The standout from this week’s DOE report is Gasoline stocks rose +6.481Mbbls and distillate fell -1.269MMbbls in inventories. Refinery utilization fell -2.20% to 84.2%. WTI Futures Hub at Cushing stocks sit just above last year’s low with a build of +0.132M EIA reported a crude draw of -2.224MMbbls Domestic US oil production figures unchanged at their highest since 2020 at 12.9mbpd. WTI Oil futures continued their pullback after the report trading at $85, they have been pulling back with the weight of falling risk assets and higher rates threatening economic growth and therefore demand.
The Baker Hughes U.S. oil and gas rig count, fell by seven to 623 in the week to Sept. 29, the lowest since February 2022. The total rig count fell by 51 in the third quarter, the cuts have slowed compared with a reduction of 81 in the second quarter as oil prices rebounded.
WTI rose for the fourth-straight week and jumped more than $7.00/bbl last month, seeing their highest level of the year with tighter oil supplies from Saudi Arabia and Russia for longer under the bid. U.S. West Texas Intermediate crude (WTI) trades around $85 after it settled down 92 cents to $90.97, up 1% last week and 29% in the third quarter. Front-month Brent November futures settled down 7 cents Friday to $95.31 per barrel at expiry, up about 2.2% in the week and 27% in the third quarter. Brent December contract settled down 90 cents to $92.20 per barrel.
The energy complex closed last week with WTI oil futures up four fourth week 0.78%, after +0.36%, +4.14%, +2.04% for the prior weeks. Brent crude was up 0.36% after being down -0.59% last week after rising +3.77% and +1.95% the previous weeks. Gasoline was down -4.53% after being down-4.94% after being up 2.39% & +2.53% prior to that, and heating oil was up 1.49% after being down -1.14% after being up 3.13% and +5.68% the prior weeks. (Prices w/w at 16:00 ET close).
EIA reported Cushing stocks continue to drop, drawing another 0.943Mbbls. The WTI Futures Hub level is at lowest level since July 2022, pushing the WTI front month spread up to $2bbl. EIA reported a crude draw of -2.135Mbbls Domestic US oil production figures unchanged at their highest since 2020 at 12.9mbpd. Gasoline stocks rose +1.027Mbbls and distillate stocks rose +0.398MMbbls in inventories. Refinery utilization fell -2.40% to 86.4%. Implied gasoline demand (4-wk avg.) fell 740k b/d below the pre-Covid five-year avg helping refinery utilization rates drop to the lowest since April amid maintenance.
Crude oil prices have been holding up as risk assets meltdown. WTI had soared to major technical confluence including a weekly trendline, the 50% correction of June 2022-May 2023 downtrend at 93.74 and last November’s high. The EIA boosted its price outlook in its September Short-Term Energy Outlook and the IEA gave an optimistic demand outlook this week also.
The OPEC and the EIA in their monthly reports predicted that demand would remain firm amid supply shortfalls that could reduce crude inventories by 3.3mbpd in the fourth quarter. Fragile imbalances were also impacted by deadly flooding in Libya which will temporarily disrupt oil exports with a number of ports that are not able to export. Libya produced about 1mbpd per day in August according to OPEC. The price had been rising since KSA and Russia extended production cuts until the year end.
The Energy Select Sector SPDR ETF (XLE) closed the w/e 9/29/23 +0.92 (+1.03%) despite falling -2.0% Friday with weak equity markets. Only the energy and materials (+0.2%) sectors registered gains on the week.
Oilfield services firm Patterson-UTI’s (PTEN) CEO said last week he expects the U.S. oil and gas rig count to recover to more than 700 by the end of next year as high energy prices boost drilling activity. This is at a time when OPEC+ is extending production cuts. Flat or falling Lower US 48 states production is seen as contributing to a tightening global oil market during the final four months of 2023. 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.
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.
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).
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 9/27/23
- Release Date Wednesday Oct 4, 2023, at 10:30 A.M
Highlights
- Crude EIA -2.224M Exp -2.200M Prior -2.169M API -4.210M
- Cushing EIA +0.132M Exp +0.340M Prior -0.943M API +0.705M
- Gasoline EIA +6.481M Exp +1.050M Prior +1.027M API +3.946M
- Distillate EIA -1.269M Exp -1.200M Prior +0.398M API +0.349M
- Refinery Utilization -2.20% to 84.2% Exp +0.5%
- Production +UNCH kbpd to 12,900kbpd (13.10 ATH)
- SPR added .300M (Recovering Off Lowest Since Aug 1983)
- NB: Crude oil supply adjustment 8/18/23 +509 day – EIA
- US petroleum inventories (crude, SPR, refined products) inventories rose by 4.938mb w/w to 1,622.967mb last week- EIA
Note in bbls *exp = Reuters poll estimates adjusted for API shift, except Cushing
The standout from this week’s DOE report is Gasoline stocks rose +6.481Mbbls and distillate fell -1.269MMbbls in inventories. Refinery utilization fell -2.20% to 84.2%. WTI Futures Hub at Cushing stocks sit just above last year’s low with a build of +0.132M EIA reported a crude draw of -2.224MMbbls Domestic US oil production figures unchanged at their highest since 2020 at 12.9mbpd.
Energy Price Matrix
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
Via RonH at Ron H Public Tableau Link
API Crude Oil Inventories
US petroleum (Crude, SPR, oil products) inventories in million barrels (EIA)
US petroleum inventories (crude, refined products, SPR) rose by 4.938mb w/w to 1,622.967mb 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
US Oil Import Export
Imports
US crude imports by origin in kbpd (incl. w/w changes)
- Canada -589 to 3291
- Mexico -320 to 524
- Saudi Arabia -92 to 291
- Colombia -143 to 143
- Iraq +26 to 306
- Ecuador -42 to 125
- Nigeria -3 to 0
- Brazil -31 to 209
- Libya +89 to 89
- 10/4/23
Exports
US crude exports
Top buyers of US crude in July in kbpd (total exports 3.835mbd) – EIA
- Netherlands 873
- Canada 376
- UK 326
- China 322
- South Korea 261
- Italy 225
- Singapore 202
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 336.6 million gallons of gasoline per day last week. That is -60.9 mil YoY.
US consumers spent $1,278.4 million dollars per day for gasoline last week. That is $225 mil YoY
US avg retail price for gasoline was $3.789 last week. That is +0.016 YoY.
Rig Watch
Baker Hughes Weekly North American Rigs Report
The Baker Hughes U.S. oil and gas rig count, fell by seven to 623 in the week to Sept. 29, the lowest since February 2022. The total rig count fell by 51 in the third quarter, the cuts have slowed compared with a reduction of 81 in the second quarter as oil prices rebounded.
- US Baker Hughes Rig Count 29-Sep: 623 (prev 630)
- Rotary Gas Rigs: 502 (prev 507)
- Rotary Oil Rigs: 116 (prev 118)
US Oil Rigs w/w changes by key shale basins
- Permian -6 to 308
- Eagle Ford unchanged at 44
- Williston +1 to 33
- Cana Woodford -1 to 16
- DJ Niobrara unchanged at 14
US oil rigs and frac spread (Baker Hughes/Primary Vision)
- Permian Basin rigs pulled off at the fastest pace in three years amid consolidation and slow return in oil demand.
- Rigs targeting both crude and natural gas in the West Texas and southeast New Mexico region declined by 7 to 320 this week, according to data released Friday by Baker Hughes Co.
- It’s the biggest weekly drop in the Permian since June 2020. – Bloomberg
Canada Rigs
- Canada’s active rig count settled at 190 on September 22, an increase of 6 rigs compared to last Friday. September 22, 2023
- This marks another consecutive week of rig count growth, prolonging a strong run of activity that has seen the number of active rigs hold above 160 since late June.
- Alberta’s active rig count increased to 136 from 131 last Friday, while Saskatchewan’s rig count stabilized at 30 rigs.
- BC’s active rig count increased by 1, settling at 22 as of this morning.
- Oil rigs increased by 6 between September 15 and September 22, settling at 114 active oil rigs.
- The number of gas rigs remained unchanged, settling at 69.
- The number of rigs classified as “Other” or “Unknown” was also unchanged from last Friday, holding at 7 rigs.
- Today’s rig utilization rate is 44.0%, a slight decline from 44.9% at last week’s end. The total number of rigs increased from 410 to 431, a significant 5.1% boost. This suggests that, compared to last week, a larger pool of rigs is being deployed slightly less efficiently.
- BOE Report
International oil rigs ex North America
International oil rigs ex North America +7 m/m to 729 in August via Baker Hughes
- Abu Dhabi, Colombia +6
- Norway, Nigeria +4
- Saudi Arabia +2
- Argentina -2
- Turkey -3
- Mexico -4
- Kuwait -5
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 Oil Production
US crude production: This week’s domestic crude oil production estimate incorporates a re-benchmarking that affected estimated volumes by less than 50,000 barrels per day, which is about 0.4% of this week’s estimated production total. 9/13/23
US Oil Field Production UNCH kbpd at 12.90mbpd (New Benchmark adj)
US crude production was at 12.991mpbd in July vs 12.900 in June (revised up 12.844mbpd)
New post-COVID record, only 90 kbpd below the all-time crude production record set in November 2019.
m/m changes in kbpd
- Texas +72
- Gulf of Mexico +73
- North Dakota +14
- New Mexico +11
- Ohio -5
- West Virgina -5
- Wyoming -5
- Utah -6
- Kentucky -8
- Colorado -9
- Alaska -26
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 reduced their net-length in Brent crude oil futures and options by 21,989 contracts to 243,542 in the week ending September 26 via ICE
- Long-only positions fell by 7,160
- Short-only positions rose by 14,829
- other reportables net-length fell by 3,612
Money managers increased their net-length in WTI crude oil futures and options by 20,123 contracts to 314,519 in the week ending September 26 via CFTC
- Long-only positions rose by 21,058
- Short-only positions rose by 935
- other reportables net-length fell by 577
COT on Commodities
COT on energy saw funds, correctly as it turned out, buy WTI against selling Brent leaving the combined position near unch on the week. Gasoil and gasoline both exposed to continued long liquidation while the natgas position flipped back to a net short
COT on commodities in wk to Sep 26 covered leverage funds reaction to the hawkish FOMC outcome which triggered a 2% drop in the BCOM Index with net selling across all sectors, led by Brent, natgas, gold, copper, soybeans, corn, sugar and livestock. The very few exceptions being WTI, silver and soymeal. 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