Joined: Oct 23, 2004 Posts: 5891 Location: New Jersey
Posted: Wed Apr 25, 2007 10:10 am Post subject: Re: Weekly US Petroleum and NG Supply Reports
The freight train barreling down the track, that is US gasoline demand, is soon about to crash into the brick wall, static gasoline supplies. Even after 11 consecutive weeks of falling gasoline inventories, many energy analysts still don’t have a sense of the catastrophe about to happen.
The US is two to four months away from the development of regional gasoline shortages. The good news in today’s report about gasoline is that supplies are fairly well distributed across the country, although as I stated before, the west coast is likely to feel the effects of developing shortages first (assuming no Gulf of Mexico hurricanes). Based on events following Hurricane Katrina, it appears that an inventory level of around 190 million barrels is the minimum level necessary to avoid scattered single state supply disruptions. Due to distortions caused in how ethanol is counted, the adjusted comparable figure is about 185 million barrels. However if current demand levels don’t change, we could see inventories fall to 180 million barrels this summer.
Crude imports last week came in about expected – 10 million barrels per day – but gasoline imports exceeded mine and general expectations and came in at 1.164 million barrels a day. I am not sure if that represents a trend or is a result of one extra large tanker arriving on the east coast. There is a strong possibility of a refinery strike in Antwerp on May 9, which will affect US gasoline imports. Last week, I thought gasoline imports would be heading to around 1.1 million barrels a day by the end of the second quarter.
Thanks again to pup 55, shortonoil, and others that add some background here and help us make some conclusions about the weekly supply and demand situation. As a disclaimer, I do not trade energy futures, do not work in the energy industry, or otherwise benefit from posting here. Please make your own judgments about the comments posted here.
_________________ It's already over, now it's just a matter of adjusting.
Last edited by DantesPeak on Wed Apr 25, 2007 5:06 pm; edited 3 times in total
Joined: Apr 05, 2005 Posts: 2464 Location: South of Atlanta
Posted: Wed Apr 25, 2007 10:48 am Post subject: Re: Weekly US Petroleum and NG Supply Reports
joewp wrote:
These demand figures are amazing. This is with a national average gasoline price of over $2.80 a gallon. While I'm sure there's been some demand destruction occurring in the working poor, there's been virtually none anywhere else. It looks like $3.00/gallon isn't going to stop people from going on vacation this Summer. It seems about the only thing that will stop Americans from driving is an actual gasoline shortage.
The definition of an inelastic commodity. I honestly did not expect the demand to be so high right now due to the gas prices where they are. Interesting but at the same time scary. I'm thinking my meager 20 gallon storage may need to be a bit more.
Posted: Wed Apr 25, 2007 10:57 am Post subject: Re: Weekly US Petroleum and NG Supply Reports
Quote:
Unleaded 20-Apr
Beginning Inv 197.0
Imports 8.4 1.2
Production 59.5 8.5
Available 264.9
Ending Inv 194.2
Balance 70.7
Balance/day 10.10
Stated Usage 9.3
Actual Change -2.8
Deviation from Forecast -2.2
Distillates 20-Apr
Beginning Inv 117.3
Imports 2.17 0.31
Production 28.7 4.1
Available 148.17
Ending Inv 117.3
Balance 30.87
Balance/day 4.41
Stated Usage 4.3
Actual Change 0.0
Deviation from Forecast -1.1
Crude Oil 20-Apr
Beginning Inv 332.4
Production 36.183 5.169
Imports 70 10
Total Available 438.583
Provided to Ref 105.7 15.1
Ending Inventory 334.5
Actual Change 2.1
Deviation from Forecast 4.767
I don't mind being 1-2 vs. the analysts when we learn something about how the system is functioning, or in this case, is not functioning.
The Unleaded inventory, as Dantespeak points out, suggests that the refiners are not able to increase production at the necessary rate to keep us out of trouble. This report is notable in that imports came up to 1.2 mbpd, so it suggests that we will once again try to import our way out of problems. We will have to monitor this to see if the surge will materialize like it did last year.
The unexpected increase in crude oil is strictly due to being unable to input crude oil into the refieries. The way to look at this is not as a crude oil surplus, which is what the uninformed traders are prone to do, but as a refinery capacity/uptime failure.
The distillates production and consumption were about what I figured, except I had predicted a little higher demand. I am ready to say this is still not too bad.
I will update the model later, but it's going to be dependent on some unknowns going forward.
Last edited by pup55 on Thu Apr 26, 2007 12:10 am; edited 1 time in total
Posted: Wed Apr 25, 2007 11:34 am Post subject: Re: Weekly US Petroleum and NG Supply Reports
DantesPeak said:
Quote:
Based on events following Hurricane Katrina, it appears that an inventory level of around 190 million barrels is the minimum level necessary to avoid scattered single state supply disruptions.
The stock level at which shortages will appear is sort of the $64 Thousand Dollar Question and probably nobody, including the oil industry, really knows that answer. One of the problems is that the nation is really broken into two areas, east and west, and they are not really connected as far as distribution is concerned.
We can, however, estimate the transit time to get oil to the customer on the East Coast. On the east coast about 80% of the oil and finished product arrives via pipelines from the Gulf suppliers. The oil and products move along at about 9 ft/sec or 6 miles per hour. It takes from 14 to 20 days to get a gallon of gasoline from the Gulf to New York via the pipeline. Obviously, the further one is out from the Gulf, the less likely you are to get oil on time via the pipeline. The rest of the oil comes in via a number of routes including barge, ship, rail freight and truck.
Once in New York, the largest transfer terminal on the East Coast, the product is then shipped to small distributors, primarily by truck and then to the thousands of retail stations. Each one of these stops takes time.
Assuming the best case scenario for oil in the pipeline at 14 days, and 2 days at each distribution point makes 18 days total travel time for the product. With consumption of gasoline at 10.3 mb/d that gives us a best case inventory number of 185.4 million barrels. If it does work out like that, I would suggest that we all go play the lottery, because, boy, it is our lucky week. There are a huge number of problems that can come up in that transfer of oil from the LOOP to Grandma Brown’s gas tank in Rochester, NY.
We do have to realize that there are some East Coast refineries, and some of their crude supply comes directly to them by ship. They will lower the needed inventory as their product doesn’t have to travel far to get to the customer. How much they lower the needed inventory is, however, the $64 Thousand Dollar Question.
I think DantesPeak is about right and if you are the worrying type a good place to start would be at about 190 mb.
This weeks decline wasn't totally unexpected. The rate that it's declining is concerning however.
Seasonally speaking next week every year for the last 6 years we've had an increase in unlead stock piles. If we don't get it then we're going to be moving beyond concerned and rapidly entering screwed territory. _________________ shame on us, doomed from the start
god have mercy on our dirty little hearts
Joined: Dec 09, 2004 Posts: 492 Location: Around somewhere
Posted: Wed Apr 25, 2007 12:13 pm Post subject: Re: Weekly US Petroleum and NG Supply Reports
A few interesting points on the BP Whiting refinery.
1. 3 hydrogen compressors for the Cat feed hydrotreater are damaged or lost. The unit will be down until August. 20% to 30% capacity loss. OUCH!
2. Currently paying a premium for light sweet as they are unable to process as much heavy sour.
3. This refinery is aproximately 115 years old. However, the equipment is not 115 years old. Lots of maintenance tho.
4. One of Canada's leaders visited recently to kick off a 3 billion dollar project to build 3 processing units to treat oil from the tar sands. GOHT's Gas Oil Hydrotreaters.
Joined: May 15, 2005 Posts: 4142 Location: THE MATRIX
Posted: Wed Apr 25, 2007 1:30 pm Post subject: Re: Weekly US Petroleum and NG Supply Reports
Odd how one can know something is eventually going to occur yet still be surprised when it does.
Keep up the good work folks. _________________ It is easier to enslave a people that wish to remain free then it is to free a people who wish to remain enslaved.
Joined: Apr 05, 2005 Posts: 2464 Location: South of Atlanta
Posted: Wed Apr 25, 2007 1:36 pm Post subject: Re: Weekly US Petroleum and NG Supply Reports
Let's all say a little prayer right now hoping the Gulf States refineries dodge the big "H" this year. I am really starting to think that if anything goes wrong with even one large refinery we are going to be in ahuge crap sandwich. I can't even imagine with these numbers and demand going up, where this all leads If we lose a million bpd due to shutdowns or damage.
It seems even If we can just maintain the current picture it still leads to shortages.
Posted: Wed Apr 25, 2007 1:49 pm Post subject: Re: Weekly US Petroleum and NG Supply Reports
AirlinePilot said:
Quote:
It seems even If we can just maintain the current picture it still leads to shortages.
IF we maintain the current picture “we are going to be in a huge crap sandwich”. The ironic part is that the DOW just hit a new high today. It’s like walking through some kind of surrealistic fantasy display. Like I just got stuffed into some part of book; one of Stephen King's.
Joined: May 15, 2005 Posts: 4142 Location: THE MATRIX
Posted: Wed Apr 25, 2007 2:05 pm Post subject: Re: Weekly US Petroleum and NG Supply Reports
A wreck now is better then a wreck later after we have picked up more speed. Our friendly neighborhood El nino' seems to have moved on so bring on the gods of swirling chaos!
"Sooner or later you gonna have ta take a stand children"
Again, good looking out folks. _________________ It is easier to enslave a people that wish to remain free then it is to free a people who wish to remain enslaved.
Posted: Wed Apr 25, 2007 2:46 pm Post subject: Re: Weekly US Petroleum and NG Supply Reports
Pup,
Awhile back you did some models using different levels of demand and different levels of foriegn imports. If this week's report is assumed the average for demand and imports, where does that leave us?
Joined: Oct 23, 2004 Posts: 5891 Location: New Jersey
Posted: Wed Apr 25, 2007 3:01 pm Post subject: Re: Weekly US Petroleum and NG Supply Reports
Abandon hope all ye who enter here
The supposed inscription at the entrance to Hell in Dante Alighieri’s Divine Comedy
I frequently review the Wall Street Journal energy blogs, where Robert Rapier frequently posts. Today RR heard directly from the EIA main spokesperson, Doug MacIntyre. Apparently even the EIA has just about abandoned hope there will be sufficient US gasoline supplies this summer:
Inventories are very low, no one can doubt that. On a Days Supply basis, the situation is even worse. That said, there are 5 weeks until the Memorial Day weekend (the unofficial start of the peak driving season). The bottom end of the average range at the end of May is 208.6 MMB, or about 14 MMB above where we are right now. So, we would need to see an average build of 2.5-3.0 MB each week over the next 5 weeks just to get back to the bottom end of the average range. Is this possible? Yes. Is it likely? I better leave that answer to others. But we need to see imports stay high and start seeing more gasoline production (from higher crude refinery inputs), which means we can't afford to continue seeing more refinery outages, if we have any chance of reaching that target at all.
By the way, I would have expected to see inventories increase as well.
APRIL 25, 2007 12:27 PM
Quote:
4/25/07 Oster Dow Jones 16:29:17
DJ OIL FUTURES:Nymex Gasoline Hits 8 1/2 Mo High; Supplies Shrink
Apr 25, 2007 (Dow Jones Commodities News via Comtex) --By Masood Farivar
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Gasoline futures shot to a new eight-and-a-half month high Wednesday, adding to gains triggered earlier by a surprisingly large draw in stockpiles.
U.S. commercial inventories of gasoline declined by 2.8 million barrels last week to 194.2 million barrels as production slipped, the federal Energy Information Administration reported.
Analysts surveyed by Dow Jones Newswires had projected a build of about 200,000 barrels.
"The report caught the market by surprise," said Mike Zarembski, an analyst with brokerage XPRESSTRADE in Chicago. "With a couple of new refineries going down, this is setting up the market for an extremely tight gasoline market this summer."
After 11 straight weeks of declines, gasoline stocks stand at their lowest level for any week since October 2005 and the lowest ahead of the peak summer driving season, and for April since 2001.
Doug MacIntyre, an analyst at the EIA, said while the stockpile situation has gotten worse, refiners still had time to increase stocks to more normal levels by Memorial Day, the unofficial start of the driving season. "We have time to do it, but we need to start seeing inventories build relatively soon," MacIntyre said.
Barring a sharp turnaround in stockpiles, Zarembski said prices will likely continue to soar into the summer.
"Looks like prices are determined to keep moving higher," he said. "$3 pump prices may look cheap this summer, and we may see prices hover at $4."
[no link] _________________ It's already over, now it's just a matter of adjusting.
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