Weekly Petroleum Status Report – 2/23/2017

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    US crude oil stocks increased by 0.6 MMBbl last week. Gasoline and distillate inventories decreased by 2.6 MMBbl and 4.9 MMBbl respectively. Yesterday afternoon, API had reported a crude oil withdrawal of 0.89 MMBbl alongside declines of 0.89 MMBbl for gasoline and 4.3 MMBbl for distillate inventories. Analysts had expected a crude oil build of 3.4 MMBbl. The most important number to keep an eye on, total petroleum inventories, posted a large decline of 11.0 MMBbl. For a summary of the crude oil and petroleum product stock movements, see table below.

    US production was estimated to be up 24 MBbl/d from last week per EIA’s estimate. Imports were down 1.2 MMBbl/d last week to an average of 7.3 MMBbl/d. Refinery inputs averaged 15.3 MMBbl/d (187 MBbl/d less than last week), leading to a utilization rate of 84.3%. The petroleum stocks report is bullish, due to the large total petroleum inventories withdrawal. WTI prices are up $1.00/Bbl, trading at $54.59/Bbl at the time of writing.

    Weekly Petroleum Status Report – 2/23/2017

    WTI prices have maintained within the $50-55/Bbl range, however they have been edging closer to the $55/Bbl mark since the IEA and OPEC reports showed 90%+ compliance with quotas. The high compliance levels have not lifted prices above $55/Bbl so far, as it appeared to be largely factored in. Any bullish sentiment is largely built on hopes that existing cuts will work to quickly normalize inventories, expectations of further OPEC cuts, or an extension of the cuts beyond the agreed upon six months. However, high inventory levels, rising US rig count, and the possibility of growing production out of Nigeria and Libya (exempt from quotas) continue to keep a lid on prices. The current 650 MBbl/d supply deficit reported by the IEA is not large enough to normalize OECD inventories. The speculative long position in the market is concerning, as speculators have increased their bullish bets to a new record high. Drillinginfo still expects prices to stay range-bound between $50-$55/Bbl in the short term. The inventory overhang and US shale production prospects may introduce a downside bias given the speculative length growing impatient waiting for higher prices.

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

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Sarp Ozkan

Sarp Ozkan is a Manager, Energy Analytics for Drillinginfo providing to the modeling, research, and fundamental analysis efforts of the Market Intelligence group. He manages the production forecasting models and leads upstream and crude oil related consulting projects. While having a focus on data-driven modeling, his ability to incorporate the effects of technological and market advances into analysis provides clients a thorough picture of the present and the future in their area of interest within the oil & gas industry. His analysis has been presented at industry and academic conferences alike. Prior to joining Drillinginfo, Sarp was a Senior Energy Analyst with Ponderosa Energy. Sarp holds a MS Degree in Mineral & Energy Economics from the Colorado School of Mines, MS Degree in Petroleum Economics & Management from the Institut Francais du Petrole (IFP School), and a BA Degree in Economics from the University of Chicago.