Thirsty Thursday: An Inventory Report (9/29/22)

Posted: September 29, 2022
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Welcome back to another Thirsty Thursday, the most entertaining hydrocarbon inventory report on the internet! Today’s cocktail goes out to those in Florida as they deal with hurricane Ian. We’re drinking a ‘Fuzzy Navel’, 2 ounces peach schnapps, 6 ounces freshly squeezed orange juice, and garnished with an orange slice. Remember, it’s never a good idea to drink alone, so send this report to a friend who might enjoy it. It’s time to kick back, relax, and dive into the data.

Photo by ABHISHEK HAJARE on Unsplash

Modest builds were expected by both the EIA and API this week, however, what was reported by each organization was quite different. Starting with the EIA we see they were a little generous in their forecasted build of nearly half a million barrels while they reported a draw of nearly a quarter million barrels.

The API on the other hand forecasted a similar number, but not only reported a build rather than a draw but quite a sizeable one at that. Whenever the EIA and API report dissimilar numbers they seem to make up for it in the coming few weeks so that everything balances out, that may be something to consider as we await future reported actuals.

Three things in life are certain, death, taxes, and the SPR will release 1 million barrels of oil per day. Isn’t that how the idiom goes? Well, until the end of October it is. Further and further down falls the level of oil in the SPR. We are now down to just 422,583 thousand or 422 million barrels of oil. It’s around this time that you start to ask yourself, how low can we go? When do we stop? Isn’t there a limit on how much can be taken out? Well stay tuned, there may just be a periodical shortly that will answer all your burning questions…

The pattern of no more than three weeks in a row of either draws or builds continues to hold. Looks like I was just barely correct on my draw prediction from last week. Will we see a larger draw as is typical following a slight draw? Who knows, check back in next week and we’ll see. With hurricane Ian wreaking havoc in Florida, odds are demand will increase and we’ll see a draw next week.

This weeks U.S. crude oil inventories according to the EIA

U.S. crude stock levels are continuing to level out following a 2 or 3-week stretch of climbing. Crude stock is feeling pressure from both sides as supply becomes tighter due to the loss of production thanks to the hurricane and demand falls on the back of subsequent higher prices.

And back up we go! WTI is +0.88% on the week and Brent is +0.20%, modest gains but we’ll take it. If you take the time to look at the graphs you’ll see a massive dip in both of them right in the middle of the week. As soon as I see something like that I can’t help myself but ask why. So I did some digging and prices dipped due to the steeply rising U.S. dollar caused by federal policy attempts at reducing inflation. It then rose back up so quickly because of slowed production ahead of hurricane Ian, and talk of OPEC+ production cuts.

Natural gas prices this week look like a roller coaster, unpredictability is good for theme park rides, and bad for countries headed into winter with no real idea of where their gas will be coming from *cough* western Europe *cough*.

Gasoline draw this week seen on the graph below left correlates to the little bump in prices seen on the graph below right. It’s a beautiful thing to see the basic laws of economics at play.

Gas prices in California have soared to $6.181 on average, meanwhile, Mississippi is still enjoying low prices of $3.063 on average. Unplanned outages at refineries in California are causing a slight shortage, driving gasoline costs way up in the state.

Distillate and propane stock diverge this week as distillates take a dive and propane continues to climb. A mix of refinery hold-ups and a transportation sector that’s heating up is likely responsible for driving distillates downward. Overproduction of propane to be sent to Europe, which is reaching maximum capacity, is to blame for increased stock levels within the country. Such high stock levels are sure to bring prices down in the coming months.

That wraps up this week’s look at inventory numbers, thanks for using us as your trusted source of inventory data and interpretation. We try our best to make our reports accurate and entertaining, let us know if there’s anything you’d like to see included next time. Make sure to check in on your fellow Floridians and we’ll see you next week, cheers!

Photo by Max on Unsplash

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