SPR, oil, distillates, product Inventories low

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Summary: Strategic Petroleum Reserve at a 1058 week low, US oil supplies at a 746 week low; distillates supplies at a 729 week low, total oil + products inventories at a 711 week low, gasoline imports at a 8 month 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 April 29th indicated that because of an increase in our oil imports, a decrease in our oil exports, a withdrawal from the SPR, and a slowdown in our refining, we again had oil left to add to our stored commercial crude supplies, for the 9th time in 23 weeks and for the 18th time in the past forty-eight weeks, even after a big decrease in oil that could not be accounted for . . . our imports of crude oil rose by an average of 397,000 barrels per day to an average of 6,332,000 barrels per day, after rising by an average of 98,000 barrels per day during the prior week, while our exports of crude oil fell by 147,000 barrels per day to 3,574,000 barrels per day during the week, which together meant that our trade in oil worked out to a net import average of 2,758,000 barrels of oil per day during the week ending April 29th, 544,000 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 11,900,000 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 14,658,000 barrels per day during the cited reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,466,000 barrels of crude per day during the week ending April 29th, an average of 218,000 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 255,000 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 553,000 barrels per day less 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 (+553,000) 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 . . . moreover, since last week’s unaccounted for oil was at (+1,254,000) barrels per day, that means there was a 701,000 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 meaningless . . . 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 255,000 barrel per day decrease in our overall crude oil inventories left our total oil supplies at 965,712,000 barrels at the end of the week, our lowest total oil inventory level since January 4th, 2008, and thus a 14 year low . . . this week’s oil inventory decrease came even though 186,000 barrels per day were being added to our commercially available stocks of crude oil, because 441,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve at the same time . . . that draw on the SPR included a withdrawal under the initial 30,000,000 million barrel release from the SPR to address Russian supply related shortfalls, as well as an earlier ongoing withdrawal under the administration’s 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 106,162,000 barrels of oil have now been removed from the Strategic Petroleum Reserve over the past 21 months, and as a result the 549,985,000 barrels of oil still remaining in our Strategic Petroleum Reserve is now the lowest since December 28th, 2001, or at a 20 year low, as repeated tapping of our emergency supplies for non-emergencies or to pay for other programs has already drained those supplies considerably over the past dozen years . . . with Biden’s recent “Plan to Respond to Putin’s Price Hike at the Pump”, an additional and unprecedented 1,000,000 barrels per day will be released from the SPR daily starting this week and running up to the midterm elections in November, in the hope of keeping gasoline and diesel fuel prices from rising further up until that time . . . that total 180,000,000 barrel drawdown over the next six months will remove almost a third of what remains in the SPR at this time and leave us with what would be about 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 rose to an average of 6,025,000 barrels per day last week, which was 3.3% more than the 5,831,000 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 even though the EIA’s rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day lower at 11,400,000 barrels per day, because Alaska’s oil production rose by 6,000 barrels per day to 453,000 barrels per day and added 100,000 barrels per day back to the final rounded national total (that’s the EIA’s math, not mine) . . . 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 still 9.1% 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 88.4% of their capacity while using those 15,466,000 barrels of crude per day during the week ending April 29th, down from the 90.3% utilization rate of the prior week, and below the historical utilization rate for late April refinery operations . . . the 15,466,000 barrels per day of oil that were refined this week were 1.5% more barrels than the 15,243,000 barrels of crude that were being processed daily during week ending April 30th of 2021, when refineries were still recovering from winter storm Uri, and 19.2% more than the 12,976,000 barrels of crude that were being processed daily during the week ending May 1st, 2020, when US refineries were operating at what was then a much lower than normal 70.5% of capacity during the first wave of the pandemic, but still 6.0% less than the 16,446,000 barrels that were being refined during the prepandemic week ending April 26th 2019, when refinery utilization was also at a somewhat below normal 89.2% for the same week of April…

Even with the decrease in the amount of oil being refined this week, gasoline output from our refineries  was somewhat higher, increasing by 175,000 barrels per day to 9,689,000 barrels per day during the week ending April 29th, after our gasoline output had decreased by 322,000 barrels per day over the prior week . . . this week’s gasoline production was 5.9% more than the 9,146,000 barrels of gasoline that were being produced daily over the same week of last year, but 2.4% below the gasoline production of 9,927,000 barrels per day during the week ending April 26th, 2019, ie, the year before the pandemic impacted gasoline output . . . at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 63,000 barrels per day to 4,719,000 barrels per day, after our distillates output had decreased by 34,000 barrels per day over the prior week…even after those decreases, our distillates output was 4.9% more than the 4,498,000 barrels of distillates that were being produced daily during the week ending April 30th of 2021, but 8.0% less that the 5,128,000 barrels of distillates that were being produced daily during the week ending April 26th, 2019…

Even with the increase in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the twelfth time in thirteen weeks, decreasing by 2,230,000 barrels to 228,575,000 barrels during the week ending April 29th,after our gasoline inventories had decreased by 1,573,000 barrels over the prior week . . . our gasoline supplies decreased again this week because the amount of gasoline supplied to US users increased by 117,000 barrels per day to 8,856,000 barrels per day, and even though our imports of gasoline rose by 282,000 barrels per day to an eight month high of 1,127,000 barrels per day while our exports of gasoline fell by 122,000 barrels per day to 836,000 barrels per day . . . but even with 12 inventory drawdowns over the past 13 weeks, our gasoline supplies were still only 3.1% lower than last April 30th’s gasoline inventories of 235,811,000 barrels, and 4% below the five year average of our gasoline supplies for this time of the year…

With this week’s decrease in our distillates production, our supplies of distillate fuels decreased for the 13h time in sixteen weeks and for the 25th time in thirty-five weeks, falling by 2,344,000 barrels to a fourteen year low of 104,942,000 barrels during the week ending April 29th, after our distillates supplies had decreased by1,449,000 barrels during the prior week . . . our distillates supplies fell again this week as the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 122,000 barrels per day to 3,956,000 barrels per day, while our exports of distillates fell by 92,000 barrels per day to 1,189,000 barrels per day, and while our imports of distillates fell by 34,000 barrels per day to 91,000 barrels per day . . . after forty inventory decreases over the past fifty-six weeks, our distillate supplies at the end of the week were 22.9% below the 136,153,000 barrels of distillates that we had in storage on April 30th of 2021, and about 22% below the five year average of distillates inventories for this time of the year…

The depressed level of our distillate supplies has led to diesel fuel and heat oil prices that have been $1 per gallon more than the already elevated price of gasoline, and both gasoline and diesel hit new record highs on NYMEX this week…supplies of diesel and pricing of it are also elevated in Europe and globally, leading to economic restrictions and power outages in countries that cant afford it, such as Sri Lanka,  Pakistan, and now India . . . because price of diesel for immediate delivery versus the next month widened to the largest ever gap this week, Gulf refiners have found it more profitable to sell immediately to Europe than wait weeks for pipeline delivery to the US east coast, with those exports to Europe exacerbating domestic shortages . . . although those diesel shortages had developed over time, the loss of Russian oil has compounded the problem, because refineries get more diesel per barrel oil out of a heavy crude than they do from a light one, and most Russian oil exports are medium heavy sour crudes….that global shortage of diesel also explains the thinking behind the 1 million barrel per day SPR release better than the administration’s political messaging about gasoline prices…for US Gulf Coast and European refineries that were built to use a medium heavy crude like Russian Urals, they need to find an equivalent grade of crude to replace it, or do some expensive blending of other grades to match it…remember that the administration’s first frantic moves after the Russian oil ban were to try to get Venezuelan oil and even Iranian oil back on the market to replace it? . . . well, the US Strategic Petroleum Reserve is 60% heavier grades of crude, so it appears that they’re pulling it out to partially replace embargoed Russian oil globally . . . most oil we get from shale is light and sweet, typically more expensive, but worthless when one is trying to replace Russian oil  losses . . . and those losses also explain our rising exports to Europe...

Meanwhile, with this week’s increase in our oil imports, the withdrawal from the SPR, and the decrease in our oil refining, our commercial supplies of crude oil in storage rose for the 16th time in 40 weeks and for the 20th time in the past year, increasing by 1,303,000 barrels over the week, from 414,424,000 barrels on April 22nd to 415,727,000 barrels on April 29th, after our commercial crude supplies had increased by 691,000,000 barrels over the prior week…with this week’s increase, our commercial crude oil inventories rose to about 15% below the most recent five-year average of crude oil supplies for this time of year, but were still about 19% above the average of our crude oil stocks as of the fourth weekend of April 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 April 22nd were 14.3% less than the 485,117,000 barrels of oil we had in commercial storage on April 30th of 2021, and were also 21.9% less than the 532,221,000 barrels of oil that we had in storage on May 1st of 2020, and 11.7% less than the 470,567,000 barrels of oil we had in commercial storage on April 26th 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 also 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 479,000 barrels this week, from 1,696,899,000 barrels on April 22nd to  1,696,420,000 barrels on April 29th, after our total inventories had fallen by 2,187,000 barrels barrels during the prior week, and left our liquids inventories down by 92,013,000 barrels over the first 17 weeks of this year….at 1,696,420,000 barrels, our total inventories of oil & its products are now the lowest since December 26th, 2008, or at an 13 1/2 year low, as the graph below shows…