Around The Barrel – Oil Traders Quarterly Recap and Outlook.

EIA reported a crude build of +3.210Mbbls. offset by draws in gasoline and diesel. Gasoline stocks fell -4.256M. Distillate drew -1.268Mbbls in inventories. The WTI Futures Hub at Cushing stocks rose with a +2.107Mbbls build. Domestic US oil production was unchanged at 13.1mbpd just off the all-time high 13.3mbpd. Refinery demand unexpectedly slowed. Refinery utilization fell -0.1% to 88.6%. Implied gasoline demand (4-wk avg.) rose for as seventh week to near 9m b/d. There was +600Mbbls added to SPR inventory WoW.

Oil futures continue to rise with safe haven bids from ongoing Ukrainian attacks on Russian refineries and the potential for a widening of the Middle East conflict after Israel killed Iran commanders in Syria. WTI trades above $85 a barrel, the highest level since October. Brent crude futures trade over $89 per barrel.

Oil Outlook Messy

We are seeing continued consolidation among energy companies. The latest Oilfield services giant SLB agreed to buy ChampionX in an all-stock deal valued at about $7.8 billion. High oil prices are clearly an attraction having closed out the first quarter stronger having survived heavy sell offs early in the year. Prices have been boosted by the unsettling geopolitical background and a continuing asset rally with stock indices at record highs in the US and elsewhere.

West Texas Intermediate crude on the last trading day for the quarter saw May delivery futures rise $1.82, or 2.2%, to settle at $83.17 a barrel on the New York Mercantile Exchange heading into Easter. Front-month prices rose 6.3% in March and gained 16.1% for the quarter. May Brent crude rose $1.39, or 1.6%, to $87.48 a barrel on ICE Futures Europe Thursday, prices were up 4.6% for the month and 13.6% for the first quarter. June Brent, the most actively traded contract, rose $1.59, or 1.9%, to $87 a barrel. April gasoline on Thursday rose 2.9% to $2.76 a gallon, a quarterly rise of 31.3%. April heating oil added 0.7% Thursday to $2.62 a gallon, up nearly 2.5% for the quarter. The April contracts expired at the end of the session.

The continuing dominating themes are playing out, Chinese economic mess with geopolitical noise, currency shifts, KSA and Russia manipulation attempts and Mid East threats. Russia’s war on Ukraine increasingly focuses on attacks on energy installations, the Israel-Gaza conflict has become more entrenched. OPEC+ said it sees no need for any policy changes during the week’s Joint Ministerial Monitoring Committee (JMMC) meeting. Russia for its part has ordered Russian oil companies to comply with lower production.

Oil prices have so far ignored much of the negative morose from the Central Bank maelstrom continuing to roil sentiment as risks of global recession threaten the demand picture with higher rates pushing the likelihood of a meaningful recession higher.

Around The Barrel Contents

Click on the links below to navigate to the relevant section.

  1. Geopolitical Watch
  2. DOE & API Petroleum Storage Forecast Matrix
  3. Crude Oil Quick Summary
  4. Weekly DoE US Petroleum Storage Report Breakdown
  5. API Crude Inventories
  6. Cushing Oil Stocks
  7. Crude Imports
  8. Crude Exports
  9. Gasoline
  10. Rig Watch
  11. Crude Oil Production
  12. Weather
  13. WTI Crude Oil Futures Technical Analysis
  14. DCOT Report
  15. Option Volatility and Gamma
  16. Key EIA and CME Dates

Geopolitical Watch

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.

Russia and Ukraine energy tit for tat

  • A Ukrainian drone attack on Russia’s Kuibyshev oil refinery in Samara, gutted one refining unit reducing capacity by half Reuters reported. According to Reuters in the first quarter of this year, Ukraine attacked seven Russian refineries, taking nearly 400,000 barrels per day of capacity offline.
  • Russia attacked an underground natural gas storage site in Ukraine, though supplies have not been disrupted, according to Kyiv.
  • DTEK, Ukraine’s largest energy producer, is running at 50% capacity, forcing it to suspend electricity exports, according to Ukraine’s energy ministry.

Middle East

The prices continue to pump and fail on continuing Middle East supply disruption threats. U.S. forces launched more strikes against Iran-backed Houthi militants who continue to target Red Sea shipping with missile and drone attacks. The Houthis and friends are adding a bigger risk factor to Mid-Eastern oil which is making energy exports from the U.S., Norway and Australia more attractive.

The geopolitical risk from the Israel-Hamas conflict to effect oil production and transportation in the Middle East has been moved to shipping lanes. The Levant is not a significant oil producing region and is unlikely to impact oil supply in the short term, it the ally risk and possible flow on. Traders’ eyes are on Iran with their backing of Hamas and the Biden’ Administration softening stance there prior to the attack.

Baltimore Bridge Collapse

The F. S. Key bridge collapse over the port of Baltimore after a ship ran into it has blocked all of the terminals within the harbor, this adds another element to oil and product pricing, mainly limited to transportation costs at first glance.   

The port is a significant distribution hub for petroleum products in the Central Atlantic (PADD1B) via articulated tug-barges, not large tankers arriving from overseas. Baltimore has connections to Colonial Pipeline, which carries motor gasoline, diesel, and jet fuel to New York Harbor from the Gulf Coast. It is also connected to refineries in the Philadelphia area via the Chesapeake and Delaware Canal.

The port of Baltimore is the 22nd largest “import” port for petroleum products. The port of Baltimore primarily “imports” asphalt and biodiesel. The asphalt primarily from Canada, and the biodiesel primarily from Europe. 

The geopolitical framework for Crude Oil remains volatile as Russia, Germany, Iran and China pursue aggressive directions. Germany in an attempt to achieve some energy independence seized the German unit of Russian oil major Rosneft PJSC a few months ago. Readdressing the dependance to Russia and the disaster that has come since the Ukraine invasion has been a slow and indecisive one by Germany. Geopolitical risks remain after President Vladimir Putin said Russia would immediately stop oil supply to countries that support the G7 members o price cap on exports of Russian oil.

DOE Weekly Petroleum Status Report Forecast

  • via TradersCommunity.com
  • Report Date: 3/28/24.
  • Release Time: Wednesday, April 3, 2024, at 9:30 A.M. (ET)
  • Crude EIA +3.210M Exp -1.0M Prior +3.165M API -2.286M
  • Cushing EIA -0.377M Exp -0.53M Prior +2.107M API -0.781M
  • Gasoline EIA -4.256M Exp M Prior +1.0M API -1.416M
  • Distillate EIA -1.268M Exp M Prior -1.0M API -2.5481M
  • Refinery Utilization -0.10% to 88.6% Exp +0.9%
  • Production UNCH kbpd at 13.00mbpd (13.10 ATH)
  • SPR rose by ~0.6mb w/w to 369.0mb last week
  • US petroleum inventories (crude, SPR, refined products) fell by 1.591mb w/w to 1,578.731mb last week – EIA

Note in bbls *exp = Reuters poll est  adjusted for API shift, except Cushing

EIA reported a crude build of +3.210Mbbls. offset by draws in gasoline and diesel. Gasoline stocks fell -4.256M. Distillate drew -1.268Mbbls in inventories. The WTI Futures Hub at Cushing stocks rose with a +2.107Mbbls build. Domestic US oil production was unchanged at 13.1mbpd just off the all-time high 13.3mbpd. Refinery demand unexpectedly slowed. Refinery utilization fell -0.1% to 88.6%. Implied gasoline demand (4-wk avg.) rose for as seventh week to near 9m b/d. There was +600Mbbls added to SPR inventory WoW.


US Crude Oil Quick Look

Crude Oil Futures Performance

It has been a year highlighted by repeated efforts by OPEC+ to ram prices higher via production cuts. The US and specifically Texas ramped up production to record highs to gain valuable customers, export income and energy security for the U.S.

  • West Texas Intermediate crude front-month prices rose 6.3% in March and gained 16.1% for the quarter.
  • Brent crude was up 4.6% for the month and 13.6% for the first quarter.
  • Gasoline had a quarterly rise of 31.3%.
  • Heating oil was up nearly 2.5% for the quarter.

WTI Crude Oil Futures Technical Analysis

via KnovaWave @KnovaWave

US Crude Oil (WTI)

Daily: WTI Crude Oil has continued to rally since retesting the pennant breakout last December after completing the correction in 3 waves. From there it broke the pennant and retested to continue to retest the breakdown last October 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. 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 held the support line from July 2021, having plunged around 50% off 2022 highs. It has broken to the topside of its sphere of influence to close out the quarter over Kijun and Tenkan which are now support. WTI completed 3 waves and powered through the tenkan and 50wma, h and held the retest. Risk support is the grid. Resistance weekly channel, Murrey Math levels and previous breaks (off monthly). Bear case is Wave 5 complete.

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 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 the long-term pattern formation: “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.

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. We successfully spat a break below the 2020 yearly open and 2018 high at 75.35-76.87. This became an area of interest for downside exhaustion and price inflection. Above is 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.

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)

March 25, 2024, US SPR crude inventories rose by ~0.7mb w/w to 363.0mb last week
Sour up by ~0.8mb to 219.3mb
Sweet unchanged at 143.8mb

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.

Cushing Storage Tanks
Cushing Storage Tanks

API Cushing Stocks

API Cushing

Weekly Update via RonH Data ‏@Ronh999

US Oil Import Export

Imports

US crude imports by origin in kbpd (incl w/w change)

  • Canada -83 to 3652
  • Mexico +172 to 525
  • Saudi Arabia +84 to 338
  • Colombia -146 to 143
  • Iraq -8 to 244
  • Ecuador -138 to 9
  • Nigeria +158 to 215
  • Brazil +116 to 230
  • Libya +88 to 88
  • Mar 27, 2024

Exports

US Gasoline Consumers

Input to Refineries

Refinery utilization rate in % in PADD3 – EIA

US consumers bought 387.9 million gallons of gasoline per day last week. That is -2.5 mil YoY.

US consumers spent $1,364.3 million dollars per day for gasoline last week. That is $-0.9 mil YoY.

US avg retail price for gasoline was $3.517 last week. That is +0.020 YoY


Rig Watch

Baker Hughes Weekly North American Rigs Report

Baker Hughes active rigs total in the U.S. onshore and Gulf of Mexico (GOM)

  • US Baker Hughes Rig Count 29-Mar: 621 (prev 624)
  • Rotary Gas Rigs: 112 (prev 112)
  • Rotary Oil Rigs: 506 (prev 509)
  • Total count down 134 rigs, or 18% below this time last year.
  • For the month, the total rig count fell by five, with the oil count rising by three, and gas down by eight, the biggest monthly decline since August.
  • In the first quarter, the total rig count fell by one in its fifth quarterly loss in a row. The oil rig count rose by six, the first quarterly increase since the fourth quarter of 2022, while gas was down by eight.
  • The oil and gas rig count dropped about 20% in 2023 after rising by 33% in 2022 and 67% in 2021, due to a decline in oil and gas prices, higher labor and equipment costs from soaring inflation and as companies focused on paying down debt and boosting shareholder returns instead of raising utput.

US Rigs w/w changes by key shale basins (prior Week)

  • Permian +1 to 310
  • Eagle Ford unchanged at 50
  • Williston unchanged at 34
  • Cana Woodford unchanged at 21
  • DJ Niobrara -1 to 11
  • Mar 28, 2024
  • The oil and gas rig count dropped about 20% in 2023 after rising by 33% in 2022 and 67% in 2021, due to a decline in oil and gas prices, higher labor and equipment costs from soaring inflation and as companies focused on paying down debt and boosting shareholder returns instead of raising utput.

US Rigs w/w changes by key shale basins (prior Week)

  • Permian +1 to 310
  • Eagle Ford unchanged at 50
  • Williston unchanged at 34
  • Cana Woodford unchanged at 21
  • DJ Niobrara -1 to 11
  • Mar 28, 2024

Canada Rigs

  • Canada’s active rig count came in at 139 Thursday, 9 rigs more than last Friday.
  • Alberta rig activity increased, with the province’s active rig count jumping from 96 to 106. Saskatchewan’s rig count fell by 2 (from 7 to 5), BC’s active rig count held steady at 27.
  • Oil rigs increased from 67 to 72 between March 22 and March 28.
  • Gas rigs increased by 5 as well.
  • The number of rigs classified as “Other” or “Unknown” decreased from 5 to 4.2
  • Today’s rig utilization rate is 38.1%, a decrease from 42.6% at last week’s end. The total number of rigs increased by 59, settling at 364.
  • BOE Report

International oil rigs ex North America

Unchanged m/m at 729 in February 2024 – Baker Hughes, m/m changes:

  • Indonesia +4
  • Abu Dhabi +3
  • Algeria +3
  • Libya +3
  • India +3
  • Congo +2
  • Australia -2
  • Saudi Arabia -3
  • Argentina -3
  • Colombia -3
  • Norway -6
  • Angola -6

US Oil Production

US Oil Field Production UNCH kbpd 13.10 mbpd (New Benchmark adj)

OPEC Crude Oil Production

Weather Watch

Gulf of Mexico



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 54,830 contracts to 288,988 in the week ending March 19 via ICE

  • Long-only positions rose by 48,527
  • Short-only positions fell by 6,303
  • other reportables net-length rose by 8,433

Money managers reduced their net-length in WTI crude oil futures and options by 2,525 contracts to 217,439 in the week ending March 26 via CFTC

  • Long-only positions rose by 14,417
  • Short-only positions rose by 16,942
  • other reportables net-length rose by 148

Chart: Crude net-positioning of non-commercial accounts (=managed money and other reportables) in Brent and WTI futures and options combined latest value is March 19 @staunovo Mar 22

COT on Commodities

via Ole S Hansen @Ole_S_Hansen

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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

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NYMEX LO = Crude Oil Options First 3 Months (Live Link)

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NYMEX LO & ICE North Sea Brent BRN Crude Oil Options (Live Link)

NYMEX LO NYMEX OH NYMEX OB Options (Live Link)

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NYMEX LO NYMEX OB Options (Live Link)

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Key EIA and CME Dates for WTI Crude Oil

Key EIA and CME Dates for WTI Crude Oil

From The TradersCommunity US Research Desk