US crude oil inventories rose +2.951Mbbls last week the EIA reported. Products drew heavily, Gasoline -3.167Mbbls and Distillate -4.170Mbbs in inventories. Gasoline seasonal stocks are hovering around the lowest since 2014. Refinery Utilization rose +0.30%. US jet fuel implied demand (product supplied) in kbpd at its highest level since December 2019. US Crude Oil Inventories SPR fell another -2.9Mbbls, the lowest since Oct 1983. Cushing OK Crude storage added +397Kbbls. The crude oil complex bounce from last week’s lows continued off levels not seen since December 2021, with WTI almost $10.00/bbl off those lows after this week’s storage reports.
Concerns about a global recession saw some relief after the April jobs report (actual 253,000; consensus 180,000), which beat headline estimates by a wide margin, though it also included sharp downward revisions to readings from March and February.
Last Week WTI futures fell -7.09% on the week, Brent was down 6.12%, heating oil was down 2.63% and gasoline down 5.74%.
Ten-day volatility in oil rose the highest level since October as crude sank for a third week. 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 has 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.
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 5/3/23
- Release Date Wednesday May 10, 2023 at 10:30 A.M
Highlights
- Crude EIA +2.951M Exp +1.300M Prior -1.281M API +3.618M
- Cushing EIA +0.397M Exp +0.520M Prior +0.541M API -1.316
- Gasoline EIA -3.167M Exp -1.700M Prior +1.742M API +0.399M
- Distillate EIA -4.170M Exp -0.500M Prior -1.190M API -3.945M
- Refinery Utilization +0.30% to 91.0% Exp +0.3%
- Production +100kbbls to 12,300kbpd (13.10 ATH)
- SPR release -2900k (Lowest Since Oct 1983)
- NB: Crude oil supply adjustment 5/5/23 fell 0.535mbpd w/w to 0.771mbpd – EIA
- US petroleum inventories (crude, SPR, refined products) up 27kb w/w to 824.598mb last week (commercial: +2.951mb, SPR: -2.924mb) – 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
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) up 27kb w/w to 824.598mb last week (commercial: +2.951mb, SPR: -2.924mb) – 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 -2,900Mbbls taken from the SPR into the crude oil market.
US SPR crude inventories – 1.0M w/w at 366.94 million barrels the lowest since Oct 1983
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 -257 to 3269
- Mexico -313 to 393
- Saudi Arabia +139 to 381
- Colombia -96 to 47
- Iraq +99 to 247
- Ecuador +88 to 145
- Nigeria -71 to 143
- Brazil +71 to 139
- Libya +99 to 99
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
US consumers bought 390.7 million gallons of gasoline per day last week. That is +25.2 mil YoY.
US consumers spent $1,380.4 million dollars per day for gasoline last week. That is $-201.4 mil YoY.
US avg retail price for gasoline was $3.533 last week. That is -0.795 YoY.
Rig Watch
Baker Hughes Weekly North American Rigs Report
- US Baker Hughes Rig Count 05-May: 748 (prev 755)
- Rotary Gas Rigs: 157 (prev 161)
- Rotary Oil Rigs: 588 (est 592; prev 591)
US Oil Rigs w/w changes by key shale basins
- Permian -5 to 353
- Eagle Ford -1 to 58
- Williston -1 to 39
- Cana Woodford +1 to 26
- 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 UNCH bpd 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 had a sharp spillover emotive wave down this week creating a clear double bottom but short of the outside down trend line, giving alternatives. The move came after completing the correction in 3 waves, the gap fill and fail of the daily bull flag back in Oct/Nov through tenkan, kijun and 50dma right to the bottom of the cloud such was the impulse. 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 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 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 69,397 contracts to 137,836 in the week ending May 2 via ICE
- Long-only positions fell by 42,383
- Short-only positions rose by 27,014
- other reportables net-length rose by 5,863
Money managers reduced their net-length in WTI crude oil futures and options by 19,525 contracts to 192,916 in the week ending April 25 via CFTC
- Long-only positions fell by 10,092
- Short-only positions rose by 9,433
- other reportables net-length rose by 2,085
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 week to April 18, fund buying of crude oil extended to a third week despite some emerging price weakness that accelerated last Wednesday. The total WTI and Brent long rose 21.9k lots to 454k lots with the bulk (93%) being driven by fresh longs. Longs that were left vulnerable to the correction that followed. Overall, it concluded a five-week roundtrip that saw 232k lots being sold as the banking crisis broke before OPEC+ production cuts helped attract a 213k lots of net buying via Ole S Hansen @Ole_S_Hansen
Money managers in commodities covering the week to April 18 when the BCOM rose 1.5%, saw net buying from managed money accounts across 24 of 28 major futures tracked in this, led by crude oil, natural gas, copper, platinum, soybeans and corn 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