US crude oil inventories fell 4.581Mbbls last week the EIA reported. Gasoline +1.299Mbbls inventories rose where seasonal stocks are now the lowest since 2014. Refinery Utilization rose 1.70%. US Crude Oil Inventories SPR fell another – 1.6M, the lowest since Oct 1983. Exports jumped 1.8mbd with production flat. Crude oil futures have maintained a bid since OPEC+ announced a surprise over 1 million barrel per day crude oil production cut a week ago. Last week WTI futures rose +3.49% on the week, Brent rose +2.91%, gasoline rose +0.90% and heating oil fell –1.57%.
Sentiment has been improving with the headwinds from three major bank failures in the US and Credit Suisse falling. Concerns grow that more aggressive tightening from the Federal Reserve would dent economic growth and curb demand.
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.
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 soaring US dollar had a significant impact on commodity futures which has since reversed with the USD back at 7-month lows. Through it all demand and supply issues are the underlying guide.
The Week Ahead
DOE Weekly Petroleum Status Report Forecast
- via TradersCommunity.com
- Report Date 4/12/23
- Release Time: Wednesday, April 19, 2023, at 10:30 A.M. (ET)
Highlights
- Crude EIA -4.581M Exp -1.300M Prior +0.597M API -2.675M
- Cushing EIA -1.088M Exp -0.473M Prior -0.409M API -0.553M
- Gasoline EIA +1.299M Exp -1.700M Prior -0.330M API -1.017M
- Distillate EIA -0.355M Exp -0.500M Prior -0.606M API -1.900M
- Refinery Utilization +1.70% to 91.0% Exp +0.3%
- Production UNCH kbbls to 12,200kbpd (13.10 ATH)
- SPR release -1600k (Lowest Since Oct 1983)
- NB: Crude oil supply adjustment 4/14/4 rose 1260mbpd w/w to 0.936mbpd – EIA
- US petroleum inventories (crude, SPR, refined products) fell by 1.003mb last week (commercial +0.597mb, SPR -1.600mb)
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
Update: PADD 3 Refinery Utilization
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)
US petroleum inventories (crude, SPR, refined products) fell by 1.003mb last week (commercial +0.597mb, SPR -1.600mb) – 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 Nov 1983.
- We saw -1.600Mbbls taken from the SPR into the crude oil market.
US SPR crude inventories unchanged w/w at 371.6mb Jan 13, 2023. Sour unchanged w/w at 203.0mb Sweet unchanged w/w at 168.6mb
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
Imports
US crude imports by origin in kbpd (incl. w/w changes)
- Canada -390 to 3590
- Mexico -470 to 450
- Saudi Arabia -138 to 376
- Colombia +88 to 159
- Iraq -104 to 241
- Ecuador +162 to 242
- Nigeria -66 to 236
- Brazil -85 to 54
- Libya +15 to 29
Exports
Top buyers of US crude in October in kbpd (total exports 4.146mbpd)
US Gasoline Consumers
Input to Refineries
US consumers bought 357.8 million gallons of gasoline per day last week. That is -14.7 mil YoY.
US consumers spent $1,310.6 million dollars per day for gasoline last week. That is $-203.8 mil YoY
US avg retail price for gasoline was $3.663 last week. That is -0.403 YoY.
Rig Watch
Baker Hughes Weekly North American Rigs Report
- US Baker Hughes Rig Count 14-Apr: 748 (prev 751)
- Rotary Gas Rigs: 157 (prev 158)
- Rotary Oil Rigs: 588 (prev 590)
US Oil Rigs w/w changes by key shale basins
- Permian +3 to 351
- Eagle Ford -2 to 61
- Williston unchanged at 41
- Canna Woodford -2 to 28
- DJ Niobrara unchanged at 17
US oil rigs and frac spread (Baker Hughes/Primary Vision)
Canada Rigs
- Canada’s weekly rig count at 140 April 14, 2023
- Canada averaged 140 active drilling rigs this week according to data from the Canadian Association of Energy Contractors. Of those rigs, 45% are drilling for natural gas, 41% are drilling for oil, 3% for other (helium, hydrogen, geothermal, lithium, or potash), and 11% are moving.
- Drilling activity by province is 81% in Alberta, 17% in BC, 1% in Saskatchewan, and 1% elsewhere.
- Precision Drilling holds the majority of the Canadian market share with 35%, Ensign Drilling with 22%, Savanna Drilling with 10%, Horizon Drilling with 7%, and Akita Drilling with 5%. View a full breakdown of Western Canada’s rig activity .
- BOE Report
International oil rigs ex North America
International oil rigs ex North America +22 m/m to 725 in March via Baker Hughes
- Saudi Arabia +6
- Turkey +5
- Mexico +4
- UK +3
- Algeria +3
- Nigeria +2
- Norway -2
- Libya -4
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 to 12.30mbpd (New Benchmark adj)
“North Dakota’s Bakken shale field — once the largest and busiest American shale patch — is showing signs of age, threatening to hold back US oil production as the world thirsts for more crude. Mature wells that are producing more gas than expected are hurting crude output from the Bakken, the Energy Information Administration said… The deteriorating performance was a main reason the agency cut its estimate for 2024 US oil output to 12.65 million barrels a day from an earlier projection of 12.8 million… Even at the lowered estimate for next year, US output would still set a record, surpassing the 12.3 million barrels a day produced in 2019.”
February 7 – Bloomberg (Sheela Tobben)
OPEC Crude Oil Production
OPEC’s crude oil output fell 80k b/d last month according to Bloomberg. Biggest changes being a 110kbd reductions from Angola to 990kbd a 19-yr low, Iraq (-50kbd), KSA (-30kbd) and Nigeria (+80kbd).
Weather Watch
Gulf of Mexico
WTI Crude Oil Futures Technical Analysis
via KnovaWave @KnovaWave
US Crude Oil (WTI)
Daily: WTI Crude Oil still chopping 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% last month with impulse, having plunged more than 30% off the June highs. It has however been stuck in its sphere of influence since other than a peek this week. WTI completed 3 waves and powered through the tenkan and 50wma, 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 reduced their net-length in Brent crude oil futures and options by 420 contracts to 234,041 in the week ending April 11 via ICE
- Long-only positions fell by 1,530
- Short-only positions fell by 1,110
- other reportables net-length fell by 9,303
Money managers increased their net-length in WTI crude oil futures and options by 22,079 contracts to 198,493 in the week ending April 11 via CFTC
- Long-only positions rose by 11,431
- Short-only positions fell by 10,648
- other reportables net-length fell by 7,631
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 March 21 2023
COT on Commodities
In energy, the 5% crude oil rally supported a 42k lots increase in the WTI long to 113k, the bulk being short covering. Selling of Brent extended into a third week (-9k to 161k, an 11-wk low). Buying of RBOB (+40%) and ULSD (+47%) while natgas buying cut the short to just 5k via Ole S Hansen @Ole_S_Hansen
Money managers in commodities covering the wk to March 28, BCOM rose 1.6% and the dollar softened, saw broad buying led by WTI, gasoline, natgas, gold silver, corn and cocoa. Selling concentrated in soybeans. 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
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