filtered through to commodities such as oil, copper and natural gas.
Ten-day volatility in oil jumped to the highest level since October as crude sank for a third week.
via commodityvol.com
NYMEX LO = Crude Oil Options First 3 Months (Live Link)
NYMEX LO & ICE North Sea Brent BRN Crude Oil Options (Live Link)
NYMEX LO NYMEX OH NYMEX OB Options (Live Link)
NYMEX LO NYMEX OB Options (Live Link)
Energy Earnings Highlights for Q2 2023
Major oil companies reported Q2 earnings:
Lower earnings have been across the big oil board. Exxon Mobil (XOM) Chevron Corp (CVX), Shell (SHEL) and TotalEnergies (TTEF) have reported profit falls of 56%, 48%, 56% and 49%, respectively.
The three major oil services companies all reported Q2 earnings:
Key EIA and CME Dates for WTI Crude Oil
Key EIA and CME Dates For WTI Crude Oil
From The TradersCommunity US Research Desk