Thirsty Thursday: An Inventory Report (9/22/22)

Posted: September 23, 2022
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Welcome back to another Thirsty Thursday, the most entertaining hydrocarbon inventory report on the internet! The cold has arrived here in Colorado, who knows if this is the end of hot summer days, but right now it feels like winter. Today we are drinking Irish coffee to keep us warm, which tastes great regardless of the temperature outside. So whether it’s hot or cold where you live, grab your coffee, pour some Irish whiskey in, and let’s get started.

Photo by Fábio Alves on Unsplash

Builds were expected by both the EIA and API this week, the EIA forecasted a 2.161 million barrel build and reported a 1.142 million barrel build. The reason we’re seeing a green number in the actual column is because the reported build was less than what was predicted. The build was mostly due to the 6.9 million barrels of oil released from the SPR during the same time period.

Well, it looks like the API and EIA heard my comments in last week’s report about how their predictions always seem too conservative. This week both the API and EIA overshot the actual stock inventory amount by about 1 million barrels. While a build typically indicates low demand, there must still be more than what analysts predicted, perhaps indicating an upwards oil price adjustment in the coming week.

There’s nothing new from the SPR side of things. As previously mentioned another 6.9 million barrels were released which is spot on the 1 million per day that will continue until the end of October. November will be a more interesting time for SPR data. There are reports that the SPR will release 10 million barrels in November, likely used to keep gas prices in check. Coincidence that midterm elections are also in November? I think not, we see right through you Biden.

This weeks U.S. Crude Oil Inventories according to the EIA

Time to keep me accountable, last week I predicted a slight drawdown. Well, I sure hope you didn’t bet on one because you’d have lost that money. Although this week was a build it was a small one so at least I wasn’t thaaaat far off. Now for this week’s analysis by Nick, looking back at the bar chart there hasn’t been a build 3 weeks in a row since April of last year. So this week we’re betting on drawdown! Again, this isn’t betting or investing advice, so take that with a grain of salt.

Price of both WTI and Brent are down slightly this week. The price of oil goes hand in hand with stock inventories and seeing how inventories grew this week and what that means for demand, it makes sense that oil price dipped too amidst the lower demand. We’re still holding out for $100+ oil again, as I’m sure most oilfield workers are.

If recent natural gas prices were a movie it would be Marley and Me. Why? Because of the emotional roller coaster it takes you on, and it has a sad ending. Last week natural gas hit a high of over $9, today it has fallen to $7.249. That’s a 19.5% decrease in about a week. What’s driving all this? Well, I’m no expert but because the US has had enough production to cover its demand for a while now it has begun exporting gas to Europe to help out with the crisis caused by Russia. Now that many European countries have nearly full inventories, they are unable to accept more gas and demand has fallen. Low demand of course equals low price.

Gasoline stocks across the U.S. are on the rise this week, inching closer and closer to the 5-year range. Meanwhile, gasoline prices are coming down from their high in June and seem to be continuing to do so.

Surprise surprise, California still has the most expensive gas in the country at $5.519 and Mississippi has the cheapest gas at $3.091. That’s a spread of over $2.5 between the average gas price in the cheapest state and the most expensive!

Another jump in distillate stocks this week, likely due to the lower demand allowing stock tanks across the country to refill a bit. Propane taking a big leap upwards this week, outpacing what is standard for this time of year. Production of propane has been running high lately and now that Europe is near maximum storage capacity the US seems to be padding its inventories lately, hence the sizeable increase as of late.

That’s about it for this week, thanks for tuning in, and make sure you get outside before the cold starts to set in. Unless you’re like me and you are just waiting for the snow to fall to get out on the slopes. See you next week, cheers!

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