Review of EIA Weekly Report for August 10th 2022

The EIA released the latest weekly report, and I am still not seeing demand destruction. Yes, from this time last year, but it is hard to make a call on demand destruction, when the days supply of gasoline falls from 26.2 last week, to 24.9 for this week's report. 

Yes, Gasoline Inventories fell nearly 5.0M BBLS from last week's report. Might the imports/exports of gasoline have something to do with that. We did export 3.2M BBLS more than import... last week. I am not sure where all those numbers citing demand destruction are coming from. 

The market for gasoline has shot up 11¢, as of this writing. Not the only one... NOT seeing demand destruction. 

Yes, I could be looking at all this wrong, but it would take some proof, that I haven't seen

On to the Natural Gas stuff...

I have about give up on trying to understand the European (including U.K.) situation. I still track it and read about it, but figure there is enough to worry about on this side of the Atlantic. Although... whether or not we in the U.S. are in a recession or about to be, it is becoming very clear that the other side of the Atlantic will almost definitely be. Does it aggravate our situation?

While the U.S. natural gas prices are back on the rise, I would expect a bit of a jump going forward, depending on whether the Freeport facility gets up to full run. It has stated early October start-up. Plus, Calcasieu Pass has been granted approval for blocks 5 and 6, whatever that means.

Meanwhile, here's hoping for a mild winter...

We are staying ahead of the curve, so that is good. 

Review of EIA Weekly Report for August 3rd 2022

I am still looking for the demand destruction in gasoline... and just not seeing it. There was likely a pull back in June and early July, but demand seems to be on a plateau. Crude Inventory is up +4.4M BBLs, distillates down -2.4M BBLs and gasoline up slightly at 163K barrels.

The U.S. exported 3.8M BBLs more Crude and Petroleum products, than imported, with the tally from March 1st at 151.1M BBLs. Gasoline exports outweighed imports by 1.6M BBLs last week and that tally now stands at 19.9M BBLs since March 1st.

At this point in time, the futures market suggests pump prices will continue to fall and should go below the $4 mark, by mid August and then maybe another 15¢ or so by end of month. A word of caution as we are heading into peak hurricane season. Let's keep our fingers crossed. 

The natural gas futures aren't signaling any big changes...

I have somewhat delved into U.K. futures and the current price is suggestive of a 49% rise in bill to £2,972 annual. I have been reading about another potential rise for 1st of the year and it would tack on another £600 annual, based on the December futures price. I don't think I have any publicly appropriate adjectives for any of those rises. 

Nearer to home, the big question is our natural gas.

A year ago, we were at the top of the 5 year maximum and now we are near the minimum. Not sure how to feel about that. I do not directly use natural gas, but I do use electric generated by natural gas, products that were made in factories that use natural gas, etc. 

I'll just have to monitor my utility bills, my grocery bills, other purchases, etc. I think there is a word for when things go up in price... is it transitory? No wait it is inflation! Crap, I thought I left that in the rear view mirror... some 40 years ago. 

Review of EIA Weekly Report for 7-27-2022

Another glorious week has passed and the Energy Information Administration has released their weekly report. Crude inventories are down 4.5M bbls from last week and gasoline is down 3.3M bbls. 

Gasoline consumption continues to fall, although the fall in pump prices may slow to a stop. We exported a walloping 1.183M bbls more than we imported. Crude and petroleum products also rose on the export side, compared to imports... by 18M bbls. Since March we have exported more than imported of gasoline... 18.2M bbls; crude and petroleum products...147M bbls. 

I am still not sure that demand destruction is taking place. The strong dollar did make U.S. gasoline for export a bit more pricey, but apparently the need has overcome the price, as exports reversed course. It may have been simply timing of ships, etc. In any case, the U.S. futures market for gasoline is on the rise and is approaching where the national average currently sits. (That's factoring in the typical margin between futures and pump.) Also, the dollar has weakened a bit the past few days, as well.

On to the natural gas stuff...

In previous posts, I had mentioned U.K. and EU, but today... should focus more on things closer to home. I don't use Natural Gas, although probably some or most of my electricity comes from Natural gas powered power plants. Also, I probably use materials, foods, etc. that may have varying amounts of natural gas power, as part of the production and/or processing.

Which is a round about way of saying... I don't have a clue. I would suggest the price of natural gas may be in the neighborhood of 35% of a natural gas bill. Obviously, large users probably get a bit of discount on the remaining 65%. The average residential customer could expect a $7 rise in their bill for every dollar the overall price rises. 

So there is likely a price hike coming your way... and you might not like it, nor the size of it. If and when that liquefaction facility comes fully back on line... the N/G price might well top $10. I guess I am saying that less than $4@MBTU bills of last winter should not be thrown away. You might need to burn them this winter to stay warm.

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?