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Weekly Petroleum Status Report – 1/19/17


US crude oil stocks increased by 2.3 MMBbl last week. Gasoline inventories increased by 6.0 MMBbl and distillate inventories decreased by 1.0 MMBbl respectively. Yesterday afternoon, API had reported a crude oil withdrawal of 5.0 MMBbl alongside a 9.75 MMBbl increase in gasoline stocks. Analysts had expected a crude oil withdrawal of 1.0 MMBbl. The most important number to keep an eye on, total petroleum inventories, posted a decline of 2.0 MMBbl. For a summary of the crude oil and petroleum product stock movements, see table below.

US production was estimated to be down 2 MBbl/d (all from Alaska) from last week per EIA’s estimate. Imports were down 674 MBbl/d last week to an average of 8.4 MMBbl/d. Refinery inputs averaged 16.5 MMBbl/d (639 MBbl/d less than last week), leading to a utilization rate of 90.7%. The petroleum stocks report was bearish, as the crude oil build was unexpected and the gasoline build was sizeable. WTI prices are up $0.37/Bbl, trading at $51.45/Bbl at the time of writing. Prices have pared gains since the bearish report, but are still up on comments from the IEA report saying that the imbalance is tightening even without OPEC cuts.

Table 1-19-17

WTI prices continue to trade in the $50-55/Bbl range. Prices were down Wednesday on the prospects of growing supply from the US offsetting some of the promised OPEC cuts. The EIA’s report now expects February shale production to grow. The expectations of growing supply from the US overshadowed the news that OPEC production had declined 221 MBbl/d in December to 33.085 MMBbl/d. OPEC members such as Saudi Arabia, Kuwait, and Algeria have all spoken about their lower production levels in January, but the market still remains dubious about the compliance levels from all parties involved. Analysts still only expect partial compliance. A committee has been formed to track compliance, and their first meeting will occur on January 21st-22nd. The press following the compliance committee meeting will need to be tracked closely, as it will give an indication as to the success of the cuts. The IEA report released today echoed that it was far too soon to gauge compliance with OPEC quotas and stated that US shale output could grow as much as 500 MBbl/d in 2017. However, the IEA also raised its demand growth estimate for 2017 and said that the rising demand was slowly tightening the market. Drillinginfo still expects prices to stay rangebound between $50-$55/Bbl. Any move in prices out of the range will be underpinned by data or news regarding the success of the implementation of OPEC quotas.

Please find the updated DrillingInfo charts on the link below:
Petroleum Stocks Chart

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Sarp is Senior Director of Power & Renewables Analytics at Enverus. He has research and modeling experience in the upstream, downstream and power markets and has presented his work at various academic conferences around the world, including those organized by the SPE and the IAEE. He has also been published in the SPE Economics & Management Journal for his work on the long-term economic viability of production from unconventional liquids-rich reservoirs. Sarp’s focus on data-driven modeling and his ability to incorporate the effects of technological and market advances into analyses provides clients a thorough picture of the present and the future in their area of interest within the oil and gas industry. Sarp holds a Master of Science in Mineral and Energy Economics from the Colorado School of Mines, a Master of Science in Petroleum Economics and Management from the Institut Francais du Petrole (IFP School), and a Bachelor of Arts in Economics from the University of Chicago.