Posted: Wed Jul 02, 2008 11:40 am Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
Quote:
any kind of significant tropical storm in the GOM during August may be enough to initate havoc in our energy markets.
That or some more of that mysterious fog that shows up on a clear day. _________________ There will come a day when we would have wished to do a little evil for a greater good.
Posted: Wed Jul 02, 2008 1:12 pm Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
Dan1195 wrote:
Would think this would be viewed as a bearish report. 1.4 mpd gasoline imports caused the rise in gasoline supplies. Crude supplies are still dropping however. Another thing to note is gasoline demand actually appeared to rebound a bit on a percentage basis, which may be a signal that additional demand destruction will not occurr without further price increases.
Dan I posted earlier that most of the recent drop in demand is the result of the final crash of the housing industry. I think you will find that demand remains fairly constant form here on out since the housing industry is basically dead. And I've strewn this same post all over theoildrum basically every day.
I just hate being away from a computer at 10:30 on Wednesdays.
A couple of things on this: We are keeping an eye on crude oil and unleaded imports. This week, there was a slug of unleaded at 1.4 mbpd, and also pretty strong crude oil imports, which led to the inventory build.
Our little model to predict the prodution levels was actually pretty good, we missed the unleaded by .1 and the distillates pretty close to dead on.
The demand: The "balance" demand on unleaded was a little lower than our little model predicted. I guess we are going to have to make a little adjustment to keep the analysts at bay.
The market must be pretty nervous to have done what it did on the basis of this report. Anybody that looks at these numbers routinely like we do knows that in the grand scheme of things, this is not a radical departure from normal.
But, right now, I guess anything will cause a stampede.
Joined: Apr 05, 2005 Posts: 2407 Location: South of Atlanta
Posted: Wed Jul 02, 2008 1:50 pm Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
pup,
I think what the market is seeing is that even with 10.2 on the crude imports you still had a draw in crude to the tune of 2m bbl.
I'm not quite sure how you say thats somewhat normal. Seems to me that the trouble is beginning to be acknowledged with imports. Even at higher import numbers if crude inventories fall what is going to happen when those imports start declining?
I'd say the market is awakening and things only get even more volatile from here. We cant be the only ones who know about Export land......
Posted: Wed Jul 02, 2008 2:17 pm Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
The market also may suspect the 9.8 unleaded import number is just a transient blip, and next week could balance it out at 9.1 or .2. Gas prices will probably need to go up some more to keep a high rate of imports on the line. _________________ At 1% annual growth, human bodies will incorporate every gram in the observable universe in approximately 10,170 years.
Posted: Wed Jul 02, 2008 5:25 pm Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
Quote:
how you say thats somewhat normal
What I am thinking is that a 2 million barrel change in a given week is the difference between unloading one of those big tankers on Friday versus waiting until Monday. If you were to run the statistics on the week to week variation in imports, you would find that this much of a change in inventory is not really that major, compared to the drainage of 7 or something which we had a month or so ago.
you are right though from the standpoint that if this happens every week for about 6 months, then you have something. The inventory a year ago was 353 million barrels. On average, a million barrels per week have been taken out of the system.
Posted: Wed Jul 02, 2008 6:19 pm Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
pup55 wrote:
Quote:
how you say thats somewhat normal
What I am thinking is that a 2 million barrel change in a given week is the difference between unloading one of those big tankers on Friday versus waiting until Monday. If you were to run the statistics on the week to week variation in imports, you would find that this much of a change in inventory is not really that major, compared to the drainage of 7 or something which we had a month or so ago.
you are right though from the standpoint that if this happens every week for about 6 months, then you have something. The inventory a year ago was 353 million barrels. On average, a million barrels per week have been taken out of the system.
And don't forget producers have significant storage also.
Turns out you can drain storage for quite some time.
Just to put in in perspective 365mb of inventory represents 1mbd of production or given Mexico's old export levels about the same as 6 months of Mexican production. This is not a small number.
And you have probably about 50-60mb or so in transit on any given day in super tankers maybe more.
You would have to play with the math but you can drain down storage for a surprisingly long time after production does not meet demand.
It would be interesting to figure out the various scenarios.
And obviously the strong price increases are shifting the shortfall to other parts of the globe.
Given world inventory levels a persistent 1mbd shortfall only drops real inventory by about 1%. You can play games but spreading a shortage over the whole world and allowing for inventories to fluctuate we can have production lag demand by a surprising amount. With simple estimate I get that the persistent decline in US inventory is probably resulting from a 2-3mbd total production shortfall spread around the globe. The poorer countries drain inventory down to shortage levels before refilling and this panic buying causes blips in imports of the wealthier nations.
Needless to say the persistent decline that seems to be happening does not bode well if global exports decline further. These blips in US inventories should occur more often with less recovery.
We have had a few interesting declines it would be neat to see how long its taken the US to build inventory back after each decline and how the price moved. I think we will see that each time the US has let its inventory decline that its taken longer and been a lot more expensive to rebuild them back from danger levels.
Joined: Apr 06, 2006 Posts: 2956 Location: 3 miles NW of Champoeg, Republic of Cascadia
Posted: Wed Jul 02, 2008 7:02 pm Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
memmel - has anyone taken a crack at estimating storage capacity for producing nations?
I've often yearned for someone to construct a macro model of world oil production/consumption. It's not very useful to look at aspects of it in isolation and extrapolate the situation therefrom, unless you're testifying before Congress. Looking at the big picture is what you do into peak oil of course. Charts detailing refinery inputs/outages, ships in transit, inventories, quotas. Would be the bee's knees, man! _________________ Cogito, ergo non satis bibivi
I'm just gonna find a cash machine.
Posted: Wed Jul 02, 2008 8:01 pm Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
TheDude wrote:
memmel - has anyone taken a crack at estimating storage capacity for producing nations?
I've often yearned for someone to construct a macro model of world oil production/consumption. It's not very useful to look at aspects of it in isolation and extrapolate the situation therefrom, unless you're testifying before Congress. Looking at the big picture is what you do into peak oil of course. Charts detailing refinery inputs/outages, ships in transit, inventories, quotas. Would be the bee's knees, man!
I wish I make the rule that they have at least 30 days of storage simply to ensure steady supplies. Evidence indicates they probably have higher more like 60 days.
Also producing nations like KSA have storage outside the country and they do use floating storage and I'm sure you heard about the Iranian tanker thing.
There is and amazing amount of oil storage in the world to keep that oil flowing without shortages. And of course draining in one country and filling in another i.e taking turns even if unintentional can hide the overall shortfall if you don't look at the globe.
I had predicted that we would see production begin to drop steeply this year prices seem to point to this happening but given all the storage I also felt it would be 2009 before real problems crop up and this seems to fit what we are seeing so far. I was concerned that we could see problems this summer but it looks like we will barely squeak through but if exports continue to drop then 2009 is the year of reckoning when playing storage games fails to work and outright persistent shortages become common somewhere in the globe. So to finish I've found assuming the world has a sort of rolling 3-6 month of storage to smooth production seems to fit well with the facts. Any less and known production problems would have shown up in storage.
Posted: Sat Jul 05, 2008 7:25 am Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
Here are some graphs, for the stat nerds, of which we have a few.
The top graph is a histogram of the crude oil inventory changes between May of 2004 and now. I picked that date because at that point, the inventory was about the same as it is now, 300 million barrels.
Here are the stats:
max 7317
min -9112
Std Dev 3349.474078
The maximum gain during this period was 7.3 million barrels, and the maximum loss was 9.1 million, when Katrina hit. About 2/3 of the time, this inventory fluctuates by +-3. The data above is the raw EIA data, which of course is in thousand barrels per day, so when I say 7.3 million barrels, I really mean 7300 thousand barrels.
So, last week's 2-million or so fluctuation in crude oil inventory was well within the statistical norm, and was by no means an abnormal event.
The second graph is a histogram of the 'absolute value' of the change in inventory. That means, the size of the change, whether it is positive or negative.
What we can see from this is about 63% of the time, the fluctuation is less than 2, either positive or negative.
What we also see from this is that for whatever reason, the system they have set up to track these inventory changes is biased a little bit toward the positive. Even though the gross inventory changes have been zero during this period, the system they use tends to give results most frequently in the plus 1 to plus 2 inventory change range.
I would be willing to bet that the "corrections" that the EIA does, when they occur, are to offset this little positive bias they have in their system.
Kind of funny. Anyway, the point is, a 2 million barrel fluctuation is probably within the level of "noise" in this system. However, a 50 million barrel drain over the course of a year is probably a lot more significant.
Joined: Oct 23, 2004 Posts: 5501 Location: New Jersey
Posted: Sat Jul 05, 2008 8:54 am Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
Thanks pup55.
Some quick comments - There was some improvement last week in the Nigerian situation I was concerned about. However things have gotten worse again:
Quote:
Shell's Nigeria Bonga oil field back in force majeure
London (Platts)--3Jul2008
Shell has declared force majeure once more on loadings at its 225,000 b/d Bonga oil field offshore Nigeria.
"Force majeure has been declared because of damage to one of the loading buoys," a Shell spokesman told Platts. The damage was not caused by militant activity.
Last week Shell said it had restarted production at the field, after an earlier militant attack caused it to shut in production and declare force majeure.
The attack was centered on the Bonga floating production storage and offloading vessel.
On Monday, Shell chief executive Jeroen van der Veer said that production at the Bonga oil field was expected to reach full output in the next few days.
You may also remember that the Thunder Horse platform was supposed to come on line in June, but so far - nothing. The FT looks into this:
Quote:
Champions of Thunder Horse have little to cheer
By Sheila McNulty
Published: July 4 2008 20:42 | Last updated: July 4 2008 20:42
When BP produced the first oil from Thunder Horse, its flagship project in the Gulf of Mexico, the company threw a barbecue.
The Thunder Horse platform was supposed to begin producing in January 2005, but was delayed three years by a string of engineering problems. However, in spite of the thrill of having achieved first oil on June 14, the mood at last week’s celebration was sombre.
Then, as BP geared up to start the initial four wells that were planned to bring the field to production last month, the Financial Times learned it had discovered problems with three of them.
“Rarely does a project go off without a hitch, but this is not normal,’’ said Kenneth B Medlock III, fellow in energy studies at the James A Baker III Institute for Public Policy. He said: “This sort of news will not be taken well by the market. I think what we are seeing is the result of an industry that is stretched to its limits in terms of qualified personnel, expertise and resources.”
Each well could take up to 30 days to repair.
Thunder Horse workers are well aware of the difficulties.
“You always have time to fix it when you screw it up, but you never have enough time to do it right the first time,” an employee said. “This has been the theme running through the project.’’
FT _________________ It's already over, now it's just a matter of adjusting.
This is one of those weeks where we, unlike the real analysts, can have a little fun and go out on a limb.
The July 4th weekend, plus some really nasty weather in the Gulf last week could have reduced imports a little. I say "could have" because without the bikini-clad interns, we will not know for sure until the numbers come in on Wednesday.
so I am saying only about 1.2 million imports of unleaded, 9.8 on crude oil, much less than recently, and this should result in a draw in inventory of crude oil.
Our little algorithm on production (based on the refinery utilization) was pretty close last week, so we will continue to use it. At 89% utilization (about the same as last week) there will be about 15.3 mbpd of crude oil inputs into refineries.
I am beginning to think that some of the sticker shock has worn off, and the so called "demand destruction" effects will be less than they were over Memorial Day. I think the "balance demand" will only about .2 mbpd less than last year, rather than .3 which was the case earlier, which will result in a small drawdown in unleaded inventory.
All in all, we are in sort of a pattern for another three weeks or so.....until the hurricanes start.
Joined: Apr 05, 2005 Posts: 1620 Location: Springsteen Country (NJ)
Posted: Tue Jul 08, 2008 8:11 pm Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
Quote:
A Reuters preliminary poll shows analysts expect a 1.8-million-barrel decline in crude stocks, a rise of 200,000 barrels in gasoline supplies and an increase of 1.9 million barrels in distillates.
That's all I could find. Maybe the analysts are getting tired of getting beat by Some Guy on the InternetTM? _________________ Joe P. United Political Debate
"Only when the last tree is cut; only when the last river is polluted; only when the last fish is caught; only then will they realize that you cannot eat money." - Cree Indian Proverb
Joined: Oct 23, 2004 Posts: 5501 Location: New Jersey
Posted: Tue Jul 08, 2008 8:42 pm Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
Is it just me or do the 'analysts' (excluding Platts) seem to have the same forecast every week for the last month? Maybe they just told their assistants while they are away on vacation to just use some guy on the internet's prediction - or the one from last week.
Anyway I may not be able to check in for a day or so, and I'll miss the 'fun', but the real fun won't start for two weeks when the first report on a mid-July fall in crude imports shows up. _________________ It's already over, now it's just a matter of adjusting.
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Looking at the big picture is what you do into peak oil of course. Charts detailing refinery inputs/outages, ships in transit, inventories, quotas. Would be the bee's knees, man! 
