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DOE Insights January 16, 2019

Crude Oil

Crude Oil Stocks Draw, Greater than Expectations

The DOE reported Total Crude Oil Inventories decreased by 2.7 million barrels to 437.1 million barrels for the week ending January 11, 2019, while expectations average was for a 1.3 million barrel decrease.
Overall hydrocarbon supplies increased by 5.0 million barrels to 1,260 million barrels.

Crude Oil Production increased by 200,000 barrels per day to 11.9 million barrels per day, a new record.

Total Crude Imports were down 300,000 barrels per day to 7.5 million barrels per day.

Total Refinery Crude Runs were down 300,000 barrels per day to 17.22 million barrels per day.

While the DOE report could be considered bullish for crude oil prices, as the stocks draw was greater than expected, the new record high of crude oil production at 11.9 million barrels per day probably weighed on oil prices. Prices traded in a relatively narrow range and ended the trading day slightly up. 

According to the latest DOE Short Term Energy Outlook (STEO) crude production is expected to increase to more than 12 million barrels per day this year and the US will become a net crude exporter by late 2020.   Without continuing output cuts by OPEC and Russia US exports will put downward pressure on prices.

We would be happy to discuss this commentary with you and provide additional market insights. Feel free to call us at 312-348-7518 or email us at joel.fingerman@fundamentalanalytics.com. 

Gasoline

Gasoline Stocks Build, Much Greater than Expectations

Total MotorGasoline Inventories increased by 7.5 million barrels to 255.6 million barrels for the week ending January 11, 2019.  The expectations average was for a 2.8 million barrel increase.

Implied Demand was down by 450,000 barrels per day to 8.89 million barrels per day. 

Gasoline Production was up by 190,000 barrels per day to 9.58 million barrels per day.

The DOE report was again very bearish to gasoline prices.  And gasoline prices did drop for 30 minutes after the report release but then rallied for the rest of the day, ending basically unchanged.

Distillates

Distillates Stocks Build, Greater than Expectations.

Total Distillates Stocks increased by 3.0 million barrels to 143.0 million barrels for the week ending January 11, 2019, while expectations average was for a 1.6 million barrel build.

Total Distillates Production was down 150,000 barrels per day to 5.41 million barrels per day.

Total Distillates Implied Demand was up by 1.06 million barrels per day to 5.37 million barrels per day.

The DOE report was again bearish to distillates prices. And like gasoline prices, heating oil prices did drop for 30 minutes after the report release but then rallied for the rest of the day, ending up about 2 cents.

For further information contact joel.fingerman@fundamentalanalytics.com

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