Oil – Everything worse but only nudged the old records out by a week or two

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RJS, Focus on Fracking, The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending March 4th indicated that even after a big drop in our oil exports and an increase in our oil imports, we had to pull oil out of our stored commercial crude supplies for the eleventh time in 15 weeks and for the 27th time in the past forty-one weeks because of a big increase in demand that could not be unaccounted for . . . our imports of crude oil rose by an average of 552,000 barrels per day to an average of 6,319,000 barrels per day, after falling by an average of 1,061,000 barrels per day during the prior week, while our exports of crude oil fell by an average of 1,374,000 barrels per day to an average of 2,422,000 barrels per day during the week, which together meant that our effective trade in oil worked out to a net import average  of  3,897,000 barrels of per day during the week ending March 4th, 1,926,000 more barrels per day than the net of our imports minus our exports during the prior week . . . over the same period, production of crude oil from US wells was reportedly unchanged at 11,600,000 barrels per day, and hence our daily supply of oil from the net of our international trade in oil and from domestic well production appears to have totaled an average of 15,497,000 barrels per day during the cited reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,377,000 barrels of crude per day during the week ending March 4th, an average of 21,000 fewer barrels per day than the amount of oil than our refineries processed during the prior week, while over the same period the EIA’s surveys indicated that a net of 627,000 barrels of oil per day were being pulled out of the supplies of oil stored in the US . . . so based on that reported & estimated data, this week’s crude oil figures from the EIA appear to indicate that our total working supply of oil from storage, from net imports and from oilfield production was 746,000 barrels per day more than what our oil refineries reported they used during the week . . . to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a (-746,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet in order to make the reported data for the daily supply of oil and for the consumption of it balance out, essentially a balance sheet fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there must have been an error or omission of that magnitude in this week’s oil supply & demand figures that we have just transcribed . . . moreover, since last week’s EIA fudge factor was at (+1,119,000) barrels per day, that means there was still a 1,865,000 barrel per day difference between this week’s balance sheet error and the EIA’s crude oil balance sheet error from a week ago, and hence the week over week supply and demand changes indicated by this week’s report are completely worthless….however, since most everyone treats these weekly EIA reports as gospel and since these figures often drive oil pricing, and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it’s published, and just as it’s watched & believed to be reasonably accurate by most everyone in the industry . . . (for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….

This week’s 627,000 barrel per day decrease in our overall crude oil inventories left our total oil supplies at 989,058,000 barrels at the end of the week, the lowest since October 3rd, 2008, and therefore at a new 13 year low . . . this week’s oil inventory decrease came as 266,000 barrels per day were being pulled our commercially available stocks of crude oil, while 361,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve, still part of the Biden administration’s original plan to release 50 million barrels from the SPR to incentivize US gasoline consumption . . . including other withdrawals from the Strategic Petroleum Reserve under similar recent programs, a total of 78,651,000 barrels have now been removed from the Strategic Petroleum Reserve over the past 19 months, and as a result the 577,496,000 barrels of oil remaining in our Strategic Petroleum Reserve is now the lowest since July 5th, 2002, or at a new 19 1/2 year low, as repeated tapping of our emergency supplies for non-emergencies has already drained those supplies considerably over the past dozen years . . . with Biden’s recent announcement an additional 30,000,000 million barrels will be pulled out of the SPR in the wake of the Ukraine situation, the US will have roughly 28 1/2 days of oil supply left in the Strategic Petroleum Reserve when the current SPR withdrawal programs are complete…

Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports slipped to an average of 6,176,000 barrels per day last week, which was still 10.1% more than the 5,611,000 barrel per day average that we were importing over the same four-week period last year . . . this week’s crude oil production was reported to be unchanged at 11,600,000 barrels per day as the EIA’s rounded estimate of the output from wells in the lower 48 states was unchanged at 11,200,000 barrels per day, while Alaska’s oil production was 1,000 barrels per day higher at 441,000 barrels per day and had no impact on the rounded national production total . . . US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was 11.5% below that of our pre-pandemic production peak, but 37.6% above the interim low of 8,428,000 barrels per day that US oil production had fallen to during the last week of June of 2016…

US oil refineries were operating at 89.3% of their capacity while using those 15,377,000 barrels of crude per day during the week ending March 4th, up from a utilization rate of 87.7% the prior week, and in line with the historical utilization rate for early March refinery operations, when the need for seasonal maintenance typically causes rotating shutdowns . . . the 15,377,000 barrels per day of oil that were refined this week were 24.9% more barrels than the 12,310,000 barrels of crude that were being processed daily in the wake of winter storm Uri during week ending March 5th of 2021, but 2.1% less than the 15,701,000 barrels of crude that were being processed daily during the week ending February 28th, 2020, when US refineries were operating at what was then a lower than normal 86.4% of capacity at the onset of the pandemic…

With the amount of oil being refined this week little changed from a week earlier, gasoline output from our refineries was somewhat higher, increasing by 303,000 barrels per day to 9,577,000 barrels per day during the week ending March 4th, after our gasoline output had increased by 4,000 barrels per day over  the prior week . . . this week’s gasoline production was 6.4% more than the 9,005,000 barrels of gasoline that were being produced daily over the same week of last year, but 3.2% less than the gasoline production of 9,956,000 barrels per day during the week ending March 6th, 2020 . . . on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 73,000 barrels per day to 4,640,000 barrels per day, after our distillates output had increased by 20,000 barrels per day over the prior week . . . but even with this week’s decrease, our distillates output was 25.3% more than the 3,704,000 barrels of distillates that were being produced daily during the storm impacted week ending March 5th of 2021, while 1.4% less than the 4,705,000 barrels of distillates that were being produced daily during the week ending March 6th, 2020…

Even with the increase in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the fifth consecutive week, decreasing by 1,405,000 barrels to 244,606,000 barrels during the week ending March 4th,after our gasoline inventories had decreased by 458,000 barrels over the prior week . . . our gasoline supplies decreased by more this week than last because the amount of gasoline supplied to US users increased by 219,000 barrels per day to 8,962,000 barrels per day, while our imports of gasoline rose by 157,000 barrels per day to 760,000 barrels per day, and while our exports of gasoline  rose by 7,000 barrels per day to 667,000 barrels per day.…even after 5 straight inventory drawdowns, our gasoline supplies were still 5.6% higher than last March 5th’s gasoline inventories of 231,603,000 barrels, after last year’s Winter Storm Uri had resulted back to back record draws, and hence about 1% above the five year average of our gasoline supplies for this time of the year…

Meanwhile, with this week’s decrease in our distillates production, our supplies of distillate fuels  decreased for the eighth consecutive week and for the twentieth time in twenty-seven weeks, falling by 5,230,000 barrels to a seven and a half year low of 113,874,000 barrels during the week ending March 4th, after our distillates supplies had decreased by 574,000 barrels during the prior week . . . our distillates supplies saw the largest drawdown since last year’s Winter Storm Uri this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 137,000 barrels per day to 4,587,000 barrels per day, and because our exports of distillates rose by 325,000 barrels per day to 1,074,000 barrels per day, and because our imports of distillates fell by 129,000 barrels per day to 274,000 barrels per day . . . and after thirty-four inventory decreases over the past forty-eight weeks, our distillate supplies at the end of the week were 17.2% below the 137,492,000 barrels of distillates that we had in storage on March 5th of 2021, and about 18% below the five year average of distillates inventories for this time of the year…

Despite the drop in our oil exports and the increase in our imports, our commercial supplies of crude oil in storage fell for the 20th time in 31 weeks and for the 35th time in the past year, decreasing by 1,863,000 barrels over the week, from 413,425,000 barrels on February 25th to 411,562,000 barrels on  March 4th, after our commercial crude supplies had decreased by 2,597,000 barrels over the prior week . . . with this week’s decrease, our commercial crude oil inventories fell to about 13% below the most recent five-year average of crude oil supplies for this time of year, but were still almost 25% above the average of our crude oil stocks as of fourth weekend of February over the 5 years at the beginning of the past decade, with the disparity between those comparisons arising because it wasn’t until early 2015 that our oil inventories first topped 400 million barrels . . . since our crude oil inventories had jumped to record highs during the Covid lockdowns of spring 2020 and remained elevated for more than a year after that, our commercial crude oil supplies as of this March 4th were 17.4% less than the 498,403,000 barrels of oil we had in commercial storage on March 5th of 2021, and are now also 8.9% less than the 451,783,000 barrels of oil that we had in storage on March 6th of 2020, and also 8.4% less than the 449,072,000 barrels of oil we had in commercial storage on March 8th of 2019…  

Finally, with our inventory of crude oil and our supplies of all products made from oil remaining near multi year lows, we are continuing to keep track of the total of all U.S. Stocks of Crude Oil and Petroleum Products, including those in the SPR . . . the EIA’s data shows that the total of our oil and oil product inventories, including those in the Strategic Petroleum Reserve and those held by the oil industry, and thus including everything from gasoline and jet fuel to propane/propylene and residual fuel oil, fell by 10,619,000 barrels this week, from 1,735,213,000 barrels on February 25th to 1,724,594,000 barrels on March 4th to 1,735,213,000 barrels on February 25th, after our total supply had decreased by 6,301,000 barrels over the prior week…that left our total supplies of oil & its products now at the lowest since  April 11th, 2014, or at a new 94 month low, following the second straight weekly across the board drawdown of all of our oil & oil product inventories…