RJS: Focus on Fracking Summary: US oil supplies at a 17½ year low with SPR at a 35 year low; refinery utilization highest since 2019, refinery throughput highest in 17 months; gasoline supplies at a 6 month low even with gasoline imports at a 46 week high The Latest US Oil Supply and Disposition Data from the EIA US oil data from the US Energy Information Administration for the week ending June 3rd indicated that after a major drop in our oil exports and another big oil withdrawal from the SPR, we had oil left to add our stored commercial crude supplies for the 6th time in 10 weeks, and for the 21st time in the past 48 weeks, even after an increase in demand that could not be accounted for…our imports of crude oil fell by an average of 64,000
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RJS: Focus on Fracking
Summary: US oil supplies at a 17½ year low with SPR at a 35 year low; refinery utilization highest since 2019, refinery throughput highest in 17 months; gasoline supplies at a 6 month low even with gasoline imports at a 46 week high
The Latest US Oil Supply and Disposition Data from the EIA
US oil data from the US Energy Information Administration for the week ending June 3rd indicated that after a major drop in our oil exports and another big oil withdrawal from the SPR, we had oil left to add our stored commercial crude supplies for the 6th time in 10 weeks, and for the 21st time in the past 48 weeks, even after an increase in demand that could not be accounted for…our imports of crude oil fell by an average of 64,000 barrels per day to an average of 6,154,000 barrels per day, after falling by an average of 266,000 barrels per day during the prior week, while our exports of crude oil fell by 1,758,000 barrels per day to 2,232,000 barrels per day, after falling by 351,000 barrels per day during the prior week, which meant that our trade in oil worked out to a net import average of 3,922,000 barrels of oil per day during the week ending June 3rd, 1,694,000 more barrels per day than the net of our imports minus our exports during the prior week…over the same period, production of crude from US wells was reportedly unchanged at 11,900,000 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 15,822,000 barrels per day during the cited reporting week…
Meanwhile, US oil refineries reported they were processing an average of 16,387,000 barrels of crude per day during the week ending June 3rd, an average of 355,000 more 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 749,000 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 184,000 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 (-184,000) 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, a 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…..however, since last week’s unaccounted for oil factor was at (+406,000) barrels per day, that means there was a 590,000 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 pretty useless…. 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 749,000 barrel per day decrease in our overall crude oil inventories left our total oil supplies at 936,081,000 barrels at the end of the week, our lowest oil inventory level since October 15th, 2004, and therefore a 17 1/2 year low….our oil inventory decreased this week even though 289,000 barrels per day were being added to our commercially available stocks of crude oil, because 1,036,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve at the same time….that draw on the SPR would now include the initial emergency withdrawal under Biden’s “Plan to Respond to Putin’s Price Hike at the Pump“, that is expected to supply 1,000,000 barrels of oil per day to commercial interests from now up to the midterm elections in November, in the hope of keeping gasoline and diesel fuel prices from rising further at least up until that time, as well as the previous 30,000,000 million barrel release from the SPR to address initial Russian supply related shortfalls, and the administration’s earlier plan to release 50 million barrels from the SPR to incentivize US gasoline consumption…. including other withdrawals from the Strategic Petroleum Reserve under recent release programs, a total of 136,826,000 barrels of oil have now been removed from the Strategic Petroleum Reserve over the past 22 months, and as a result the 519,323,000 barrels of oil still remaining in our Strategic Petroleum Reserve is now the lowest since March 27th, 1987, or at a 35 year low, as repeated tapping of our emergency supplies for non-emergencies or to pay for other programs had already drained those supplies considerably over the past dozen years, even before the Biden administration’s releases….so now, the total 180,000,000 barrel drawdown expected over the next six months will remove almost a third of what remains in the SPR, and leave us with what would be less than a 20 day supply of oil at today’s consumption rate…
Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 6,357,000 barrels per day last week, which was still 1.9% more than the 6,238,000 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 11,900,000 barrels per day as the EIA’s rounded estimate of the output from wells in the lower 48 states was unchanged at 11,500,000 barrels per day, and as Alaska’s oil production was 5,000 barrels per day lower at 445,000 barrels per day andand has no impact on the final rounded national 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 9.2% below that of our pre-pandemic production peak, but was 41.2% 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 94.2% of their capacity while using those 16,387,000 barrels of crude per day during the week ending June 3rd, up from the 92.6% utilization rate of the prior week, and the highest refinery utilization rate since December 2019…the 16,387,000 barrels per day of oil that were refined this week were the most since January 2020, and 2.9% more barrels than the 15,925,000 barrels of crude that were being processed daily during week ending June 4th of 2021, but still 4.0% less than the 17,064,000 barrels that were being refined during the prepandemic week ending June 7th, 2019, when refinery utilization was at a fairly normal 93.2% for the first weekend of June…
With the increase in the amount of oil being refined this week, gasoline output from our refineries was also higher, increasing by 73,000 barrels per day to 9,968,000 barrels per day during the week ending June 3rd, after our gasoline output had increased by 545,000 barrels per day over the prior week.…this week’s gasoline production was 6.5% more than the 9,431,000 barrels of gasoline that were being produced daily over the same week of last year, but 2.3% below our gasoline production of 10,276,000 barrels per day during the week ending June 7th, 2019, ie, during the year before the pandemic impacted US gasoline output….at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 17,000 barrels per day to 5,001,000 barrels per day, after our distillates output had decreased by 169,000 barrels per day over the prior week…but after other recent production increases, our distillates output was still 1.7% more than the 4,918,000 barrels of distillates that were being produced daily during the week endingJune 4th of 2021, but 4.5% less than the 5,239,000 barrels of distillates that were being produced daily during the week ending June 7th, 2019…
Even with the recent increases in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the seventeenth time in eighteen weeks, decreasing by 812,000 barrels to a six month low of 218,184,000 barrels during the week ending June 3rd,after our gasoline inventories had decreased by 711,000 barrels over the prior week….our gasoline supplies decreased again this week because the amount of gasoline supplied to US users increased by 222,000 barrels per day to 9,199,000 barrels per day, even as our exports of gasoline fell by 106,000 barrels per day to 957,000 barrels per day, and as our imports of gasoline rose by 286,000 barrels per day to a 46 week high of 1,176,000 barrels per day . . . after 17 inventory drawdowns over the past 18 weeks, our gasoline supplies were 9.5% lower than last June 4th’s gasoline inventories of 241,026,000 barrels, and 10% below the five year average of our gasoline supplies for this time of the year…
With the small increase in our distillates production, our supplies of distillate fuels increased for the 6th time in twenty-one weeks and for the 13th time in forty weeks, rising by 2,592,000 barrels to 108,984,000 barrels during the week ending June 3rd, after our distillates supplies had decreased by529,000 barrels during the prior week….our distillates supplies rose this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 319,000 barrels per day to 3,650,000 barrels per day, and because our exports of distillates fell by 152,000 barrels per day to 1,201,000 barrels per day, while our imports of distillates fell by 43,000 barrels per day to 220,000 barrels per day….but after forty-two inventory withdrawals over the past sixty weeks, our distillate supplies at the end of the week were 20.6% below the 137,214,000 barrels of distillates that we had in storage on June 4th of 2021, and about 23% below the five year average of distillates inventories for this time of the year…
Meanwhile, after this week’s big release of crude from our Strategic Petroleum Reserve, our commercial supplies of crude oil in storage rose for the 11th time in 28 weeks and for the 20th time in the past year, increasing by 2,025,000 barrels over the week, from 414,733,000 barrels on May 27th to 416,758,000 barrels on June 3rd, after our commercial crude supplies had decreased by 5,068,000 barrels over the prior week…after this week’s increase, our commercial crude oil inventories remained roughly 15% below the most recent five-year average of crude oil supplies for this time of year, but were still 17% above the average of our crude oil stocks as of the first weekend of June 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 then jumped again after last year’s winter storm Uri froze off US Gulf Coast refining, our commercial crude oil supplies as of this June 3rd were 12.1% less than the 474,029,000 barrels of oil we had in commercial storage on June 4th of 2021, and were also 22.5% less than the 538,065,000 barrels of oil that we had in storage on June 5th of 2020, and 14.2% less than the 485,470,000 barrels of oil we had in commercial storage on June 7th of 2019…
Finally, with our inventories 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, rose by 3,682,000 barrels this week, from 1,681,261,000 barrels on May 27th to 1,684,943,000 barrels on June 3rd, after our total inventories had fallen by 4,803,000 barrels during the prior week….that still left our total liquids inventories down by 103,490,000 barrels over the first 23 weeks of this year, and less than 4 million barrels from a 13 1/2 year low..