Roebear, as promised, a more detailed analyses of the DOE numbers.
As most folks know who follow this thread know, consumers do not actually use crude oil, they use refined products. To whit, the pricing of crude based on the availability of crude alone can only be seen as a very short term phenomenon. Crude stocks relative to pricing MUST be viewed in the context of the availability of and near term estimates of supply/demand of product. To that end, I think it prudent to take a look at same.
What follows are some comments made by EIA officials during Congressional testimony on gasoline availability, followed statements made in their April special report on the summer gasoline outlook (the complete report is provided via a url). Lastly the charts included conclusively (to me anyway) demonstrate the current imbalance between crude availability and product availability.
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Congressional Testimony in March:
But even after we get through the spring, we may see price volatility this summer as well. EIA expects to see high refinery utilization rates on top of precariously low gasoline stocks. This combination leaves little room for the unexpected. Unplanned refinery outages, import delays or demand increases can create price surges above levels shown in the EIA forecast. EIA is currently projecting regular gasoline prices to peak at $1.56 per gallon this summer. Price volatility can result in a 20-25 cent per gallon price surge such as those seen in California historically, which brings the price to $1.80 for a time. Although these prices are far from record highs in real terms, they have risen rapidly over a short period of time, attracting a great deal of consumer attention.
The EIA April report on the summer gasoline outlook:
Refineries will be expected to meet not only the 130,000 barrels-per-day increase in demand but also to accommodate the reduced availability from stocks and net imports.
Total domestic output (refinery and field production) is projected to average 8.40 million barrels per day during the summer months, up almost 190,000 barrels per day from last summer. Refineries will be expected to meet not only the 130,000 barrels-per-day increase in demand but also to accommodate the reduced availability from stocks and net imports. As a result, refinery utilization rates for the summer are projected to average 96.8 percent, up from 94.3 percent last summer.
Demand is projected to average 8.72 million barrels per day, up 130,000 barrels per day, or 1.5 percent, from last summer. Even though that represents a new summer season recor...
eia.doe.gov
Stocks charts:
Crude and Aggregates:
eia.doe.gov
Gasoline:
eia.doe.gov
Distillates:
eia.doe.gov
Imports:
eia.doe.gov
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Obsevations and conclusions:
1. The rate of change slope for crude stocks is steep but still BELOW the five year lower seasonal range.
2. The slope of aggregates is much less steep and FAR below the five year seasonal range.
3. #'s 1 and 2 can be explained in part by the charts of gasoline, distillate, and importation charts that follow.
4. The inescapable conclusion is that refinery runs are not nearly at the levels needed to meet EIA's estimates for production.
5. The seasonal decline in imports of gasoline will be exascerbated by sharply declining imports from Venezuela.
6. Gasoline stocks in the midwest are declining to alarming levels (sorry Slider and Razorbak ;o}).
8. Distillate stocks have been declining for a full three months when the should have been leveling out. Not good.
9. Summer driving season is almost upon us with 0 build in gasoline stocks. The EIA estimates a record year for gasoline demand.
10. Total OECD demand for product accelerates rapidly starting May 1:
eia.doe.gov
Sooooo the questions become: Is OPEC pumping too much crude and blowing it? OR Is OPEC supplying desperately needed crude that is not being handled by refining infrasctructure?
How will the markets frame the question? We will know in the fullness of time, but one thing IS clear, refineries need to start making product in a BIG BIG way, and they need to start yesterday. |
