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Welcome to this week’s Thirsty Thursday: An Inventory Report. You know what day it is! If not… do you remember? The 21st night of September! Perhaps this week’s featured cocktail will zap you back into the 70s if you have forgotten. We will be enjoying the Gin Fizz! This classic and citrusy cocktail was well loved in the 70s, and you can go ahead and toss an egg in there if you are feeling particularly fancy. Remember: it is never a good idea to drink alone, so go ahead and send this report to someone that you think would also enjoy nerding out over inventory data. Speaking of data, let’s dive in!
Crude Oil Stocks
After a brief relapse into builds the EIA was confident we would experience a 2.2 million barrel draw and they were nearly right on the money as it was reported just 65,000 barrels less. Not bad EIA, not bad.
The API started the celebrations for the 21st a little early and predicted a bit of a bigger drawdown at 2 and 2/3rds a million barrels but ended up doubling their precited with the actual results at a 5 and a quarter million barrel drawdown.
As I mentioned last week we have witnessed a pretty standard pattern of a few weeks of draws, and one week of a build before cycling through that pattern. After last week’s build it seems we still on track though next week could very easily be yet another build. Patience will be key. As far as historical levels of crude for this time period we are well within the territory, though the general trend would put is in 5-year historical lows by mid October.
Oil and Natural Gas Prices
Last week we saw WTI continue it’s climb to $100 as it reached $91 a barrel. I’m happy to say that we peeked at just above $93 and a quarter this week, but unfortunately we are seeing some more resistance. Through this week the price has dropped back down to as low as nearly $88 before bouncing back to $90. This is a great technical sign if the price can continue to remain above $90 because it signifies the new floor is around $88. We will have to see how the following week plays out to know if this hypothesis is true. Brent is making similar moves but the spread was around $3 or less for quite some time. Only today are we seeing some separation back into relatively normal territory.
Natural gas had a little bump that brought the price closer to a relative high of nearly $2.90 but this doesn’t quite mean anything. It sticks to its month’s long trend that is ever so slightly positive.
Fuels Market
Total gasoline inventories decreased 800,000 barrels after that massive 5.6 million barrel build we saw last week which lives in the the lower 1/3 of historical normal territory for the past 5 years. This is not likely to change soon as the minimum only continues to get lower and the range widens considerably leading into the holiday season.
Gasoline prices are starting to stagnate as they increase only over a cent from last week. Diesel has gotten to be 5 cents more expensive. Gasoline was going sideways for a bit, but now it looks like we are doomed to look dead down the barrel of increased costs. The most expensive gallon remains in California as they enjoy their expensive summer blends at $5.792. Governor Gavin Newsom hopes to change that soon by installing a fuel markets watch dog that is supposed to sniff out any price gouging. It is likely to ironically make gas more expensive. Mississippi continues to enjoy the cheapest national gallon at $3.292.
Distillates saw a slight drawdown pulling its total closer to the minimum of the 5 year historical range, but the floor is about to drop out from under it to give it some more breathing room. Propane sits at record highs and much like a cat in a tree, refuses to come down.
Crude Oil Imports/Exports
Net crude oil imports rose nearly 300K bbl/d from the last reporting period, which is the highest net import volume since January 2022. The main driver for this was an unusually large drop in exports for the week as the import volumes have continued to remain relatively flat.
Crude oil imports over the short term have continued to move sideways to show a generally long-term flat trendline. Exports have become more and more volatile each week over the last several months, but have continued an overall upward trend.
US Weekly Import/Export Data (Aug 4)
| Product | Imports (Mbbl/d) | Exports (Mbbl/d) | Net (Mbbl/d) |
|---|---|---|---|
| Crude Oil | 6,682 | 2,360 | 4,322 |
| Other Petroleum Products | 1,801 | 6,411 | -4,610 |
| Total Oil + Products | 8,483 | 8,771 | -288 |
Mexico is back on top for exports this month with the country receiving the most oil and products from the US. China, Canada, and the Netherlands continue to import similar volumes month over month from the US, while south Korea becomes the 5th largest importer for May. Imports of oil and products from OPEC countries has fallen in the last month, likely due to the extended production cuts announced through September.
US Monthly Import/Export Origin and Destination Data (Month of May 2023)
| Export Destination | Total (Mbbl) | Import Origin | Total (Mbbl) |
|---|---|---|---|
| Mexico | 31,214 | Canada | 140,206 |
| China | 24,951 | Mexico | 28,316 |
| Netherlands | 23,177 | Saudi Arabia | 11,049 |
| Canada | 22,927 | Iraq | 9,409 |
| Japan | 17,968 | Colombia | 7,460 |
That’s it for this week. Everyone at RARE PETRO hopes you are enjoying your summer!
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