Review of EIA Weekly Report for 7-20-2022

Last week I posited the notion of demand destruction. Not quite so sure about it happening after this week's numbers. While down -2.19% from year ago levels, quite a jump (7.1%) from last week's number. Information is from the EIA Weekly Report

I would suggest the jury is still out on demand destruction. The gasoline inventory did jump by 3.5MB, while crude fell -455KB and distillates down -1.3MB. Spot market for gasoline is suggesting another 35¢ per gallon fall... from current average of $4.467. 

Exports of Crude and Petroleum Products outpaced imports to the tune of 4.6MB to reach a disparity since March of 129,266,000 barrels. Gasoline slid to 17,087,000 barrels as it may be that we are finally returning to a more normal seasonal flows. Typically imported gasoline outpaces exported from late December until mid summer, and then reverts to exports being more than imports.

The past few years, with understanding covid messed up 2020...

The stronger dollar is also playing a role in bringing down WTI Crude prices. By way of comparison, if the dollar was at same level as end of July 2021, the price would be $119.14, rather than the current $102.28. 

Another example would the impact on U.K. pricing of Brent...

This helps explain some of the fall in U.S. pump prices, versus U.K., which is not seeing much of a decline. This might seem beneficial to the U.S. consumer, but a word of caution... the dollar has been know to fall quite significantly at times. 

2008 would be a reminder, when we in the U.S. were talking about our high gasoline prices and trying to compare the high prices in the U.K. and the EU, by using the exchange rate at that time. The dollar was at its weakest since the early 70s... by quite a bit.

As an exercise, the U.K is currently at £1.88 per liter, at £88.90 per barrel of crude. We are at $102.28 and pump price average is $4.467. IF the dollar was at April 2008 levels, the numbers for the U.K. would stay the same in THEIR currency. However, the WTI crude would be at $154 and pump prices would be near $5.50 national. We in the U.S. would attempt to make ourselves feel better, by using that weak dollar to convert the £1.88 per liter, the Brits are actually paying and come up with something like $10 per gallon. 

In any case, the dollar rises and then it falls. Don't expect anything permanent and don't strut with glee over a strong dollar. Just understand that rise and fall does impact any global commodity.

On to the Natural Gas futures, and yes in dollars, as it makes it easier for me to understand. 

Even with the conversion, I cannot make sense of what appears to be a train wreck in the works. Granted the UK gets about 40% of its Natural Gas for the North Sea, and that pricing is probably mixed with the spot market, prior to end user... But those future would seem to suggest a much higher price on the "mixed" result to consumer. 

I got enough to worry about here, although our Natural Gas stocks are rebounding, but anything near a midpoint of 5 year average. While crude, gasoline, etc. were distorted by covid, not so much for Natural Gas.

I guess the bottom line is whether we are starting to see demand destruction in the crude/gasoline side of the equation and then if that destruction is due to a slower economic outlook or simply high prices? 

Review of EIA Weekly Report for 7-13-2022

 

Is demand destruction taking place in the gasoline market? The weekly EIA report does seem to suggest it. A whopping jump in gasoline inventory from last week (+5.8MB), although not at last year's level. The consumption numbers would lead me to believe that someone may have stubbed their toe, when doing the math. Highly unlikely, so consumption dropped off considerably.

Crude inventories jumped 3.3MB and distillates up 2.7MB. Across those 3 we get 11.8MB of products. 

Oh wait, I forgot the imports/exports. We had been exporting roughly 1MB per day more than importing of all products. This week indicated we imported slightly more than exports. Since March, we have exported 124,597,000 barrels of Crude and Petroleum products, than we have imported. 

Gasoline, on the other hand... continues to exported more than imported. 17,500,000 barrels more since March.

It still puzzles me, as this report is for week ending July the 8th, which included the July 4th holiday. Apparently, most people stayed home at shot off fireworks. It seemed that way in my neighborhood and lasts for days on end. Seriously, July the 12th and still lighting them up. 

In any case, the gasoline pump prices are on the decline, although not falling as fast as they rose. Still can see gasoline falling to $4.10 regular for the national average. Probably won't get there this month, but in August... possibly. Of course, it could all change very quickly. 

I should mention the importance of the strong dollar. In an alternate universe, where the dollar was stable compared to last year, the price of WTI crude would be in the $115 range and not the current $96. Hooray for the strong dollar... until it begins to weaken, which it will. It's just when.

On to the Natural Gas futures...

I have no idea where Europe and the U.K. stands on their natural gas supplies, but the pricing indicates a lot of pain going forward. I can only think of the USA status and hope for the best.

It seems a long time ago, but once there was a saying... if the U.S. sneezes, the rest of the world catches cold. Times have changed and I suspect... if Europe sneezes, the rest of the world will catch a cold. Maybe not that extreme, but if Germany is E.U.'s engine and their exports have fallen dramatically, even with a weak Euro... then something is terribly amiss, in my humble opinion. 

Review of EIA Weekly Report for 7-07-2022

 The EIA.GOV released their weekly report.

Here are some interesting tidbits... Our exports of Crude and Petroleum Products since March, stands at 124,758,000  million barrels more than our imports, which up near 5 million barrels from last week's report. Gasoline exports during the same period now stands at 16,625,000 million barrels more than our imports and up about 400K from last week. 

There is some semblance of relief at the pump, as current conditions indicate the national average drifting lower another 50¢ to around $4.25. You would think they might be lower, with demand decreasing, but imports still rule the day. If and when Europe settles down, expect these high prices to continue. But hooray, we can cheer for $4.25 at the pump, like it is some sort of consumer victory.

As certain politicians are already cheering the SPR release as working. It kept the crude prices somewhat at bay, but really did nothing for gasoline prices in the USA. You simply cannot export gasoline like we have the past 4 months and expect anything different.

Now on to natural gas (data from yesterday's close)...

I cannot help but notice the problems with futures, concerning U.K. and Europe in general. I recognize that U.K and Europe are outside my area of concern, but we talk about recession in the USA and what we are doing or not doing (about it), when we might consider a recession in U.K. and Europe, despite what they are doing or not doing. 

I wouldn't count out a NG shortage this winter in Europe. It would serve you know who quite well, as it would divide NATO. You know who might get blamed for a cutoff, but the root blame would fall elsewhere and by elsewhere... you know where!

On the bright side, the gasoline prices in the U.S. should continue to fall, as no hurricanes or "other" storms appear on the horizon. Even U.S. natural gas has somewhat stabilized, due to Freeport shutdown. 

Amazingly, government regulators have stepped in to embark on strenuous safety oversight... which will likely delay Freeport's timetable for restart and full operation of LNG exports. Remember... it is all about safety and has nothing to do with replenishing U.S. natural gas storage for the coming winter. 

Time to rest up for next week, which has a bunch of reports about June. Not sure what to expect.

Review of EIA Weekly Report for 6-29-2022

 

The EIA.gov has released the latest weekly report. 

Here are some interesting tidbits... Our exports of Crude and Petroleum Products since March, is 120,789,000  million barrels more than our imports. Gasoline exports during the same period now stands at 16,135,000 million barrels more than our imports. And you wonder why.

There is some semblance of relief at the pump, as current conditions indicate the national average drifting lower another 18¢ to around $4.68. You would think they might be lower, with demand decreasing, but imports still rule the day. If and when Europe settles down, expect these high prices to continue.

As for Natural Gas...

The outlook seems positive for moderation in natural gas pricing in the United States, but the picture is somewhat distorted by Freeport problems. I would still expect the futures price to jump up from $6.95, as Freeport resolves problems toward the end of the year. 

As to why the UK has diverged from the Dutch TTF... I have no idea, nor am I that interested. 

That's it for now!

Even A Broken Clock is Right Twice a Day!!

In this digital age, there will be many that do not understand a reference from way back in the age of analog clocks. But on to the meat of the matter, or where’s the beef?

After months of American citizens complaining about inflation, certain politicians have determined it is a problem and are focused upon the problem. We should also understand the “rest” of the world is also experiencing inflation.

Except there was rarely a peep, until the “rest” of the world caught up with the U.S.A.

Here is a nice graph with annual inflation rates since August 2021. (Click on Picture for larger view).

Eurostat is the source for the EU, France, Germany, as well as the harmonized inflation rate of the U.S. Oddly the U.S. is not in the EU and is tracked, yet U.K. no longer appears anywhere. Someone is taking Brexit very seriously, imo. The U.K. is represented by its own Office of National Statistics, which has both HCIP and CPI. Then Canada data is taken from Statistics Canada. (I estimated the Eurostat numbers for the U.S. at 9.1%, but put 8.8% on this chart/graph to be safe on the low side).

Here is a chart as well...

There does seem to be inflation in these countries, but they are just now joining the inflation party, we have been experiencing for several months. As they say… numbers don’t lie, but politicians do. In this case, our politicians may not be lying, but have put off telling the truth until it could be spun as impacting a lot of countries. 

Clearly, we can see the impact of the natural gas pricing in the EU and UK, as well as the impact of the Ukraine invasion, for all including Canada. The U.S. can certainly join in the chorus blaming Putin, but what about the earlier periods, when both the EU and the UK were experiencing less inflation than the United States?

Why wasn’t inflation an issue then? Did our politicians need to wait for someone else to blame and then proclaim it's not my fault, everyone is having high inflation?

Hey, it will probably work... given the short attention span of most Americans. 

Review of EIA Weekly Report for 6-15-2022

 

The EIA has released this week's report. 

Petroleum product movement from the Gulf Coast to the East Coast remains robust while exports reach record highs

That's what it says and yes, those exports keeps adding up.  102,309,000 barrels of crude and petroleum exports ABOVE what has been imported since first of March. Oh and 14,091,000 barrels of gasoline have been exported in that period, ABOVE imports.

I keep hearing how someone is threatening the refiners to do more. Do what... export? I really can't believe our dear leaders are that dumb, BUT... they think we are and can be easily misled. So in addition to the current heatwave baking the country, we must endure more hot air from D.C. 

Of course, it would be easy to see the futures market for gasoline was heading down sharply by as much as 25¢, then criticize refiners, at which point someone could then turn around and take credit... when gasoline prices drop at the pump. Just wait for it. Of course, it will serve as some kind of proof of skullduggery, the next time prices jump back up. 

Frankly, an angry electorate cannot think rationally and it is easy to trot out the usual bogeymen to deflect blame. 

The problems with Freeport has really rocked the LNG market...

Dutch is up 50% and the UK is nearly double last week. Of course, problems with Nord Stream and also the Norwegian pipeline is wreaking havoc.

That's their problem, which actually might provide some relief to U.S. Consumers as the natural gas slated for LNG export will stay at home... for awhile.

It really cannot hurt... or even over saturate our storage.

I think this is enough for awhile, as I am starting to get tired of the less than positive news. 

Review of EIA Weekly Report for 6-8-2022

 Gasoline, Diesel and Crude Oil stocks are still well below seasonal average.

Much is being made about those inventories climbing since last week, except gasoline. It should be noted that imports remain similar to previous weeks, but exports fell 1.5 ~2.0 million barrels per day, compared to past week's numbers.

Not sure this portends to a capping of crude and petroleum products pricing. Consider the imports of gasoline actually exceeded the exports of gasoline for the first time in a few weeks. Consumption of gasoline is still slightly below last year's pace... yet inventory fell by about 600K barrels.

The AAA has the national average of regular gasoline at $4.955 per gallon. It should break that $5 level over the next few days, according to the futures market.

Here's a look at where we (EU, UK, US) were, where we are, and what the futures market indicates for natural gas. At some point that high price of natural gas will make its way to the consumer, via electrical generation, manufacturing with high NatGas inputs as well as those using natural gas in their homes.

I keep hearing that inflation might be at peak, but that doesn't necessarily mean it is subsiding. 

Oh, aren't I a bundle of optimism!

Update: This afternoon, an explosion at a Freeport LNG has halted the terminal for 3 weeks, according to reports. NatGas prices plunged on Henry Hub, as this will slowdown NatGas exports. EU and UK markets were closed, so should watch direction tomorrow.

Review of EIA Weekly Report for 6-2-2022

Yes, gasoline prices continue to rise, as inventories are below seasonal 5 year averages... as are distillates and crude.

Refineries are working at normal or above, with gasoline and distillate consumption down and crude consumption up. Yet the prices for gasoline and diesel are going up... oh yes exports.

There is really no global slowdown in demand, although U.S. usage indicates some demand destruction. Those that import a lot of energy are trying to build up inventories, unless you know what were to happen. On the other hand, the U.S. can absorb some of that excess demand, depending on how much the consumer can handle in price increases. Yes, I do believe $5 national average on gasoline is just around the corner... as in just days.

Beginning in March, the U.S. began exporting more than importing and the exports have been large enough to state the U.S. is a net exporter since Mid October of 2021. Wrap your head around that fact.

Now for LNG... We are exporting at capacity and adding processing capacity. This is impacting Natural Gas prices in the U.S., as well as prices in Europe.

As can be seen, the UK v Dutch pricing has diverged, due to UK capacity for processing LNG back to gas. UK appears to be capping off inventories and shipping excess to mainland Europe.

In the U.S., we can expect natural gas prices to rise, as further processing capacity for LNG is brought on line. None of this bodes well for U.S. inflation, but everything else is going up, so why not. 

As for good news, the anticipated soon to be named T.S. Alex, appears to be barely a T.S. and will impact southern Florida. Maybe not good news for southern Florida, but stays away from the very sensitive gulf coast refineries. I hope that lasts, as it would be a game changer, in my opinion... and not a good one.

I really do wish there was some good news for the consumer. Just remember, this is all transitory [sarc].