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Weekly Petroleum Status Report -12/29/16

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US crude oil stocks increased by 0.6 MMBbl last week. Gasoline and distillate inventories decreased by 1.6 MMBbl and 1.9 MMBbl respectively. Yesterday afternoon, API had reported a crude oil build of 4.2 MMBbl/d. Analysts had expected a crude oil withdrawal of 1.5 MMBbl/d. The most important number to keep an eye on, total petroleum inventories, posted a sizeable decrease of 12.9 MMBbl. For a summary of the crude oil and petroleum product stock movements, see table below.

US production was estimated to be down 20 MBbl/d from last week per EIA’s estimate. Imports were down 304 MMBbl/d last week to an average of 8.2 MMBbl/d. Refinery inputs averaged 16.6 MMBbl/d (101 MBbl/d more than last week), leading to a utilization rate of 91.0%. The petroleum stocks report has bullish and bearish factors. On the bearish side, crude oil posted a build, which was against analyst expectations. On the bullish side, total petroleum inventories posted a sizeable decrease, with refined product withdrawals more than offsetting the small crude oil build. Prompt month WTI prices are down $0.17/Bbl, trading at $53.89/Bbl at the time of writing.

table-12-29-16

WTI prices have been trading in the $50-55/Bbl range recently. The market is waiting on data from OPEC and non-OPEC producers to see if they will be able to enforce the quotas or elect to keep pumping at record levels. The market has been optimistic about the production cut so far, causing WTI to post significant gains in the last couple of months. However, if data (which should become available towards the end of next month) does not show adequate implementation of the cuts, the sentiment will swing the other direction. Recent bearish news has capped WTI gains, with additional Libyan production expected to come back online shortly and the rising US rig count which will translate to additional production (albeit with a lag). Drillinginfo expects WTI prices to stay within the $50-55/Bbl range. Until fundamental data can confirm or deny the enforcement of the production cut, prices will struggle to break out of the range.

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.