Like the illusion of Wall Street, with its vast and powerful investment banks, now shuttered, China too is an illusion perpetuated by the Globalists that gave us the 15,000 mile Caesar salad, poisoned cat food and lead based paint on babies' pacifiers. Like the illusion that money would come from thin air to always push housing prices higher, China has spent a generation pursuing its illusion. Pursuing an unattainable dream to be like the West, while 6000 years of its carefully shepherded top soil blows into the sea.
Posted: Wed Aug 13, 2008 10:11 am Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
Quote:
Sum of Weekly Predictions
pup55 Analysts Actual
Unleaded 3.055 0.575 -5
Distillates 0.511 8.730 4.4
Crude -1.070 24.280 6.5
I have a lot of respect for Khebab, who used to post over here quite a bit when we were working on the logistic function and verhulst methods to do curve fitting.
I said in one of these other threads that if you are an accountant, and want all of these numbers to balance out every week, this report really drives you crazy, because it is full of estimates, statistical samplings, and that sort of thing, and in fact, a fudge factor is needed most of the time to get everything to balance out.
DP is more tuned into these revisions in the report than I am. I am down at the tree level, rather than at the forest level, trying to understand the week to week variability. But it is clear that the EIA has a way to adjust the data periodically to get everything to more or less balance out over time.
I keep the above little statistic, to see how we are doing. If you take the actual weekly changes in the inventories, and add them all up, you should end up with something that approaches the actual change in inventory that happened since then. Example: In the first week of January, the crude oil inventory was 289, and now it is about 296 or so, an increase of about 7. Somehow, some way, between January and now, there have to have been enough adjustments to accommodate the reality that the inventory has changed that much.
If you add up my predictions every week (and the pesky analysts) you see that the sum of my predictions has been -1 or so, and the sum of the analysts has been 24, so in the grand scheme of things, I feel pretty good that my weekly estimates, over time, will get to a number that is pretty close to what is happening in the real world. I am not doing quite as well in unleaded or distillates, but I am just some guy on the internet so I do not have to worry about it.
The point is, there is a lot of drift in these numbers, and the EIA obviously adjusts them on the fly without necessarily telling anybody, so this is one more reason you should not go out and panic over any of this stuff.
I said before that I think this is more of an engineering/process measurement document than it is an accounting document. It's useful to measure the trends, and important as an indicator of the overall health of the system, but to say that you should flip out because the inventory is 196 this week instead of 198 is probably not a good idea.
Posted: Wed Aug 13, 2008 10:51 am Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
DantesPeak said:
Quote:
Apparently ignored, but perhaps the most significant part of this week’s report is the continued drop in gasoline imports. Gasoline imports for all parts of the US, except the East Coast, have dropped to zero lately, and imports in the East are down sharply.
Imports weren’t what one would call stellar this week either. If these imports have become permanently reduced for some reason, and they are starting to look like they may be, we are going to be in some serious trouble soon.
Posted: Wed Aug 13, 2008 11:46 am Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
shortonoil wrote:
DantesPeak said:
Quote:
Apparently ignored, but perhaps the most significant part of this week’s report is the continued drop in gasoline imports. Gasoline imports for all parts of the US, except the East Coast, have dropped to zero lately, and imports in the East are down sharply.
Imports weren’t what one would call stellar this week either. If these imports have become permanently reduced for some reason, and they are starting to look like they may be, we are going to be in some serious trouble soon.
All I can say was this was the issue that I felt would hobble America.
I feel like we can and will get enough oil for our refineries but gasoline imports eventually will simply stop showing up one day.
Is today the day ?
I don't think so since this is happening in a down market I think the real drop will be seen when we see increasing oil prices and falling gasoline imports. This is not the situation we have yet. However we will see if oil prices rebound and start increasing but imports remain flat to dropping then we may have reached the point that world wide gasoline exports are finally falling.
However it does seems that the mysterious ability of the US to import vast quantities of dirt cheap gasoline at a whim is finally faltering.
Posted: Wed Aug 13, 2008 12:49 pm Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
Quote:
I thought gasoline demand was only down 2.4 percent at its most a few weeks back compared to a year ago? According to the inventory report, products supplied fell by 2.8 percent from last year, not 1.9 percent.
Quote:
Over the last four weeks, motor gasoline demand has averaged 9.4 million
barrels per day, down by 1.9 percent from the same period last year
The week of July 11th, the "products supplied" for unleaded was 9.344 mbpd, compared to 9.710 the week of July 13th, 2007, a difference of 3.9%, but the calculated demand, determined by the following formula:
was 10.440 last year, and 9.760 this year, for a decrease of 6.9%.
This week, the calculated demand was 10.600 versus 10.660 a year ago, so I am ready to say that demand has picked up a lot relative to about four weeks ago.
Posted: Wed Aug 13, 2008 2:41 pm Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
Ok, an opinion on the present course of the crude oil situation:
An important new fact that has been driving down the crude prices is a very strong selling pressure in the Dec 2009 to Dec 2012 CL contracts.
This started some 3 to 4 weeks ago, and is going on in strength.
This had never occurred before, and indeed marks the start of the use of long term futures contracts to sell very large quantities of future production.
The reasons for this can only be that some clueless bigwig from Mexico, or Saudi Arabia, or whatever, really believes that prices have made a top and will go down in the next few years.
My calculations, based on the present levels of trades vs. the historic traditional values, suggest a selling pressure (above the normal trading for those time frames) of some 15 Mb/d!
This is huge, and is happening at the same time that financial investors (the famous “non-commercial” market participants) are reducing their long positions (mostly involving shorter term contracts).
Those are the drivers for the very significant (and quite fast) price drop since the record $147, only a few weeks ago.
Now, the important questions are:
1. Who is selling those long term contracts?
2. How long will this go on (or: how many Mb is this seller interested in hedging)?
If this is being done by several producers (IOCs, Mexico, etc.), or by a very big producer like S. Arabia, this can go on for some more months, pushing the crude prices well below $100.
If it is more “localized” (lets say, almost only Mexico, like some rumours were defending some 3 weeks ago), this can finish any day now.
(Of course, some conspiration theorists will associate this pressure to drive down the crude prices to the upcoming elections. Personally, I don’t believe that is the case.)
My personal bet would be for this to go on for a few more weeks, driving the crude price to the region of $100.
If this selling pressure ends around those prices, and the balance between offer and demand evolve normally in this setting of an approaching Peak Oil, that should be a good opportunity to go long on crude again.
However, I believe the economic downturn of the world economies (or at least of the USA and Europe) and the relatively significant production increases predicted for 2008 and 2009 will mean that a very strong price increase (like the one of the first 6 months of 2008, i.e. some 50% in 6 months) will only repeat itself by 2010.
That is, of course, unless a significant (oil-wise) war is started before that.
So, we should have a year and a half (or something close to that) to prepare for more serious consequences of the Peak Oil.
And, even then, I don’t believe things will sour to fast, when (most probably by 2010) the real Peak Oil is reached.
Posted: Wed Aug 13, 2008 2:44 pm Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
pup55 wrote:
Quote:
I thought gasoline demand was only down 2.4 percent at its most a few weeks back compared to a year ago? According to the inventory report, products supplied fell by 2.8 percent from last year, not 1.9 percent.
Quote:
Over the last four weeks, motor gasoline demand has averaged 9.4 million
barrels per day, down by 1.9 percent from the same period last year
The week of July 11th, the "products supplied" for unleaded was 9.344 mbpd, compared to 9.710 the week of July 13th, 2007, a difference of 3.9%, but the calculated demand, determined by the following formula:
was 10.440 last year, and 9.760 this year, for a decrease of 6.9%.
This week, the calculated demand was 10.600 versus 10.660 a year ago, so I am ready to say that demand has picked up a lot relative to about four weeks ago.
That is what I was thinking.
Yes, the present gas prices already seem a lot nicer, for the average Joe...
Posted: Wed Aug 13, 2008 3:36 pm Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
r101958 wrote:
Is it possible that the U.S. Gov't is purchasing huge lots of futures at these prices to hedge against assumed future price increases?
No, the US gov. already has a very significant hedge: The Strategic Reserve.
And the pressure on the long term contracts is from sellers, not from buyers.
That is why in the last 4 weeks the price differential between Dec 08 and Dec 12 increased from $0 to $5…
Joined: Apr 06, 2006 Posts: 3626 Location: 3 miles NW of Champoeg, Republic of Cascadia
Posted: Wed Aug 13, 2008 10:51 pm Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
Fascinating analysis, Ming.
Here's a chart of US Petroleum Product Exports:
Definite trend upward in recent years - which Katrina rudely interrupted. Who is the benefit of our largess? I already noted exports to Mexico are up; also Chile, Gibraltar, Argentina, Canada. _________________ Cogito, ergo non satis bibivi
C'mon man, who're you gonna believe?
Joined: Apr 28, 2005 Posts: 3920 Location: West shore Lake Eire, MI, USA
Posted: Thu Aug 14, 2008 5:34 am Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
Forgive me for stating something that seems obvious and asking how big a factor it is. I am constantly hearig that profit margins for gasoline from USA refiners are break even at best and they are making all their profit on Diesel and other middle distillates. That being the case why woulf Europe ship Gasoline accross the ocean at a significant cost and then end up taking a loss upon delivery in the continental USA? The same would apply to Japan or other pacific bations that ship gasoline our direction while we ship diesel in their direction.
World wide, we are told, Diesel demand is exceeding production in many places driving the fuel cost up significantly. European refineries are already optimized for Diesel production, they still however produce to much Gasoline for local demand. If they can't ship it to North America at a profit then they will either store it till the price goes up, or they will find a local use for it that matches their over supply. It isn't as if they can't burn it in some alternative way to get the energy out of it if they choose not to store it for future export. The other factor is, if they start finding alternative uses for it how much will the export value have to go up to make them switch back to exporting?
So muy question for Pup and Ming and DantesPeak, how much of a factor is the gasoline price in North America to these falling imports? _________________ Always appeal to a man's enlightened self interest, you can trust him to look out for himself honestly, It's when you appeal to his Honor or the Common Good that he stops paying attention.
Posted: Thu Aug 14, 2008 5:58 am Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
Tanada wrote:
Forgive me for stating something that seems obvious and asking how big a factor it is. I am constantly hearig that profit margins for gasoline from USA refiners are break even at best and they are making all their profit on Diesel and other middle distillates. That being the case why woulf Europe ship Gasoline accross the ocean at a significant cost and then end up taking a loss upon delivery in the continental USA? The same would apply to Japan or other pacific bations that ship gasoline our direction while we ship diesel in their direction.
World wide, we are told, Diesel demand is exceeding production in many places driving the fuel cost up significantly. European refineries are already optimized for Diesel production, they still however produce to much Gasoline for local demand. If they can't ship it to North America at a profit then they will either store it till the price goes up, or they will find a local use for it that matches their over supply. It isn't as if they can't burn it in some alternative way to get the energy out of it if they choose not to store it for future export. The other factor is, if they start finding alternative uses for it how much will the export value have to go up to make them switch back to exporting?
So muy question for Pup and Ming and DantesPeak, how much of a factor is the gasoline price in North America to these falling imports?
I believe that the refining margins for gasoline will recover from now on, given that the stocks are finally below average for this time of the year, and that lower crude prices will help a recovery of demand both in the OECD and in many less affluent countries.
The refiners were able to turn the tide, by reducing production to very low rates during the last few months. That implied some pain, but was better than working at margins close to zero for a much longer period.
As for Europe, the demand for gasoline has been dropping quite fast (while demand for diesel has been rising very slowly).
So, the excess production of gasoline is increasing, in Europe.
I don’t think there can be other uses for excess gasoline production in Europe that can beat the economic value of exports to the US, even if they have to be done at a very low margin (that really tends to be negative after transport costs).
Also, storing gasoline in Europe, waiting for an eventual recovery of the margins, would not work out:
Gasoline does not store very well for the long term; the fast recovery of the gasoline margins was not assured; the storage facilities would not be available; and the immobilization of such (enormous) financial values would be crippling for the European refiners.
Posted: Thu Aug 14, 2008 6:35 am Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
Quote:
why woulf Europe ship Gasoline accross the ocean at a significant cost and then end up taking a loss upon delivery in the continental USA?
If you are BP, or one of the other big multinational oil companies, this might make sense. If your European plants are more cost-efficient than your US plants, you would rather run the gas in Europe and ship it if the increased efficiency offsets the shipping cost. Also if you have captive sources of crude oil in Europe, which you can tap into at reduced cost (such as the North Sea grades which are produced in wells that you own) you want to take advantage of your production capabilities where the raw material situation is the most favorable.
I think it only costs a few of cents to send that stuff over here via tanker, especially if you already own the tanker. Pretty easy to make that up if you can get your crude oil supply at a friendly price.
I single out BP because they are the most obvious. A lot of the unused US capacity belongs to them. Their giant plants in Whiting and Texas City have been at 1/2 or less capacity for the last couple of years. Part of this is that when they start up, they have a nasty habit of exploding. These are old Amoco plants, I think, and they have spent literally billions trying to bring them up to date.
The total US refinery capacity is defined by the EIA as 17.5 mbpd input. Last week, the refineries input about 15 mbpd. These two refineries alone account for almost 1 mbpd at full capacity, and they have been running at half or less for a couple of years. So in conservative, rough figures, .5 out of the 2.5 mbpd spare refinery capacity in the US belongs to BP. With a little effort, we can track down the rest of it in our spare time at some point.
Also, if you look at it from the point of view of somebody like Tesoro, your decision to run the plant depends on whether or not you are the low cost supplier. If BP can produce gas in one of their giant, efficient plants in Europe more cheaply than you can in your old, dilapidated plant in the US, especially if you need to buy $140 crude oil, then they will get the business and you will not. According to their last 10Q, Tesoro is running at 80-85% of capacity, and I think Valero is actually lower than that right now, because they are doing some "planned maintenance". Their plants are in even worse shape, and have even more of a tendency to explode if they are not careful. When this was a problem in 2006 and 2007, these guys wer e the poster children for "fire safety", if you know what I mean.
Anyway, it is not all that unreasonable for gas to be brought from anyplace to anyplace else if it is more efficient to produce and import.
Joined: Oct 15, 2004 Posts: 2257 Location: Arkansas
Posted: Thu Aug 14, 2008 6:36 am Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
My suspiscion on "demand destruction" is has more to do with the economic downturn/housing bust than the price of oil. Here's why: the housing bust wiped out homebuilders. That means, there's a lot of trucks off the road that used to carry all the wood, windows, everything from manufacturers, to retailers, to the home. It means a lot of construction guys out of work who are no longer driving to jobsites, less people out driving around looking at homes, whether those people by potential buyers or realtors. I know a lot of out of work construction guys and small businesses right now. My WAG is this makes up a majority of the demand destruction.
Joined: Oct 23, 2004 Posts: 5928 Location: New Jersey
Posted: Sun Aug 17, 2008 6:16 pm Post subject: Re: Weekly US Petroleum and NG Supply Reports (Current)
I’m back today from a visit to Canada (with $5.00 US + gasoline) and a quick trip through the part of northwest Pennsylvania where oil was first commercially extracted in the US. Curiously, most (but not all) traces of the start of the petroleum age have since disappeared from PA.
Anyway, I haven’t quite figured out the puzzle as to why more gasoline supplies have not been dumped in the US from Europe, which to the Europeans is more a by-product of more valuable distillates. As I said before I think the answer is increased demand for European gasoline in Africa and the Middle East, and also some refinery downtime. To a lesser extent, increased gasoline imports in Mexico and Canada are also diverting some imports away from the US. While I am not exactly predicting a continued fall off in imports, I don’t think we will see normal imports of gasoline for the rest of 2008 (that is barring a crisis, such as a hurricane, where IEA stocks are sent to the US).
The continued decline in US gasoline imports may be the most under-reported energy story of 2008. Meanwhile the recent fall in energy prices may reverse much of the ‘demand destruction’ we have seen so far in 2008 for gasoline. To repeat, I expect the issue of gasoline supplies to get a lot more attention around the Labor Day holiday - as available supplies approach MOLs (minimum operating levels) _________________ It's already over, now it's just a matter of adjusting.
We have pretty much figured out how to calculate the refinery inputs and production, based on the percent utilization and the current ratio of unleaded to distillates, so all we really have to do is try to guess the utilization. It had been running 87% until last week, when it went all the way down to under 86% because of the outages caused by Edouard. A complicating factor is the fact that usually, this time of year, the refineries scale back from their summertime production schedules, except that this year, there were no "summertime" schedules, because of the supposed low demand.
So, if you say that they came back a little last week, but not up to the full 87 like it was, maybe 86.5% utilization, 9 or so for unleaded, 4.5 for the distillates, and we will be pretty close.
On the unleaded demand, we have discussed above at length the fact that because of the slightlier friendlier pricing, people are firing up the family truckster and taking one last week of vacation after all this year. Last couple of years, the second week in August is actually the maximum in demand, so it would not surprise me at all to see the products supplied be up aroud 9.55 for unleaded, and the "balance" calculation be up around 10.6. So we should see another drawdown in unleaded like we have been.
In crude oil, of course it is all about imports, isn't it? We know last week there was probably .3 mbpd lower imports than had been previous, because of the storm, and you have to figure that they made up for it this week, so I am going to estimate the inflated amount of 10.4 mbpd imported crude oil, and this will cause an "unexpected build in inventory" except it is not unexpected for everybody.
So probably another soft week, once the storm gets out of the shipping lanes, and we will continue to move into fall and harvest season. There ought to be a lot of diesel demand this year, what with all of the extra grain production that is anticipated.
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