U.S. Crude Production Eased In December

Robert Boslego - INO.com Contributor - Energies - U.S. Crude Production


The Energy Information Administration (EIA) reported that December U.S. crude production averaged 9.949 million barrels per day (mmbd) in December, off 108,000 b/d from November. The primary cause of the decline was unexpected seasonal factors, which caused production in the Gulf of Mexico (GOM) to drop by 131,000 b/d and output in North Dakota to dip by 15,000 b/d. The EIA had expected a 30,000 b/d dip in GOM production. Meanwhile, production in Texas and New Mexico reached new historically-high levels of 3.933 mmbd and 556,000 b/d, rising 36,000 b/d and 26,000 b/d, respectively.

It is worth noting that EIA also revised its November estimate up by 19,000 b/d to 10.057 mmbd. As a result, November 2017 broke the November 1970 production record of 10.044 mmbd.

Even with December’s seasonal drop, the EIA-914 Petroleum Supply Monthly (PSM) figure was still 193,000 b/d higher than the week data reported by EIA in the Weekly Petroleum Supply Report (WPSR), averaged for the month, of 9.756 mmbd. EIA’s model failed to forecast the surge in production which began in August and totaled 846,000 b/d through November. Continue reading "U.S. Crude Production Eased In December"

Oil Price 'Risk Premium' to Play Out Over 4Q17

Robert Boslego - INO.com Contributor - Energies


The Energy Information Administration (EIA), International Energy Agency (IEA) and Organization of Petroleum Exporting Countries (OPEC) each released their monthly global oil assessments and projections. They agree that the global oil glut will not be whittled down to anywhere near OPEC’s target of the 5-year OECD average by year-end. Their numbers also imply that global inventories in 1Q18 will build.

The EIA numbers indicate that stocks will be 130 million above the average, just slightly below September’s estimate at end-March.

Global Oil Inventory

OPEC does not project its own production, and it, therefore, does not produce future global inventory levels. But assuming September OPEC production for 4Q17 and 1Q18, stocks will drop by 51 million barrels in 4Q17 and rise by 74 million in 1Q18, a net gain in inventories from September. Continue reading "Oil Price 'Risk Premium' to Play Out Over 4Q17"

Why Oil Is At $50 With An Inventory Glut

Robert Boslego - INO.com Contributor - Energies


According to the Energy Information Administration (EIA), world oil inventories are about 425 million barrels higher than their “normal” levels. In the U.S., inventories stand a 1.368 billion barrels, a few million off their recent peak. Given that supply glut, how could oil futures prices be at $50 after falling below $30?

U.S. Crude and Product Stocks

One answer is that the futures market assesses future developments. As discussed below, the peak of the glut appears behind us and the U.S. oil market is tightening, as rising demand narrows the supply-demand gap. This is best observed by looking at the trends in inventory storage changes for both petroleum products and crude oil. Continue reading "Why Oil Is At $50 With An Inventory Glut"