Energy Investing - EIA weekly report: another slightly bullish, another progress - Energy Investing - InvestorVillage
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Msg  289406 of 290783  at  9/16/2020 6:23:23 PM  by

romm

The following message was updated on 9/16/2020 7:21:46 PM.

EIA weekly report: another slightly bullish, another progress

I'm on vacation this week, but looked at the report briefly and was mostly pleased with some progress. Not everything.....
I would assess it as slightly bullish.
 
Crude: draw 6.5 mm bbl including SPR 2.1 mm and commercial 4.4 mm bbl - reversed last week 1.7 mm bbl build.
Cushing:  small 0.1 mm bbl draw, again reversed last week build.
SPR leased space was materially unloaded, just 0.9 mm bbl remained, basically entire SPR lease was gone - bullish.
Commercial stockpile dropped to 496mm bbl. 
 
Gasoline: draw 0.4 mm bbl - 231.5 mm bbl - bullish
 
Distillate: build 3.5 mm bbl - to 179.3 mm bbl, just shy of 180 mm bbl at July 31 which was the highest since 1982  - bearish. 
 
Jet fuel: build 0.2 mm bbl
 
Total crude/gas/dist/jet: Draw 3.2 mm bbl - down from 3.8 mm bbl last week slightly bullish 
 
Crude Imports: fell by 0.416 mm bpd to 5.008 mm bbl, after rising 500K bpd last week - bullish
 
Crude exports: modeled lower by 349K bpd at 2.595 mm bpd
 
Adjustments: switched from positive 547K bpd to negative to 755K bpd  - large switch.
As a broken record - you should not make judgement about adjustments in isolation. it is a balancing factor. You should take adjustments in combination with modeled US production, exports and even imports to some extent. 
 
During production recovery after the Laura impact the entire production was in the equation. But some crude was not delivered to storage tanks due to flow time. That resulted in a portion of negative adjustments.
Modeled exports have added some. Even some imports that are used in equations based on customs paperwork may not be discharged entirely and didn't end in storage tanks during the reported time.
Adjustments may switch back to positive next week.
Regardless - adjustments do not affect storage figures. 
 
US production: modeled at 10.9 mm bpd, up 0.9 mm bpd - came back after Laura impact.
 
Refinery inputs: rose by 0.709 mm bpd to 13.788 mm bpd - came back after Laura impact slightly bullish
 
Gasoline/distillate imports/exports: no sequential material change, within normal ranges.
 
Bottom line:
I was expecting crude to fall to 492 mm bbl last week, but for some reasons last week has shown a build. But this week large draw helped to resume drainage.
We are at 496 mm bbl now, down from 540.7 mm bbl at peak on 6/19. ~45mm bbl were drained.
As the SPR lease is basically gone drainage should continue in coming weeks....yes even during maintenance season in my opinion.
 
Again as a reminder - somewhere in the about 440 mm bbl crude stocks range is a key threshold for $50-55 WTI IMHO.
56 mm bbl is a long road, but we are moving at a relatively fast pace. I continue to expect this year September-December consumption to continue recovering to close the gap with last year low demand season.
We have ended a high demand season in typical years  - consumption should decline from peak, but  it is rising from the low this year, with expectation to cross sometime in 2-3 months.
 
Total crude/product draw of 3.2 mm bpd - slightly bullish, even with the help of Laura. 
Sally is helping a bit more for the next report.
Gasoline draw was small, but important. We continue moving deeper into 5-year range, still higher by ~6 mm bbl than 5-year average line, but...the gap has closed from 30 mm bbl back in April, 80% glut has gone.
 
This year the Labor Day was delayed by several days so the reported period did include the Holiday. In typical years similar weeks large builds of products were reported....not this year, gasoline stocks were drawn.
 
But distillate stocks rose by large 3.5 mm bbl - this is the only negative in this report. I have no other explanations as continuation of extremely low demand from jet fuel kerosene which is similar to distillate.
Kerosene storage is limited, typically inventories are in a tight range. Refiners must produce certain volumes of distillate/kerosene at a ratio to gasoline.
Gas demand is recovering much faster than distillate and especially kerosene. So we are building distillate.
 
Refiners can switch to lower distillate production, but it is likely takes a bit more time as product volumes switch is high, they may need to switch crude feed stock to lighter crude. They produce based on cracks. 
Regardless distillate storage is very large, but inventories are at a very high level. I don't know how much storage is left.
 
As reported last week I don't expect seasonal builds this year at still much lower refinery inputs while consumption to rise towards average (not reaching still) in coming 2-3 months.
 
WTI jumped by $1.88 to settle at $40.16, back to above $40 - bullish.
I believe this was caused not by EIA report, but mostly due to several reasons -  OPEC+ meets for review this week, the Fed language to keep zirp until 2023 gave more confidence for demand recovery, and the slightly bullish EIA report
All above conclusions -from my assessment only. 
 
Best of luck,
romm
 
 
 
 
 
 
 


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289409 Re: EIA weekly report: another slightly bullish, another progress hipshot 0 9/16/2020 7:25:15 PM






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