US oil prices rose for the fourth time in five weeks and ended at a 5 month high on stronger than expected US economic data and expectations that OPEC would leave its production cuts in place….after rising less than 0.1% to $80.63 a barrel as week as an early rally on bullish Chinese data following attacks on Russian refineries was reversed by the threat of a ceasefire in Gaza, the contract price for the benchmark US light sweet crude for May delivery moved higher in Asian trading early Monday, as oil routes remained under threat amid ongoing attacks on Russian oil refineries, then traded higher in New York following a 14-0 vote by the United Nations Security Council passing a resolution calling for a ceasefire in Gaza, and settled $1.32 higher at $81.95 a barrel after the Russian government ordered oil producers to cut their output…oil prices traded in a narrow range Tuesday, as traders weighed the bearish effect of the decline in Russian refinery demand against the bullish effect from the cut in Russia’s oil exports, and settled 33 cents lower at $81.62 a barrel as traders assessed the impact of the wars in Eastern Europe and the Middle East on the supply picture…oil prices extended those losses in overnight trading after the American Petroleum Institute reported a surprise and significantly large crude build and a notable increase in stocks at the Cushing Hub, then continued to trade lower on Wednesday amid signs that OPEC+ appeared unlikely to change its output policy at its meeting next week, and settled 27 cents lower at $81.35 a barrel, as the US dollar strengthened and EIA data showed a surprise jump in both crude and gasoline stocks….oil prices rose by more than $1 a barrel in Asian trading early Thursday, as traders anticipated tighter supplies as OPEC+ producer cartel was widely expected to continue its current production cuts, then added another one percent gain to that rally in New York trading to settle $1.82 higher at a 5 month high of $83.17 a barrel after the US Bureau of Economic Analysis said that the U.S. economy grew 0.2% faster than previously estimated, on upward revisions to 4th quarter consumer spending and nonresidential fixed investment, leaving oil prices 3.2% higher on the week, 6.3% higher for the month, and 16.1% higher over the first quarter of 2024..
meanwhile, natural gas price quotes finished higher this week on a switch to the higher priced May contract, even as both contracts that were traded as the front month ended lower…after inching up 0.2% to $1.659 per mmBTU last week on a bit of chilly weather, despite the first addition to natural gas inventories of the year, the contract price for natural gas for April delivery opened four cents lower on Monday morning, on ample storage levels and forecasts for weak heating demand, then hovered near the $1.640 level for much of the day before settling 4.4 cents lower at a three-week low of $1.615 per mmBTU, on lowered demand forecasts for this week, a glut of gas in storage, and expectations that gas flows to LNG export plants would remain low…after volatile trading between $1.461 and $1.647 on its last day of trading Tuesday, the April gas contract finished 4.0 cents, or 2.5% lower at a three and a half year low of $1.575 per mmBTU on mild forecasts, while the more actively traded May contract for natural gas traded sideways near $1.785 throughout the day and settled a tenth of a cent lower at $1.788 per mmBTU as May gas traders positioned ahead of the storage report on Thursday…with markets now quoting the contract price of natural gas for May delivery, that contract opened 4 cents lower on Wednesday and retreated to trade near $1.720 for most of the day, as weak fundamentals and a drop in weekly LNG export volume provided bearish pressure, before settling 7.0 cents lower at $1.718 per mmBTU amid a plethora of bearish fundamentals, most notably abundant supply met by a shortage of demand…natural gas prices opened two cents higher ahead of the storage report on Thursday, but to slipped back to an intraday low of $1.718 minutes after the report, before staging a steady advance to settle 4.5 cents higher at $1.763 per mmBTU, as traders considered the implications of the larger-than-anticipated storage withdrawal… while natural gas price quotes ended 6.3% higher on the week, the contract price of May gas, which had ended the prior week at $1.812 per mmBTU, finished 2.7% lower..
The EIA’s natural gas storage report for the week ending March 22nd indicated that the amount of working natural gas held in underground storage fell by 36 billion cubic feet to 2,296 billion cubic feet by the end of the week, which left our natural gas supplies 430 billion cubic feet, or 23.0% above the 1866 billion cubic feet that were in storage on March 22nd of last year, and 669 billion cubic feet, or 41.1% more than the five-year average of 1,627 billion cubic feet of natural gas that were typically in working storage as of the 22nd of March over the most recent five years…the 36 billion cubic foot withdrawal from US natural gas working storage for the cited week was more than the 31 billion cubic foot withdrawal that was the consensus estimate from S&P Global Commodity Insights’ weekly gas storage survey, while it was quite a bit less than the 55 billion cubic feet that were pulled from natural gas storage during the corresponding third week of March 2023, but was more than the average 27 billion cubic feet withdrawal from natural gas storage that has been typical for the same last winter week over the past 5 years…
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 22nd indicated that after an increase in our oil imports and a drop in our oil exports, we had surplus oil to add to our stored commercial crude supplies for 7th time in nine weeks and for the 15th time in the past 23 weeks, despite a decrease in oil supplies that the EIA could not account for….Our imports of crude oil rose by an average of 424,000 barrels per day to an average of 6,702,000 barrels per day, after rising by an average of 787,000 barrels per day over the prior week, while our exports of crude oil fell by 700,000 barrels per day to average 4,181,000 barrels per day, which when used to offset our imports, meant that the net of our trade in oil worked out to a net import average of 2,521,000 barrels of oil per day during the week ending March 22nd, 1,124,000 more barrels per day than the net of our imports minus our exports during the prior week. At the same time, transfers to our oil supply from Alaskan gas liquids, from natural gasoline, from condensate, and from unfinished oils averaged 382,000 barrels per day, while during the same week, production of crude from US wells was unchanged at 13,100,000 barrels per day. Hence our daily supply of oil from the net of our international trade in oil, from transfers, and from domestic well production appears to have averaged a rounded total of 16,003,000 barrels per day during the March 22nd reporting week…
Meanwhile, US oil refineries reported they were processing an average of 15,932,000 barrels of crude per day during the week ending March 22nd, an average of 127,000 more barrels per day than the amount of oil that our refineries reported they were processing during the prior week, while over the same period the EIA’s surveys indicated that a rounded average of 558,000 barrels of oil per day were being added to the supplies of oil stored in the US… So, based on that reported & estimated data, the crude oil figures provided by the EIA for the week ending March 22nd appear to indicate that our total working supply of oil from net imports, from transfers, and from oilfield production was 488,000 barrels per day less than what what was added to storage plus our oil refineries reported they used during the week…To account for that difference between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a +488,000] barrel per day figure onto line 16 of the weekly U.S. Petroleum Balance Sheet, in order to make the reported data for the 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 was an error or omission of that magnitude in the week’s oil supply & demand figures that we have just transcribed… Despite that, since most oil traders react to these weekly EIA reports as if they were accurate, and since these weekly figures therefore 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 reliable 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)….(note there is also an aging twitter thread from an EIA administrator addressing these ongoing weekly errors, and what they had hoped to do about it)
This week’s average 558,000 barrel per day increase in our overall crude oil inventories came as an average of 452,000 barrels per day were being added to our commercially available stocks of crude oil, while an average of 106,000 barrels per day were being added to our Strategic Petroleum Reserve, the sixteenth SPR increase in twenty-three weeks, following nearly continuous withdrawals over the prior 39 months… Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to 6,419,000 barrels per day last week, which was 1.1% more than the 6,350,000 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 13,100,000 barrels per day because the EIA’s rounded estimate of the output from wells in the lower 48 states was unchanged at 12,700,000 barrels per day, while Alaska’s oil production was 9,000 barrels per day lower at 432,000 barrels per day, but still added the same 400,000 barrels per day to the EIA’s rounded national total as it did last week…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 matches that of our pre-pandemic production peak, and is also 35.1% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.
US oil refineries were operating at 88.7% of their capacity while processing those 15,932,000 barrels of crude per day during the week ending March 22nd, up from their 87.8% utilization rate of a week earlier, and finally approaching a normal operating rate for mid March, after recovering from damage caused by the arctic cold that penetrated to the Gulf Coast in mid January… the 15,932,000 barrels of oil per day that were refined this week were 0.8% more than the 15,813,000 barrels of crude that were being processed daily during week ending March 24th of 2023, and 0.6% more than the 15,831,000 barrels that were being refined during the prepandemic week ending March 22nd, 2019, when our refinery utilization rate was at a below normal 86.6%..
Even with the increase in the amount of oil being refined this week, gasoline output from our refineries was somewhat lower, decreasing by 435,000 barrels per day to 9,213,000 barrels per day during the week ending March 22nd, after our refineries’ gasoline output had decreased by 263,000 barrels per day during the prior week. This week’s gasoline production was 8.2% less than the 10,038,000 barrels of gasoline that were being produced daily over week ending March 24th of last year, and 4.6% less than the gasoline production of 9,657,000 barrels per day during the prepandemic week ending March 22nd, 2019….on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 124,000 barrels per day to 4,814,000 barrels per day, after our distillates output had increased by 128,000 barrels per day during the prior week. After six straight solid production increases, our distillates output was 3.9% more than the 4,633,000 barrels of distillates that were being produced daily during the week ending March 24th of 2023, but it was still 2.3% less than the 4,925,000 barrels of distillates that were being produced daily during the week ending March 22nd, 2019…
Even with this week’s decrease in our gasoline production, our supplies of gasoline in storage at the end of the week rose for the first time in eight weeks, following five prior increases, increasing by 1,299,000 barrels to 232,072,000 barrels during the week ending March 22nd, after our gasoline inventories had decreased by 3,310,000 barrels during the prior week. Our gasoline supplies rose this week because the amount of gasoline supplied to US users fell by 94,000 barrels per day to 8,715,000 barrels per day, and because our exports of gasoline fell by 247,000 barrels per day to 786,000 barrels per day, and because our imports of gasoline rose by 26,000 barrels per day to 522,000 barrels per day.…After thirty-two gasoline inventory withdrawals over the past fifty-two weeks, our gasoline supplies were still 2.4% above last March 24th’s gasoline inventories of 226,694,000 barrels, but about 1% below the five year average of our gasoline supplies for this time of the year…
Even with this week’s increase in our distillates production, our supplies of distillate fuels fell for 7th time in nine weeks, following eight consecutive prior increases, decreasing by 1,185,000 barrels to 117,337,000 barrels over the week ending March 15th, after our distillates supplies had increased by 624,000 barrels during the prior week. Our distillates supplies fell this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 242,000 barrels per day to 4,028,000 barrels per day, and because our exports of distillates rose by 135,000 barrels per day to 1,120,000 barrels per day, while our imports of distillates fell by 5,000 barrels per day to 165,000 barrels per day…Even with 30 inventory decreases over the past fifty-two weeks, our distillates supplies at the end of the week were 0.6% above the 116,683,000 barrels of distillates that we had in storage on March 24th of 2023, but about 6% below the five year average of our distillates inventories for this time of the year…
Finally, after this week’s increase in our oil imports and decrease in our oil exports, our commercial supplies of crude oil in storage rose for the 16th time in twenty-six weeks and for the 23rd time in the past year, increasing by 3,165,000 barrels over the week, from 445,042,000 barrels on March 15th to 448,207,000 barrels on March 22nd, after our commercial crude supplies had decreased by 1,952,000 barrels over the prior week… With this week’s increase, our commercial crude oil inventories rose to about 2% below the most recent five-year average of commercial oil supplies for this time of year, but were still about 32% above the average of our available crude oil stocks as of the fourth weekend of March over the 5 years at the beginning of the past decade, with the big difference between those comparisons arising because it wasn’t until early 2015 that our oil inventories had first topped 400 million barrels. After our commercial crude oil inventories had jumped to record highs during the Covid lockdowns of the Spring of 2020, then jumped again after February 2021’s winter storm Uri froze off US Gulf Coast refining, but then fell in the wake of the Ukraine war, only to jump again following the Christmas 2022 refinery freeze offs, our commercial crude supplies as of this March 22nd were still 5.4% less than the 473,691,000 barrels of oil left in commercial storage on March 24th of 2023, but 5.4% more than the 409,950,000 barrels of oil that we still had in storage on March 25th of 2022, while still 10.7% less than the 501,835,000 barrels of oil we had in commercial storage on March 26th of 2021, after refinery damage from winter storm Uri left even more crude oil remaining after 2020’s pandemic precautions had left a lot of oil unused…
This Week’s Rig Count
In lieu of a detailed report on the rig count, we are again just including a screenshot of the rig count summary from Baker Hughes…note that this week’s rig count was released a day early, ahead of the Good Friday holiday, and hence only covers 6 days…in the table below, the first column shows the active rig count as of March 28th, the second column shows the change in the number of working rigs between last week’s count (March 22nd) and this week’s (March 28th) count, the third column shows last week’s March 22nd active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting period a year ago, which in this week’s case was the 31st of March, 2023…
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