WTI crude oil prices continued to hold over $75.00 after this week’s DoE’s storage report. Oil futures got a boost when US CPI for June showed annual inflation decelerated to 3.0% from 4.0% in May which saw risk on asset buying supporting crude prices. The EIA reported US crude oil inventories rose 5.946Mbbls, which included -.401Mbbls taken from the SPR in the fifteenth straight week of SPR drawdowns. US crude inventories built mostly in PADD3 (Gulf Coast), up by 7.973mb last week, with draws in PADD2, down by 2.579mb last week. Domestic US oil production fell -10000kbpd to 12.3mbpd back off the highest level since 2020.
Gasoline demand rose to 9.599mbd (4wk avg.), highs last seen at the December 2021 high. The WTI Futures Hub at Cushing had a draw of -1.605Mbbls. gasoline stocks fell just -0.004Mbbls and distillate rose 4.815Mbbls in inventories. Refinery utilization rose 2.60% to account for holiday driving.
Last week’s future’s price move was the largest increase since the week of April 3. Support came from a lower US dollar, Russian Energy Ministry confirming oil supplies cuts by 500K Bpd by cutting exports and the Department of Energy issuing a request for proposals to purchase another 6Mbbls for the Strategic Petroleum Reserve. U.S. labor market continues its resilience in June with both the ADP and BLS reports underscoring the strength in the belly of the economy.
The US oil-directed rig count declined by 5 to 540 with most of the decline in the Permian suggesting it may be transfer to gas rigs given they rose. Takeaways from the week’s DOE storage report are again the strength in gasoline demand and crude oil production.
For the week, the price rose 2.07% with geopolitical and asset risk-on buying humming in the background. The energy complex closed the week with gasoline up 1.47% week, WTI futures rose +4.29% on the week, Brent rose +3.87% and, heating oil rose +4.58%
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 7/7/23
- Release Date Wednesday July 12, 2023, at 10:30 A.M
Highlights
- Crude EIA +5.946M Exp +0.480M Prior -1.508M API 3.026M
- Cushing EIA -1.605M Exp -1.85 Prior -0.400M API -2.150M
- Gasoline EIA -0.004M Exp -0.100M Prior -2.550M API +1.004M
- Distillate EIA +4.815M Exp +0.400M Prior -1.045M API +2.908M
- Refinery Utilization +2.6% to 91.1% Exp +2.1%
- Production -100kbpd to 12,300kbpd (13.10 ATH)
- SPR release 0.400M (Lowest Since Aug 1983)
- NB: Crude oil supply adjustment 7/7/23 +1346 w/w at 1.415mbpd – EIA
- US petroleum inventories (crude, SPR, refined products) rose by 16.575mb w/w to 1,624.895mb last week- EIA
Note in bbls *exp = Reuters poll estimates adjusted for API shift, except Cushing
Stocks have been building rather stoically in 2023, specifically at the Cushing WTI futures Hub.
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 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 inventories (crude, SPR, refined products) rose by 16.575mb w/w to 1,624.895mb 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 fell to lowest since August 1983.
- We saw -1.458 Mbbls taken from the SPR into the crude oil market.
US SPR crude inventories – 1.4mb w/w at 348.6 million barrels the lowest since Oct 1983
- Sour unchanged w/w at 203.2mb
- Sweet -1.mb w/w to 145.4mb
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 +206 to 3776
- Mexico -50 to 758
- Saudi Arabia +314 to 460
- Colombia +74 to 222
- Iraq +114 to 216
- Ecuador -136 to 67
- Nigeria -108 to 96
- Brazil -320 to 71
- Libya +43 to 43
Exports
The tightening of the Dubai differential to WTI +the weakish WTI/Brent spread has served to increase US exports of WTI to Asia & the EU. (France & Netherlands) Exports were an extraordinary 5.338 mbpd. And while distillate demand here is lackluster, exports were on fire @1.496 mbpd
via Patricia A Hemsworth @phemsworth
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 367.8 million gallons of gasoline per day last week. That is +29.1 mil YoY.
US consumers spent $1,304.0 million dollars per day for gasoline last week. That is $-269.1 mil YoY
US avg retail price for gasoline was $3.546 last week. That is -1.100 YoY.
Rig Watch
Baker Hughes Weekly North American Rigs Report
- US Baker Hughes Rig Count 07-Jul: 680 (prev 674)
- Rotary Gas Rigs: 135 (prev 124)
- Rotary Oil Rigs: 540 (prev 545)
US Oil Rigs w/w changes by key shale basins
- Permian -6 to 330
- Eagle Ford -1 to 59
- Williston unchanged at 34
- Cana Woodford unchanged at 23
- DJ Niobrara unchanged at 14
US oil rigs and frac spread (Baker Hughes/Primary Vision)
Canada Rigs
- Canada’s weekly rig count at 168 June 23, 2023
- Canadian rig activity continues to trend upwards, although today’s count is below the month’s peak of 170 active rigs on June 13. As of this morning, there were 168 active rigs in Canada. This represents a 5.7% increase over last week and a 12.0% increase over the week prior.
- Alberta added 7 rigs this past week, while Saskatchewan added 2. In some encouraging news, BC’s rig count grew for the first time in 2 weeks, reaching 19 active rigs as of today.
- The annual late-spring/early-summer recovery in Canadian rig activity has begun. After dropping rapidly in March and flatlining through April and much of May as per the seasonal pattern, increased rig counts suggest the spring thaw may have reached its end.
- From a YTD low of 77 active rigs on May 9, the 168 active rigs today are the most since April 5.
- Number of active oil rigs continues to grow week-over-week, reaching 110 rigs on June 23 compared to 105 on June 16 and 97 on June 9.
- Gas rigs also grew by 8.5% this week, while rigs for other commodities held fast at 7.
- Drilling rig fleet utilization rates are also on the rise after slumping through April and May. Rig fleet utilization levels also continue to grow, reaching 39.0% on June 23 compared to 38.0% on June 16. There were also more 13 more rigs in total in Canada, suggesting the increased utilization rate is driven by a boost in real activity as opposed to a reduction in available equipment.
- BOE Report
International oil rigs ex North America
International oil rigs ex North America -4 m/m to 735 in June via Baker Hughes
- Norway +6
- Mexico +3
- UK, Algeria, Argentina, Brazil +2
- Vietnam -2
- Abu Dhabi, Kuwait -3
- Indonesia -5
- Baker Hughes
US Oil Production
US crude production changed benchmark April 12, 2023: US oil production: This week’s domestic crude oil production estimate incorporates a re-benchmarking that increased estimated volumes by 105,000 barrels per day, which is about 0.9% of this week’s estimated production total.
US Oil Field Production -100kbpd at 12.30mbpd (New Benchmark adj)
OPEC Crude Oil Production
OPEC+
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
Heading into the June 4 OPEC+ meeting OPEC’s crude oil output fell 0.5m b/d last month (BBG survey) to 28.26m b/d, a 15-mth low. Cuts from key GCC producers being partly offset by increases from members without or those pumping below quota, most notably Angola (60k b/d), Iraq (80k b/d) and Nigeria (180k b/d) @Ole_S_Hansen
Weather Watch
Gulf of Mexico
WTI Crude Oil Futures Technical Analysis
via KnovaWave @KnovaWave
US Crude Oil (WTI)
Daily: WTI Crude Oil continues in a flag formation since the snap back from the sharp spillover emotive wave down creating a clear double bottom. The 50dma (green) has kept the topside in check and the lows give us a flatbottomed triangle. The break and continuation or fail will give the next significant move (or fail). While we complete the correction in 3 waves, the gap fill and fail of the daily bull flag back in Oct/Nov the impulse has been lacking. 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 for bulls? Support is previous lows. The bear case is the high was a complete 5.
Weekly: WTI crude Oil futures have 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. WTI completed 3 waves and spat the 50wma after the since filled OPEC+ gap up underscoring its weakness. This week’s lows underscore the support here, 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 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 25,106 contracts to 184,906 in the week ending July 4 via ICE
- Long-only positions rose by 16,881
- Short-only positions fell by 8,225
- other reportables net-length fell by 33,409
Money managers icnreased their net-length in WTI crude oil futures and options by 23,820 contracts to 95,3633 in the week ending July 3 via CFTC
- Long-only positions rose by 215
- Short-only positions fell by 23,605
- other reportables net-length fell by 18,014
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 June 27, 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 Q4 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