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”U.S”. Economic Activity Charts, Issued December 6, 2021, Federal Reserve Bank of Dallas: https://www.dallasfed.org/-/media/Documents/research/econdata/uscharts.pdf
”U.S.” Weekly Economic Index (WEI) The WEI is an index of ten indicators of real economic activity, scaled to align with the four-quarter GDP growth rate. The WEI represents the common component of ten daily and weekly series covering consumer behavior, the labor market, and production, including:
* Initial unemployment insurance claims
* Continuing unemployment insurance claims
* Federal taxes withheld
* Redbook same-store sales
* Rasmussen Consumer Index
* The American Staffing Association Staffing Index
* Raw steel production
* U.S. railroad traffic
* U.S. fuel sales to end users
* U.S. electricity output
https://www.newyorkfed.org/research/policy/weekly-economic-index#/interactive
Commentary:
The increase in the WEI for the week of December 4 (relative to the second revision for the week of November 27) is due to an increase in consumer confidence, which more than offset decreases in retail sales and steel production. Because the WEI measures changes over a 52-week period, the large positive reading also reflects the sharp deterioration in economic conditions during the same time last year. December 7th Preliminary Estimate: 7.68
Mrs. Smith
The 12/3/2021 US Oil and Gas Rig Count remained unchanged from the previous week and is currently reflecting 569 rigs. The GOM Offshore Rig Count decreased by 2 rigs and is currently showing 13 rigs.
http://www.dnr.louisiana.gov/assets/TAD/data/drill_weekly/ogj_rig_count.pdf
http://www.dnr.louisiana.gov/assets/TAD/data/drill_weekly/WeeklyRigCountUpdate.pdf
Mrs. Smith
December 2021 EIA Short-term Energy Outlook STEO Forecast: Release Date: December 7, 2021 | Forecast Completed: December 2, 2021 | Next Release Date: January 11, 2021
FULL REPORT WITH EXCELLENT GRAPHS: https://www.eia.gov/outlooks/steo/pdf/steo_full.pdf
ALL FIGURES AND DATA: https://www.eia.gov/outlooks/steo/data.php?type=figures
WTI $72.05/bbl up 3.68% January Contract 17:55 pm CDT 07/12/2021: https://oilprice.com/oil-price-charts/#WTI-Crude
FORECAST HIGHLIGHTS:
Global liquid fuels
The December Short-Term Energy Outlook (STEO) remains subject to heightened levels of uncertainty related to the ongoing recovery from the COVID-19 pandemic. Notably, the emergence of the SARS-CoV-2 Omicron variant raises uncertainty about the level of energy consumption throughout the world compared with last month’s forecast. U.S. gross domestic product (GDP) declined by 3.4% in 2020 from 2019 levels. This STEO assumes U.S. GDP will grow by 5.5% in 2021 and by 4.4% in 2022. The U.S. macroeconomic assumptions in this outlook are based on forecasts by IHS Markit. The U.S. macroeconomic forecast and the global macroeconomic forecast from Oxford Economics were completed in mid-November before the Omicron variant was identified. In addition to uncertainty about macroeconomic conditions, winter weather along with the evolving effects of consumer behavior on energy demand because of the pandemic present a wide range of potential outcomes for energy consumption. Supply uncertainty in the forecast results from the production decisions of OPEC+ and with the rate at which U.S. oil and natural gas producers increase drilling.
* Brent crude oil spot prices averaged $81 per barrel (b) in November, a $3/b decrease from October 2021 but a $38/b increase from November 2020. Crude oil prices have risen over the past year as result of steady draws on global oil inventories, which averaged 1.4 million barrels per day (b/d) during the first three quarters of 2021. Crude oil prices fell significantly on November 26, and the Brent spot price began December below $70/b. The drop in prices followed the identification of the new COVID-19 Omicron variant, which raised the possibility that petroleum demand could decline in the near term.
* We expect Brent prices will average $71/b in December and $73/b in the first quarter of 2022 (1Q22). For 2022 as a whole, we expect that growth in production from OPEC+, of U.S. tight oil, and from other non-OPEC countries will outpace slowing growth in global oil consumption, especially in light of renewed concerns about COVID-19 variants. We expect Brent prices will remain near current levels in 2022, averaging $70/b.
* We estimate that 99.7 million b/d of petroleum and liquid fuels was consumed globally in November, a 4.9 million b/d increase from November 2020 but 1.1 million b/d less than in November 2019. We revised down our forecast of consumption of petroleum and liquid fuels for 4Q21 and 1Q22, partly as a result of recently announced travel restrictions following reported outbreaks of the Omicron variant of COVID-19. The potential effects of the spread of this variant are uncertain, which introduces downside risks to the global oil consumption forecast, particularly for jet fuel. We forecast that global consumption of petroleum and liquid fuels will average 96.9 million b/d for all of 2021, which is a 5.1 million b/d increase from 2020. We forecast that global consumption of petroleum and liquid fuels will increase by 3.5 million b/d in 2022 to average 100.5 million b/d.
* U.S. regular gasoline retail prices averaged $3.39 per gallon (gal) in November, a 10 cents/gal increase from October and $1.29/gal higher than in November 2020. The November monthly average was the highest since September 2014. We forecast that retail gasoline prices will average $3.13/gal in December before falling to $3.01/gal in January and $2.88/gal on average in 2022.
* Total U.S. crude oil production was an estimated 11.7 million b/d in November. We forecast that it will rise to an average of 11.8 million b/d in 2022 and to an average of 12.1 million b/d in 4Q22.
Natural Gas
* In November, the natural gas spot price at Henry Hub averaged $5.05 per million British thermal units (MMBtu), down from the October average of $5.51/MMBtu but up from an average of $3.25/MMBtu in the first half of 2021 (1H21). After rising in recent months, natural gas prices declined in November amid mild weather across much of the country that resulted in less natural gas used for space heating than expected. Decreased demand for natural gas also contributed to inventory levels moving closer to the five-year (2016–20) average. Global demand for U.S. liquefied natural gas (LNG) has remained high, limiting some downward pressure on natural gas prices.
* The Henry Hub spot price averages $4.58/MMBtu from December 2021 through February 2022 in our forecast and then generally declines through 2022, averaging $3.98/MMBtu in 2022 amid rising U.S. natural gas production and slowing growth in LNG exports. We forecast that U.S. inventory draws will be similar to the five-year average this winter, and we expect that factor, along with rising U.S. natural gas exports and relatively flat production through March, will keep U.S. natural gas prices near recent levels before downward price pressures emerge. Because of uncertainty around seasonal demand, we expect natural gas prices to remain volatile over the coming months, and winter temperatures will be a key driver of natural gas consumption and prices.
* We estimate that U.S. LNG exports averaged 10.7 billion cubic feet per day (Bcf/d) in November 2021, a 0.8 Bcf/d increase from October, supported by large price differences between the Henry Hub price in the United States and spot prices in Europe and Asia. LNG exports resumed from Cove Point LNG in late October after that facility’s annual maintenance was completed. In our forecast, LNG exports average 9.8 Bcf/d for all of 2021, a 50% increase from 2020. We expect that LNG exports will average 11.1 Bcf/d from December through March. We expect high levels of LNG exports to continue into 2022, averaging 11.5 Bcf/d for the year, a 17% increase from 2021. The forecast reflects our assumption that global natural gas demand remains high and U.S. LNG export capacity increases.
* U.S. natural gas inventories ended November 2021 at more than 3.5 trillion cubic feet (Tcf), 3% less than the five-year average for this time of year. Less natural gas was injected into storage this summer than the previous five-year average, largely as a result of more electricity consumption in June because of hot weather, and because of increased exports. However, storage levels moved closer to average as injections outpaced the five-year average in September, October, and early November. We expect natural gas inventories to fall by 2.0 Tcf during the November-to-March withdrawal season, ending March below 1.7Tcf, which would be 2% less than the 2017–21 average for that time of year.
* We estimate dry U.S. natural gas production averaged 96.1 Bcf/d in the United States in November, up 1.0 Bcf/d from the average in October. Production in November was up from an average of 91.9 Bcf/d in 1H21. Natural gas production in the forecast rises to an average of 95.3 Bcf/d during the rest of this winter (December–March) and averages 96.0 Bcf/d for all of 2022, driven by natural gas and crude oil price levels that we expect will be sufficient to support enough drilling to sustain production growth.
Electricity, coal, renewables, and emissions
* We forecast that the share of electricity generation produced by natural gas in the United States will average 37% in 2021 and 35% in 2022, down from 39% in 2020. For 2021, the annual share for natural gas as a generation fuel declines in response to our expectation of a higher delivered natural gas price for electricity generators, which we forecast will average $4.99/MMBtu compared with $2.40/MMBtu in 2020. The natural gas share declines in 2022 as a result of continued high fuel costs and an increasing share of renewable generation. As a result of the higher expected natural gas prices, the annual forecast share of electricity generation from coal rises from 20% in 2020 to 23% in 2021 and then drops slightly to 22% in 2022. For renewable energy sources, new additions of solar and wind generating capacity have been offset somewhat by reduced generation from hydropower this year. As a result, we forecast that the share of all renewables in U.S. electricity generation will average 20% in 2021, about the same as last year, before rising to 22% in 2022. The nuclear share of U.S. electricity generation declines from 21% in 2020 to 20% in 2021 and 2022.
* We expect coal production to rise by 48 million short tons (MMst), or 9%, in 2021 and by an additional 38 MMst (6%) in 2022. The increase in production reflects more demand and higher prices for coal in the electric power sector because of higher natural gas prices this year compared with last year. Despite the increase in production, growth has not kept pace with rising domestic demand for steam coal in the electric power sector and export growth. As a result, coal inventories held by the electric power sector fall by an expected 51 MMst (38%) in 2021 and a further 10 MMst (13%) in 2022.
* Planned additions to U.S. wind and solar capacity in 2021 and 2022 increase electricity generation from those sources in our forecast. We estimate that the U.S. electric power sector added 14.6 gigawatts (GW) of new wind capacity in 2020. We expect 17.2 GW of new wind capacity will come online in 2021 and 7.1 GW in 2022. Utility-scale solar capacity rose by an estimated 10.4 GW in 2020. Our forecast for added utility-scale solar capacity is 16.2 GW for 2021 and 20.9 GW for 2022. We expect significant solar capacity additions in Texas during the forecast period. In addition, in 2020, small-scale solar capacity (systems less than 1 megawatt) increased by 4.4 GW to 27.6 GW. In particular, Texas and Florida had large increases of small-scale solar capacity in 2020. We project that small-scale solar capacity will grow by 5.1 GW in 2021 and by 5.0 GW in 2022.
* U.S. energy-related carbon dioxide (CO2) emissions decreased by 11% in 2020 as a result of less energy consumption due to reduced economic activity and to end user responses to the COVID-19 pandemic. For 2021, we forecast energy-related CO2 emissions will increase about 7% from 2020 as economic activity increases and leads to rising energy use. We expect a 1% increase in energy-related CO2 emissions in 2022. We forecast that after declining by 19% in 2020, coal-related CO2 emissions will rise by 17% in 2021 and then fall by 3% in 2022.
Good morning Trip,
The 175 million dollars recently generated by CENAQ’s IPO “is” Cash Flow. By the way, it is my understanding that banks do not lend money for exploration wells although they can make loans against production that is used for collateral. Oftentimes investment $$$ will come from entities similar to CENAQ Energy. Did the Tau 1 not quantify and diminish the risk of a Tau 2? Absolutely. Depending on the agreement a discovery could add Reserve assets to CENAQ, and a Tau 2 discovery should add a great deal.
If I remember correctly, Gulfslope’s 2019 Presentation mentioned “Sub-sea tie backs could also be used to accelerate time to first production” on a Tau 2 drill well.
Before I forget, WTI up 4% this morning if it holds.
Mrs. Smith
P.S. Spec, I like how you always seem to offer up realistic solutions. This time it is on how a Tau 2 could come to fruition. Your powers of observation are on display. 99.997% in action.
The 23rd OPEC and non-OPEC Ministerial Meeting (ONOMM), was held via videoconference, on Thursday December 2, 2021. The Meeting remains in session.
https://www.opec.org/opec_web/en/press_room/6736.htm
The meeting reaffirmed the continued commitment of the Participating Countries in the Declaration of Cooperation (DoC) to ensure a stable and balanced oil market. In view of current oil market fundamentals, the Meeting resolved to:
1. Reaffirm the decision of the 10th ONOMM on April 12, 2020 and further endorsed in subsequent meetings including the 19th ONOMM on July 18, 2021.
2. Reconfirm the production adjustment plan and the monthly production adjustment mechanism approved at the 19th ONOMM and the decision to adjust upward the monthly overall production by 0.4 mb/d for the month of January 2022, as per the attached schedule. Link to schedule:
https://www.opec.org/opec_web/static_files_project/media/downloads/Production%20table%20-%20December%202021.pdf
3. Agree that the meeting shall remain in session pending further developments of the pandemic and continue to monitor the market closely and make immediate adjustments if required.
4. Extend the compensation period until the end of June 2022 as requested by some underperforming countries and request that underperforming countries submit their plans by December 17, 2021. Compensation plans should be submitted in accordance with the statement of the 15th ONOMM.
5. Reiterate the critical importance of adhering to full conformity and to the compensation mechanism.
6. Hold the 24th OPEC and non-OPEC Ministerial Meeting on January 4, 2022.
EIA Weekly Petroleum Status Report, Release Date: 12/1/2021, Data for week-ending: 11/26/2021
Full ‘Status’ Report with Graphs: https://www.eia.gov/petroleum/supply/weekly/pdf/wpsrall.pdf
HIGHLIGHTS
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 0.9 million barrels from the previous week. At 433.1 million barrels, U.S. crude oil inventories are about 6% below the five year average for this time of year. Total motor gasoline inventories increased by 4.0 million barrels last week and are about 5% below the five year average for this time of year. Finished gasoline and blending components inventories both increased last week. Distillate fuel inventories increased by 2.2 million barrels last week and are about 9% below the five year average for this time of year. Propane/propylene inventories decreased by 1.0 million barrels last week and are about 14% below the five year average for this time of year. Total commercial petroleum inventories increased by 4.3 million barrels last week.
U.S. crude oil refinery inputs averaged 15.6 million barrels per day during the week ending November 26, 2021 which was 9,000 barrels per day less than the previous week’s average. Refineries operated at 88.8% of their operable capacity last week. Gasoline production decreased last week, averaging 9.6 million barrels per day. Distillate fuel production increased last week, averaging 4.9 million barrels per day.
U.S. crude oil imports averaged 6.6 million barrels per day last week, up by 168,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 6.3 million barrels per day, 18.5% more than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 643,000 barrels per day, and distillate fuel imports averaged 234,000 barrels per day.
Total products supplied over the last four-week period averaged 20.7 million barrels a day, up by 7.1% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.2 million barrels a day, up by 10.6% from the same period last year. Distillate fuel product supplied averaged 4.3 million barrels a day over the past four weeks, up by 6.1% from the same period last year. Jet fuel product supplied was up 34.5% compared with the same four-week period last year.
The West Texas Intermediate crude oil price and the product spot prices were not available due to the market closure on Friday.
The national average retail regular gasoline price decreased to $3.380 per gallon on November 29, 2021, $0.015 below last week’s price but $1.260 over a year ago. The national average retail diesel fuel price decreased to $3.720 per gallon, $0.004 per gallon less than last week but $1.218 higher than a year ago.
This Week in Petroleum: https://www.eia.gov/petroleum/weekly/
Heating Oil and Propane Update: https://www.eia.gov/petroleum/heatingoilpropane/
Petroleum Marketing Monthly: https://www.eia.gov/petroleum/marketing/monthly/
Thinking about a Tau partnership, here is a totally speculative version of my vision. I have no insights regarding actual talks and plans, so this is all only supposition about how it could work.
The first thing is how to attract a partner. There has to be something in it for them. The best thing would be ownership, a “slice of the pie”. Gulfslope will be challenged to share ownership since they only have 25% interest, so mostly it will fall to Delek with their 75% ownership. Seems logical since they prefer to not go it alone and have the largest share of the ownership. In order to remain the majority interest owner, I can not see Delek willing to give up more than 24% (75% - 24% = 51%) and likely much less.
Then what will a partner be required to provide for it’s 24% stake? Besides $$$, perhaps some expertise. How about someone like Arena Offshore (remember ‘speculation only’), a large successful independent operator and producer in shallow, continental shelf, GOM. My pitch to them would go something like “you drill the well using your $$$ and expertise, for a 24% ownership stake, and if you have time, let us talk about Corvette”. Far-fetched? Probably. But this is my vision… what is yours?
Mrs. Smith
I was trying to let it go because there are numerous other things I need to be doing, but your comment about low-risk production of maturing oil assets could give readers the wrong impression.
While it is true that there will be low risk of not having production to sell, there are plenty of risks associated with operating mature assets and making an acceptable profit from the sales (ROI).
There are reasons Chevron sold those North Sea assets. We could talk about the risks associated with operating maturing oil and gas fields, but that would be a really long post and I have holiday shopping to complete. Just trying to keep things in their proper perspectives.
Mrs. Smith
If you are of the opinion that the focus of Gulfslope should be to purchase maturing oil assets, then I think you misunderstand the objective of the company, and this is probably not the right stock for you as an investor. As a trader it may not matter, but none the less you should keep in mind that Gulfslope’s core mission is exploration.
I doubt any shareholder bought GSPE based on the idea that the company would buy mature oil assets.
I agree with you about the difficulties of financing, and financing for a billion is 1000 X more difficult than for a million.
Mrs. Smith
Why I think Delek is still in the game.
Delek can choose Door #1 and keep paying billions of dollars to purchase marginally economic wells in aging fields, with hundreds of millions of dollars in decommissioning liabilities not too far into the future, and with the profit depending on the operator’s ability to keep operating expenses low.
Or, they can choose Door #2 and invest another 40 million dollars (for 21,543 ft depth) in a young oil and gas Tau Field, for the opportunity to acquire Reserves worth billions of dollars, and the potential to produce MMBOEs for decades into the future, and prosper from the wealth that comes with that.
What a tough choice… hopefully it is not an either/or.
Mrs. Smith
Note: Due to Delek making the 1.7 billion shekel bond payment “in advance”, their 12/31/2022 Closing Cash Balance on the ‘Projected Cash Flow’ should increase by roughly 179 million shekels (56 million USD).
Mrs. Smith
Delek Group released their Financial Statements as of 9/30/2021.
1. Delek reported a 50% “Net Profit” increase in Q3 2021 as compared to Q3 2020.
2. Their auditors removed the “going concern” warning.
3. Once Delek makes the “recently” approved 1.7 billion shekel bond payment, their “Net Financial Debt” will have dropped by 60% (relative to pre-Covid debt levels).
4. Midroog upgraded Delek’s “Old Debentures” with a Baa3.il “stable outlook” rating. By the way, the Midroog’s rating upgrade was issued prior to the 1.7 billion shekel reduction in “Net Financial Debt”.
5. Delek’s Projected Cash Flow through 9/2023 (which includes outflows for debenture and bank loan payments) looks robust.
https://www.reuters.com/markets/rates-bonds/israels-delek-group-q3-profit-jumps-going-concern-warning-removed-2021-11-28/
https://en.globes.co.il/en/article-midroog-upgrades-delek-group-rating-1001392008
Mrs. Smith
EDITED
I am waiting for you to get your PR before I request one.
Mrs. Smith
Why I believe Delek wants to drill Tau.
Consistent readers of this board know that I have stated numerous times that I believe Delek and Gulfslope will drill Tau 2. It occurred to me that I have not really discussed why.
So, the main reason is the Tau is a great prospect and they both know it. Also, Delek still owns approximately 300 million GSPE shares (23%) and a 75% working interest in the Tau prospect’s oil assets. They have not been divesting, they are still holding, they have declined to take advantage of any of the numerous opportunities to sell or transfer large numbers of shares. Why wouldn’t they sell if they were abandoning the Tau? Why leave millions of dollars on the table instead of in your bank account, if you are walking away?
Until I see material changes that suggest Delek is giving up and throwing in the towel, I will continue to believe that they plan to drill the Tau 2.
Mrs. Smith
I could see OPEC+ taking the 400,000 (bpd) oil production increase for January off the table due to the surge in Covid cases. But some OPEC+ members might worry about the ramifications, LOL. No way, OPEC+‘s final decision will be based on dollars and their own interests. December 2nd is the BIG day… (23rd OPEC and non-OPEC Ministerial Meeting)
Mrs. Smith
Consumer prices hit a 30-year high in October.
“US Treasury Secretary Janet Yellen said Monday she expects current record-high inflation to ease, with monthly rates falling back to 0.2 or 0.3 percent in the second half of 2022.”
“The annual inflation rate will decline at a slower pace, Yellen said.”
You think so Yellen? Yes, those price increases are already “baked in the cake”.
I like to refer to Yellen’s recent comments regarding (monthly vs annual rates) as “wordsmithing”. Reminds me of that famous quote “It depends on what the meaning of the word ‘is’ is”.
And it is just in time for the mid-term elections.
https://www.macaubusiness.com/monthly-us-inflation-to-return-to-0-2-0-3-pct-in-second-half-of-2022-yellen/
https://www.bls.gov/news.release/cpi.nr0.htm
Mrs. Smith
MKTMVN’s Quote 1: “As someone who saw the data coming up from the drill-string instruments on the Tau well, I have no doubt that there will be a ton of reservoir there if they drill another well and keep it under control.”
Smith: Your interpretation of the data aligns with the Tau prospect’s June 2019 “NSAI” report, which revealed the “quality of sands discovered at the Tau-1 Well was better than expected”.
And the “NSAI” report did mention the M1 sand target “marker” was only partially penetrated by the Tau 1 exploration well leaving it to be redefined as M1 Upper and M1 Lower. “The M1 Upper part was found not to contain oil and gas in quantities that justified commercial production”. I can only imagine Mr. Seitz’s dissatisfaction of not being able to have a few more days to confirm a Tau 1 well discovery.
Excerpt from the Tau prospect June 2019 “NSAI” report:
“After drilling of the Tau 1 well and based on the reprocessing (2018) of the seismic survey, whose results were received during drilling works at the Tau 1 well, the targets were redefined and re-characterized.”
MKTMVN’s Quote 2: “We observed in Mahogany field that the number, quality and thickness of sands increases with depth below the surface in that field. It isn’t a subtle difference - it improves dramatic as you drill deeper and deeper. There is reason to believe that the same would be true of Tau. And the Tau-1 well was suggesting that - there was getting to be more and better sand as the well went down.”
Smith: I absolutely agree, you can see the significant increase (triple digits) in MMBOEs in the deeper target layers (M5 and M6) when compared to the target layers (M1 Lower, M1A, M3, M4).
MKTMVN’s Quote 3: “I believe there actually was enough evidence collected, especially at the very bottom of the hole, to provide strong reasons to drill again.”
Smith: Do you think Delek Group believes it too? I do.
MKTMVN’s Quote 4: “I think what you wanted to know is how many reservoirs might be penetrated by a well. The answer is a number of them, and they will keep coming to whatever depth anyone is able to get. Enough reservoirs is not a problem.”
Smith: This is good to hear from someone with your skills and know-how. Thank you for taking the time to answer my questions in such detail. Great information for the board. Those of us without knowledge of Geology greatly benefit from this type of analysis. Certainly helps us to better understand the issues and maintain focus…. Your perspective is greatly appreciated.
Take care,
Mrs. Smith
EIA Weekly Petroleum Status Report, Release Date: 11/19/2021, Data for week-ending: 11/24/2021
Full Report with Graphs: https://www.eia.gov/petroleum/supply/weekly/pdf/wpsrall.pdf
HIGHLIGHTS
U.S. crude oil refinery inputs averaged 15.6 million barrels per day during the week ending November 19, 2021 which was 243,000 barrels per day more than the previous week’s average. Refineries operated at 88.6% of their operable capacity last week. Gasoline production increased last week, averaging 10.1 million barrels per day. Distillate fuel production decreased last week, averaging 4.8 million barrels per day.
U.S. crude oil imports averaged 6.4 million barrels per day last week, up by 245,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 6.2 million barrels per day, 18.5% more than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 483,000 barrels per day, and distillate fuel imports averaged 332,000 barrels per day.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 1.0 million barrels from the previous week. At 434.0 million barrels, U.S. crude oil inventories are about 7% below the five year average for this time of year. Total motor gasoline inventories decreased by 0.6 million barrels last week and are about 6% below the five year average for this time of year. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories decreased by 2.0 million barrels last week and are about 8% below the five year average for this time of year. Propane/propylene inventories decreased by 1.0 million barrels last week and are about 13% below the five year average for this time of year. Total commercial petroleum inventories decreased by 6.0 million barrels last week.
Total products supplied over the last four-week period averaged 20.7 million barrels a day, up by 7.0% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.3 million barrels a day, up by 11.5% from the same period last year. Distillate fuel product supplied averaged 4.2 million barrels a day over the past four weeks, up by 3.0% from the same period last year. Jet fuel product supplied was up 40.4% compared with the same four-week period last year.
The West Texas Intermediate crude oil price was $76.11 per barrel on November 19, 2021, $4.76 below last week’s price but $34.12 more than a year ago. The spot price for conventional gasoline in the New York Harbor was $2.288 per gallon, $0.127 less than last week’s price but $1.086 above a year ago. The spot price for No. 2 heating oil in the New York Harbor was $2.150 per gallon, $0.116 below last week’s price but $0.945 over a year ago.
The national average retail regular gasoline price was $3.395 per gallon on November 22, 2021, $0.004 per gallon less than last week’s price but $1.293 over a year ago. The national average retail diesel fuel price was $3.724 per gallon, $0.010 below last week’s price but $1.262 over a year ago.
The 11/26/2021 US Oil and Gas Rig Count reflects 569 rigs an increase of 6 rigs. The GOM Offshore Rig Count remained unchanged from the previous week and is currently showing 15 rigs.
http://www.dnr.louisiana.gov/assets/TAD/data/drill_weekly/ogj_rig_count.pdf
http://www.dnr.louisiana.gov/assets/TAD/data/drill_weekly/WeeklyRigCountUpdate.pdf
Mrs. Smith
Shell's new Gulf of Mexico senior VP, Colette Hirstius recently gave an interview to upstreamonline, below are some interesting excerpts:
https://www.upstreamonline.com/people/hirstius-leading-shells-future-in-us-gulf/2-1-1096910
”The Gulf of Mexico will be one of the last basins standing, in part due to its ability to produce at such a low greenhouse gas intensity. Exploration and production in the Gulf will continue for a long time,” she says, highlighting the company plans to drill 25 exploration wells in the next three years.
“There’s still a lot of exploration remaining in the Gulf, if you look at the number of wells that are drilled in the Gulf each year, with the predominance of them exploration wells,” she adds.
Hirstius sees continuing exploration activity as a demonstration of the US Gulf's capacity to attract upstream investments, with viable development concepts still earning their place in global portfolios, even as energy transition gathers pace.
"We can then factor in ways to reduce greenhouse gas emissions,” she says.
“It becomes part of the scope for how you develop a project, ensuring you’re working to minimise emissions in the design phase.”
”We know that we're going to have fossil fuels in the mix of providing energy for the world for decades to come. Shell agrees with the IEA (International Energy Agency) on that position”, she says. “The task now is finding how can we accelerate this transition, while recognising the role fossil fuels have to play.”
Should there be a Tau 2 discovery would they do an “appraisal well” soon after to verify the size, quality and continuity of the “oil field”?
I assume while drilling a Tau 2 Delek Group will again be using Netherland Sewell and Associates, Inc. “NSAI” to evaluate and report on any Reserves or Contingent and Prospective Resources. Delek Group’s Delek Drilling and Ithaca Energy use the respected global evaluator, Netherland Sewell and Associates, Inc. “NSAI”.
Yes sir, my wish for the Tau field is a discovery with high quality oil pays and fluid properties similar to the Mahogany field.
In all sincerity, the Tau 2 is just begging to be drilled!
Mrs. Smith
MKTMVN, not being a geologist I would like your opinion about whether or not I am on the right track?
Gulfslope’s October 2020 news release and most recent 10-Q reflected the Tau 2 “twin well” would be drilled to a measure depth of 21,543 feet, and approximately 21,000 feet, respectively.
Could Gulfslope’s Tau 2 sand targets consist of M1 Lower, M1A and M3 with the remaining six targets (M4, M5 and M6) for future Tau wells?
While drilling the Tau 1 “trial well” Gulfslope revised the “Top MD” for the Base of Salt, M1 Sand, and M1A Sand with BSEE. Originally, Gulfslope’s Tau 1 September 2018 ‘Permit to Drill’ reflected:
Base of Salt @ 13, 164 feet
M1 Sand @ 14,311 feet
M1A Sand @ 18,466 feet
M3 Sand @ 21,892 feet
M4 Sand @ 24,836 feet
Gulfslope’s Tau 1 BSEE permit modifications in 2019 reflected:
Base of Salt @ 12,311 feet on 4/3/19
M1 Sand @ 13,703 feet on 5/1/19
M1A Sand @ 17,894 feet on 5/1/19
Noticing the improvement in feet to reach the “Top MD” of the Base of Salt, M1 and M1A targets, I did an estimated calculation for the M3 Sand “Top MD” using the average percentage change in the M1 and M1A targets only. My estimated revised calculation is:
M3 Sand @ 21,100 feet
Could my M3 Sand “Top MD” estimated calculation of 21,100 feet be a possibility? If so, does it make sense that it would be included in a Gulfslope Tau 2 discovery that was drilled to a total measured depth of 21,542 feet?
Delek Group’s Tau Prospect Netherland, Sewell and Associates, Inc.”NSAI” June 30, 2019 ‘Prospective Resources’ report, at 100% working interest, reflected the M1 Lower, M1A and M3 ‘Total Oil Assets’ “Best” and “High” estimates at 84 MMBOE and 211 MMBOE, respectively. M1 Lower, M1A and M3 ‘Average Net Thickness’ on the “High” estimate is 575 feet.
Thank you in advance for your opinion and guidance on the board.
Mrs. Smith
SOURCES:
BSEE Data Center, and Delek Group (Investors, Regulatory Filings, June 30, 2019, Title Update on Prospective Resources Report for Trial well Tau-1), Gulfslope’s 10/30/2020 Press Release and 10-Q for quarterly period ended 6/30/2021.
“Our original leases have a five-year primary term, expiring in 2022, 2023 and 2025. Drilling the Tau No. 2 well will extend the terms of the lease that is set to expire in 2022. BOEM’s regulatory framework provides multiple options for leaseholders to apply to receive extensions of lease terms under specified conditions.”
“The Company has been conducting pre-drill operations for the Tau prospect which is anticipated to be re-drilled to a total depth of approximately 21,000 feet. The Exploration Plan has been filed with and approved by BOEM and the Application for Permit to Drill (“APD”) has been filed with BSEE and is pending approval. The Company plans to sign a rig contract, and arrange for bonding and insurance in conjunction with the approval of the APD.”
The above are excerpts from Gulfslope’s most recent 10-Q.
Mrs. Smith
I can not help but believe that Gulfslope’s and Delek’s interest in the Tau is assured for the future. The global attack on oil exploration is bound to accentuate the potential of drilling in the GOM compared to other parts of the world. Specifically, the political powers over North Sea producers are attempting to curtail drilling activities there and Israeli politicians are attacking Delek as being a “monopoly”. If these hostilities to drilling continue, it could result in the good, old USA GOM being moved to the “head of the line”.
While on the topic of climate change policies, are we being duped by climate control strategies? Politicians talk about agreements that need to be made to save the planet, but in reality nothing ever gets done. I am not complaining because these plans generally have awful outcomes and accomplish nothing except to raise the prices for energy.
For example, in our recent climate conference in Glasgow, India agreed to significant fossil fuel cuts for the future. In the actuality of today, they are opening a large coal mine and coal burning plant for electricity. The scale of production for the mine is estimated to be 5 million tons per year. Who knew?
Also, is using the Strategic Petroleum Reserve (SPR) the right answer to lowering the costs of energy? Especially if the use is in other countries besides the USA. We only have one SPR. Regardless of the agreements about replenishment, I do not believe they will replenish it, or how that could even be done with current production rates. The goal might just be to use it today, not have it tomorrow, and force our society to “get by” with wind and solar. This could also compromise the USA fuel supply during a military conflict with Russia, China, or anyone else. Fortunately, our nuclear missiles are already fueled, LOL. Just makes me want to be wary of the unintended consequences from some of these plans to save the planet.
Mrs. Smith ‘giving thanks’ on Thanksgiving
Regressive Energy Taxes Hit Poor and Lower-Income Families, Creates More Inflation
https://www.realclearenergy.org/articles/2021/11/22/regressive_energy_taxes_hit_poor_and_lower-income_families_creates_more_inflation_804772.html
It’s hard to believe that the U.S. economy doesn’t have enough money, when the simplest definition of inflation – now at a 30-year high – is too much money chasing too few goods.
President Biden has convinced himself that the way to increase the number of goods is to inject even more money into the economy. But if we could spend our way out of our inflationary problem, we would not be in one to begin with.
According to budget expert Brian Riedl, over the past two years Washington has added $6 trillion in new deficit spending to combat Covid-19 and support the economy. That doesn’t even count the $550 billion for the infrastructure bill that Congress just passed or the sharp spike in discretionary spending that would increase the budget baseline by $1 trillion over the next decade.
On top of that, the Federal Reserve has been buying up $120 billion worth of Treasury and housing-backed securities every month. Initially, Biden and his team insisted that the inflation Americans were experiencing was “transitory,” but they have since changed their tune as it has become obvious that inflation is here to stay.
Biden is blaming inflation on the standard left-wing bogeyman – the energy sector.
“The largest share of the increase in prices in this [inflation] report is due to rising energy costs,” the president recently told Americans, adding that he had asked the Federal Trade Commission to deal with “market manipulation or price gouging in this sector.”
This move attempts to deflect attention from the administration’s responsibility for higher oil and gas prices. It has purposely looked to cripple the domestic fossil fuel industry through policies like killing the Keystone XL pipeline and (illegally) banning oil and gas development on federal lands. These policies have worked to chill investment and development. With demand rising, output of oil and gas should be booming, but it’s still well below pre-pandemic levels.
Just two years ago, the U.S. Energy Information Administration reported that the United States had become the world’s top producer of oil and natural gas. Now, having hamstrung the domestic oil and gas industry, the administration has been reduced to pleading with OPEC+ (which includes adversaries such as Russia, Iran, and Venezuela) to increase oil production.
OPEC+ refused, an embarrassing setback that puts the lie to the administration’s claim that “America is respected around the world again.”
A gallon of gasoline costs $1.29 more today than it did this time last year. The U.S. Energy Information Administration forecasts that this winter Americans will be paying 30% more for natural gas, 43% more for heating oil, 6% more for electricity, and 54% more for propane to heat their homes than they did last winter – and even more if the weather is colder than normal. Higher energy costs have a disproportionate impact on vulnerable populations, including minority and low- and fixed-income households. These costs are essentially a regressive tax on the poor.
When Secretary of Energy Jennifer Granholm was asked what her plan was to increase domestic oil and gas production and lower prices, she responded, “That is hilarious.
Would that I had the magic wand on this. But as you know, of course, oil is a global market. It is controlled by a cartel. That cartel is called OPEC.”
If OPEC’s decision not to increase production is the culprit, then why is the administration threatening to go after gas stations instead of finding ways to increase domestic output?
Meantime, the president’s Build Back Better plan is chock-full of Green New Deal-type energy policies that would result in even higher energy costs to American families. Make no mistake, for the Left, higher energy prices are a feature, not a bug. White House spokesperson Jen Psaki recently gave the game away when she said, “Our view is that the rise in gas prices over the long term makes an even stronger case for doubling down our investment and focus on clean energy options.”
The administration sees higher energy costs not as a problem but as an opportunity. Since it cannot bring down the price of renewables to compete with oil and gas, it needs higher oil and gas prices. But when that happens, as it has, the administration wrings its hands and complains, or tries to sic the FTC on “price gougers.”
The United States has enjoyed a competitive advantage because of its lower energy costs. American industries pay anywhere from two to four times less for energy than industries in Europe. The Biden administration is pursuing policies that would surrender that advantage by saddling energy producers and consumers alike with more regulations and taxes.
President Biden is sure that spending trillions more taxpayer dollars on his Build Back Better plan is the way to fix the mounting inflation problem. He’s wrong: it will only make things worse. Congress should reject his plan.
Banning Exports of US Crude Oil Would Likely Raise Gasoline Prices, Not Lower Them
https://www.businesswire.com/news/home/20211115006339/en/IHS-Markit-Banning-Exports-of-US-Crude-Oil-Would-Likely-Raise-Gasoline-Prices-Not-Lower-Them
WASHINGTON--(BUSINESS WIRE)--Instituting a ban on U.S. crude exports has currently been put forward for consideration as a “tool” to alleviate rising U.S. gasoline prices—average price in October up 36% from a year ago. This is one of the notable factors contributing to the surge in inflation, the highest increase in U.S. consumer prices in 31 years. However, the unintended consequences of such a policy would likely increase gasoline prices rather than lower them, according to a new analysis by IHS Markit (NYSE: INFO), a world leader in critical information, analytics and solutions.
“A U.S. crude oil export ban would make the situation worse—for the United States and the world—at a time when global supply chains are already under exceptional strain,” said Jim Burkhard, vice president and head of crude oil markets, IHS Markit. “Such a ban would disrupt global oil supply chains, run counter to decades of U.S. policy promoting the free flow of oil and gas, lead to inefficient and costly re-allocation of domestic crude oil production, disrupt supplies for allies and discourage domestic production—which would all put upward pressure on U.S. gasoline prices. It would also send an unnerving signal to allies and partners about the reliability of the United States.”
Gasoline prices in the United States are connected to the global oil and gasoline market—and not the price of domestically produced crude oil, the analysis notes. A ban on exporting domestic U.S. crude oil production may lower the price of domestic crude. However, this could discourage production of both oil and natural gas with the result likely being a tighter world oil market—without lowering gasoline prices.
Instead, the disruption to the oil supply chain—both domestically and internationally—would likely increase gasoline prices, the analysis finds.
“Removing the 3 million barrels per day of crude that the United States exports to Europe, Asia and elsewhere would deliver a shock to the world market. The lost barrels would have to be replaced from somewhere else. And it is not clear if all of that could or would be replaced in a tight market,” said Burkhard. “Such a disruption of international crude oil flows would lead to a scramble to find other oil and generate more upward pressure on crude oil prices—and thus increase the price of U.S. gasoline.”
Implementing an export ban would also force a costly and inefficient re-allocation of crude oil supplies to refineries, the analysis says.
A large share of U.S. refining capacity is configured to process a different type of crude than the kind that the United States exports. Refineries in the United States are already operating at high utilization rates. Additional processing of another type of crude—a type that those refineries are not designed for—would only occur with increasing inefficiency, says the analysis.
Geography is also a complicating factor. Oil produced in Texas and the central United States that otherwise would be exported is difficult and costly to move to refining centers on the Atlantic or Pacific coasts. There are no crude oil pipelines to either coast and what rail facilities exist have been out of use.
“Without the ability to export U.S. crude, you enter a situation where there is a tighter global oil market or U.S. refineries are inefficiently processing types of crude that they are not configured for, or both,” said Kurt Barrow, vice president, oil markets, midstream and downstream, IHS Markit. “This would lead to supply chain and processing inefficiencies and possibly even higher gasoline prices as a direct result of an export ban.”
The most effective supply-side force that could lower oil prices is more oil production, the analysis finds. The United States is currently expected to be the world’s leading source of oil production growth in 2022. The imposition of a crude export ban could place that growth in jeopardy.
“Instituting a crude exports ban would threaten U.S. oil production growth and make the world oil market more heavily dependent on OPEC+ increasing their production to meet demand,” said Burkhard. “This would test the amount of additional production capacity available in the rest of the world.”
OPEC World Oil Outlook 2045 ”Key Message Video”
https://players.brightcove.net/34306109001/default_default/index.html?videoId=6274451945001
Note: The 23rd OPEC and non-OPEC Ministerial Meeting will be held on 2 December 2021. Since OPEC+ forecasts a decline in demand due to a surge of Covid cases in Europe, will they “decrease or increase” their overall production plan for the month of January, should the U.S. and others release barrels from their stockpiles? The U.S. and China have already released millions of barrels from their strategic reserves this year. How did that work out in lowering the price of crude and/or gasoline? No bueno.
Mrs. Smith
BINGO MKTMVN.
The domino effects from tinkering with the supply chain of “crude oil” is supply shortages and soaring prices for thousands of products that support the entire medical industry, all branches of the military, airports, electronics, communications, merchant ships, container ships, and cruise liners, as well as asphalt for roads, and fertilizers to help feed the world.
Two of the fossil fuels, coal, and natural gas, are used to generate continuous uninterruptible electricity, but crude oil, the third fossil fuel, is seldom ever used for electricity, but primarily used to manufacture oil derivatives that thousands of products are based upon, and the fuels for the various transportation infrastructures.
The primary usage of crude oil is to manufacture oil derivatives that make 6,000 products used in our daily lives, and the transportation fuels needed by the worlds:
* Militaries
* 23,000 Commercial jets
* 20,000 Private jets
* 10,000 Superyachts over 24 meters in length
* 300 cruise ships
* 53,000 merchant ships, and
* 1.2 billion vehicles
One 42-gallon barrel of oil creates 19.4 gallons of gasoline. The rest (over half) is used to make things like: Although the major use of petroleum is as a fuel, (gasoline, diesel, jet fuel, bunker, ). Here are some of the ways petroleum is used in our every day lives: Adhesive, Air mattresses, Ammonia, Antifreeze, Antihistamines, Antiseptics, Artificial limbs, Artificial turf, Asphalt, Aspirin, Awnings, Backpacks, Balloons, Ballpoint pens, Bandages, Beach umbrellas, Boats, Cameras, Candies and gum, Candles, Car battery cases, Car enamel, Cassettes, Caulking, CDs/computer disks, Cell phones, Clothes, Clothesline, Clothing, Coffee makers, Cold cream, Combs, Computer keyboards, Computer monitors, Cortisone, Crayons, Credit cards, Curtains, Dashboards, Denture adhesives, Dentures, Deodorant, Detergent, Dice, Dishwashing liquid, Distillates, Dog collars, Drinking cups, Dyes, Electric blankets, Electrical tape, Enamel, Epoxy paint, Eyeglasses, Fan belts, Faucet washers, Fertilizers, Fishing boots, Fishing lures, Floor wax, Food preservatives, Footballs, Fuel tanks, Glue, Glycerin, Golf bags, Golf balls, Guitar strings, Hair coloring, Hair curlers, Hand lotion, Hearing aids, Heart valves, Heating Oil, House paint, Hula hoops, Ice buckets, Ice chests, Ice cube trays, Ink, Insect repellent, Insecticides, Insulation, iPad/iPhone, Kayaks, Laptops, Life jackets, Light-weight aircraft, Lipstick, Loudspeakers, Lubricants, Luggage, Model cars, Mops, Motorcycle helmets, Movie film, Nail polish, Noise insulation, Nylon rope, Oil filters, Packaging, Paint brushes, Paint roller, Pajamas, Panty hose, Parachutes, Perfumes, Permanent press, Petroleum jelly, Pharmaceuticals, Pillow filling, Plastic toys, Plastics, Plywood adhesive, Propane, Purses, Putty, Refrigerants, Refrigerator linings, Roller skate wheels, Roofing, Rubber cement, Rubbing alcohol, Safety glasses, Shampoo, Shaving cream, Shoe polish, Shoes/sandals, Shower curtains, Skateboards, Skis, Soap dishes, Soft contact lenses, Solar panels, Solvents, Spacesuits, Sports car bodies, Sunglasses, Surf boards, Swimming pools, Synthetic rubber, Telephones, Tennis rackets, Tents, Tires, Tool boxes, Tool racks, Toothbrushes, Toothpaste, Transparent tape, Trash bags, Truck and automobile parts, Tubing, TV cabinets, Umbrellas, Unbreakable dishes, Upholstery, Vaporizers, Vinyl flooring, Vitamin capsules, Water pipes, Yarn, Wind turbine blades, LOL.
https://www.eia.gov/energyexplained/oil-and-petroleum-products/
https://www.eia.gov/energyexplained/oil-and-petroleum-products/use-of-oil.php
https://www.energy.gov/sites/prod/files/2019/11/f68/Products%20Made%20From%20Oil%20and%20Natural%20Gas%20Infographic.pdf
The above are excerpts from sources with respect to “crude oil”.
EDITED
The 11/19/2021 US Oil and Gas Rig Count reflects 563 rigs an increase of 7 rigs. The GOM Offshore Rig Count remained unchanged from the previous week and is currently showing 15 rigs.
https://rigcount.bakerhughes.com
https://rigcount.bakerhughes.com/na-rig-count
Mrs. Smith
An unprecedented ”140” shallow water (less than 200 meters) bids were received during this weeks BOEM lease auction. This weeks auction was the largest, in acreage and dollars, in recent years.
Note A: Shallow water is considered “less than” 200 meters. Deep water is anything “greater than” 200 meters.
Note B: The BOEM royalty rate on shallow water leases is currently 12.50% versus 18.75% on deep water. The administration is actively pursing a royalty rate increase on BOEM leases “greater than 200 meters”. FYI, Gulfslope’s Tau prospect is “less than 200 meters”.
Notice the following shallow water < 200 meters vs deep water > 200 meters stats for blocks with bids on the last 8 BOEM lease auctions. Could the increase in shallow water bids be the result of lower costs, carbon capture/storage or both. I say BOTH. I also say “Fossil Fuels” will be around for the next 30 years. I will continue to maintain the weekly and monthly reports during the holidays.
Most recent BOEM Lease sale 257 held on November 17, 2021
0-<200 meters: 140
200-<400 meters: 3
400-<800 meters: 23
800-<1600 meters: 89
1600+ meters: 53
BOEM lease sale 256 held on November 18, 2020
0-<200 meters: 12
400-<800 meters: 6
800-<1600 meters: 39
1600+ meters: 36
BOEM lease sale 254 held on March 18, 2020
0-<200 meters: 6
200-<400 meters: 3
400-<800 meters: 9
800-<1600 meters: 41
1600+ meters: 12
BOEM lease sale 253 held on August 21, 2019
0-<200 meters: 19
200-<400 meters: 4
400-<800 meters: 11
800-<1600 meters: 68
1600+ meters: 49
BOEM lease sale 252 held on March 20, 2019
0-<200 meters: 25
200-<400 meters: 15
400-<800 meters: 8
800-<1600 meters: 84
1600+ meters: 95
BOEM lease sale 251 held on August 15, 2018
0-<200 meters: 32
200-<400 meters: 1
400-<800 meters: 13
800-<1600 meters: 43
1600+ meters: 55
BOEM lease sale 250 held on March 21, 2018
0-<200 meters: 43
200-<400 meters: 3
400-<800 meters: 8
800-<1600 meters: 35
1600+ meters: 59
BOEM lease sale 249 held on August 16, 2017
0-<200 meters: 10
200-<400 meters: 4
800-<1600 meters: 34
1600+ meters: 42
API Monthly Statistical Report ‘MSR’, Released 11/18/2021. API Statistics Department & Office of the Chief Economist
For Notable Chart Details and Data By Section see pdf link below:
https://www.api.org/-/media/Files/News/2021/11/API_MSR_10_2021.pdf
EXECUTIVE SUMMARY
Historically, a combination of demand outpacing supply, low inventories, and high imports has been a recipe for upward pressure on prices. API’s primary data on U.S. petroleum markets for October reflected these directions as prices struck their highest levels since 2014 for crude oil and 2008 for natural gas.
Along with the economy, U.S. petroleum demand remained solid in October with the highest gasoline demand for the month since 2017 as well as record refining and petrochemical demand for other oils – intermediate products in refining and petrochemicals – for the month of October.
To meet this solid demand, U.S. refining activity matched its October 2019 capacity utilization rate of 85.8%. Consequently, U.S. crude oil inventories (excluding the Strategic Petroleum Reserve) fell to their lowest for the month since 2014, and U.S. crude oil imports rose by 0.9 million barrels per day year-on-year. In fact, U.S. total petroleum imports of 8.4 mb/d in Oct. exceeded the 8.0 mb/d level for an eighth consecutive month, contributing to the U.S. being a petroleum net importer of 0.4 mb/d in October. EIA projects the U.S. will remain a net importer for 2021 as a whole.
Leading economic indicators presented a dichotomy of industrial strength, but the lowest consumer sentiment in a decade due to the impact of high price inflation. API’s Distillate Economic IndicatorTM suggested continued growth of U.S. industrial production and broader economic activity (please see pdf link for chart details).
Demand:
U.S. petroleum demand solid at 20.4 mb/d.
– Motor gasoline demand (9.3 mb/d) at its highest for October since 2017.
– Distillate demand sustained at 4.0 mb/d.
– Jet fuel demand was stable at 1.5 mb/d.
– Marine shipping sustained residual fuel oil demand.
– Other oils’ demand of 5.3 mb/d a record for October.
Prices and Macroeconomy
Highest gasoline prices for October since 2013.
Leading indicators suggest industrial strength, but lowest consumer sentiment in a decade.
Supply
U.S. crude oil production rebounded to 11.4 mb/d.
International Trade
U.S. petroleum net imports have persisted.
Industry Operations
Refinery capacity utilization at its Oct. 2019 level.
Inventory
Lowest crude oil and total inventories for October since 2014.
EIA reports it’s first draw in 8 weeks for U.S. crude oil inventories.
EIA Weekly Petroleum Status Report, Release Date: 11/18/2021, Data for week-ending: 11/12/2021
Full Report with Graphs: https://www.eia.gov/petroleum/supply/weekly/pdf/wpsrall.pdf
HIGHLIGHTS
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 2.1 million barrels from the previous week. At 433.0 million barrels, U.S. crude oil inventories are about 7% below the five year average for this time of year. Total motor gasoline inventories decreased by 0.7 million barrels last week and are about 4% below the five year average for this time of year. Finished gasoline inventories decreased and blending components inventories remained unchanged last week. Distillate fuel inventories decreased by 0.8 million barrels last week and are about 5% below the five year average for this time of year. Propane/ propylene inventories decreased by 0.2 million barrels last week and are about 13% below the five year average for this time of year. Total commercial petroleum inventories decreased by 8.9 million barrels last week.
U.S. crude oil refinery inputs averaged 15.4 million barrels per day during the week ending November 12, 2021 which was 32,000 barrels per day more than the previous week’s average. Refineries operated at 87.9% of their operable capacity last week. Gasoline production decreased last week, averaging 9.9 million barrels per day. Distillate fuel production decreased last week, averaging 4.8 million barrels per day.
U.S. crude oil imports averaged 6.2 million barrels per day last week, up by 83,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 6.2 million barrels per day, 15.3% more than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 823,000 barrels per day, and distillate fuel imports averaged 239,000 barrels per day.
Total products supplied over the last four-week period averaged 20.2 million barrels a day, up by 3.9% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.3 million barrels a day, up by 10.1% from the same period last year. Distillate fuel product supplied averaged 4.0 million barrels a day over the past four weeks, down by 0.6% from the same period last year. Jet fuel product supplied was up 44.1% compared with the same four-week period last year.
The West Texas Intermediate crude oil price was $80.87 per barrel on November 12, 2021, $0.38 below last week’s price but $40.94 more than a year ago. The spot price for conventional gasoline in the New York Harbor was $2.415 per gallon, $0.043 less than last week’s price but $1.257 above a year ago. The spot price for No. 2 heating oil in the New York Harbor was $2.266 per gallon, $0.049 below last week’s price but $1.158 over a year ago.
The national average retail regular gasoline price was $3.399 per gallon on November 15, 2021, $0.011 per gallon less than last week’s price but $1.288 over a year ago. The national average retail diesel fuel price was $3.734 per gallon, $0.004 above last week’s price and $1.293 over a year ago.
That did not come out right. So much for hurried posts on an IPhone.
Spec, What I meant to say was I agree with you 99% of the time, but I reserve the right to gracefully disagree. I greatly appreciate your contributions. Please keep up the good works.
Again, Happy Holidays.
Take good care,
Mrs. Smith
WTI crude oscillating between $79 and $81 dollars per barrel. Currently WTI December Contract @ $81.43/bbl, 20:59 PM 11/15/2021: https://oilprice.com/oil-price-charts/45
With the holidays approaching and travel commitments I anticipate my participation will slack off. I will check in as time permits.
spec, your Christmas wish is coming true.
Happy Holidays to all.
Mrs. Smith
I get your overall point (you enjoy the scent), but you can fly a jet on coconut oil. I remembered reading an article on this very subject a while back.
But, would it be enough?
https://aip.scitation.org/doi/abs/10.1063/5.0014341
https://www.greencarcongress.com/2008/02/virgin-atlantic.html
https://link.springer.com/article/10.1007/s13399-020-01046-9
99% of the time I will agree to gracefully disagree.
Mrs. Smith
November Federal Reserve Bank of Dallas ”Energy Slideshow”, Updated November 8, 2021
See link below for slideshow charts on Energy Prices, Global Petroleum Data, National Outlook Data, and Regional Activity:
https://www.dallasfed.org/-/media/Documents/research/energy/energycharts.pdf?la=en
Mrs. Smith
Speaking of the Federal Reserve Banking System the following link is to an article I found interesting.
https://www.heartland.org/news-opinion/news/central-banks-ignore-their-mission-push-climate-alarm
Mrs. Smith
“U.S”. Economic Activity Charts, Issued November 8, 2021, Federal Reserve Bank of Dallas: https://www.dallasfed.org/-/media/Documents/research/econdata/uscharts.pdf
”U.S.” Weekly Economic Index (WEI) The WEI is an index of ten indicators of real economic activity, scaled to align with the four-quarter GDP growth rate. The WEI represents the common component of ten daily and weekly series covering consumer behavior, the labor market, and production, including:
* Initial unemployment insurance claims
* Continuing unemployment insurance claims
* Federal taxes withheld
* Redbook same-store sales
* Rasmussen Consumer Index
* The American Staffing Association Staffing Index
* Raw steel production
* U.S. railroad traffic
* U.S. fuel sales to end users
* U.S. electricity output
https://www.newyorkfed.org/research/policy/weekly-economic-index#/interactive
Commentary
The drop in the WEI for the week of November 6 (relative to the final estimate for the week of October 30) is due to increases in initial unemployment insurance claims and decreases in tax withholding, rail traffic (relative to the same time last year), and fuel sales (relative to the same time last year), which more than offset a rise in electricity output. Because the WEI measures changes over a 52-week period, the large positive reading also reflects the sharp deterioration in economic conditions during the same time last year. November 9 2021 Preliminary Estimate: 7.06
Database of ”Global” Economic Indicators (Real, Price, Trade and Financial), Charts as of November 2021: https://www.dallasfed.org/institute/dgei
Mrs. Smith
FEATURED ARTICLE - OPEC November 2021 “MOMR” Monthly Oil Market Report. Released 11/11/2021
Recent developments of global oil inventories
Global oil inventories, which serve as a tangible measure of the oil market balance, are grouped in three major components. The first group is OECD’s commercial oil stocks and Strategic Petroleum Reserves (SPR). Clearly, the OECD commercial stocks serve as a key indicator of the status of the oil market balance, as they are frequently published by national government reporting systems, and as the seasonal variations in the OECD commercial stock levels are linked to oil demand through an inverse relationship.
The second major group is the non-OECD commercial inventories and SPR, which have become more important in recent years as non-OECD oil demand has increased, taking a higher share than the OECD in total world oil demand and requiring more stockpiling. However, inventory levels in the non-OECD are hard to track due to a lack of complete data. In the absence of regularly reported data, stock levels in non-OECD are often estimated using information released by companies and ministries, as well as data published in the JODI database. The final group is oil at sea, which includes “oil afloat” and “oil in transit”.
In the 2Q20, the global oil market saw oil supply heavily outpacing world oil demand, leading to a drastic surge in global oil inventories, within a short span of a couple of months. In response to this critical situation, in April 2020, OPEC and non-OPEC oil producing countries participating in the ‘Declaration of Cooperation’ (DoC) announced voluntary productions adjustments commensurate with the huge oil stock surplus, to achieve the rebalancing and stabilization of the global oil market.
Since its historic peak in June 2020, global oil inventories have declined significantly. At the end of September 2021 they had fallen by 938 mb, with all components witnessing stock draws.
Over this period, total OECD commercial and SPR stocks have dropped by 411 mb and 46 mb, respectively, while non-OECD and oil at sea have fallen by 320 mb and 160 mb, respectively.
Moreover, OECD commercial oil inventories, compared to the latest five-year average (2015- 2019), reached a high of around 270 mb in June 2020, clearly reflecting a huge supply excess. This surplus has since declined to a deficit of 163 mb at the end of September 2021, mainly driven by DoC successful efforts to stabilize the market and supported by higher refinery crude runs, which is an indicator of an improvement in oil demand on the back of an economic recovery following the initial impact of the COVID-19 pandemic.
Clearly, the global stock draws during the first three quarters of 2021were largely due to efforts of the DoC and a pick up in global oil demand, which outpaced global supply by 0.1mb/d, 1.5mb/d, 2.2mb/d in 1Q21, 2Q21 and 3Q21 respectively. This is equivalent to a total implied stock draw of 342 mb.
With these market developments, the countries participating in the DoC continue their course to increase production starting August 2021, to gradually return the adjusted production volumes by 0.4 mb/d on a monthly basis, until the phasing out of the total 5.8 mb/d adjustment in 2022. The DoC will continue to review the market conditions on a regular basis, reaffirming the participating countries’ commitment to ensure adequate supply and support efforts to maintain global oil market stability.
November 2021 OPEC Monthly Oil Market Report “MOMR”, Released 11/11/2021
11/2021 MOMR PDF: https://momr.opec.org/pdf-download/res/pdf_delivery_momr.php?secToken2=accept
11/2021 MOMR VIDEO: https://players.brightcove.net/34306109001/default_default/index.html?videoId=6281471497001
WTI $80.79/bbl December Contract, 11/12/2021 22:37 pm CDT: https://oilprice.com/oil-price-charts/45
LLS $81.82/bbl Wholesale Spot Price, 11/11/2021 close: https://www.eia.gov/todayinenergy/prices.php
OIL MARKET HIGHLIGHTS
Crude Oil Price Movements
Crude oil spot prices surged by more than 12% in October, on the back of soaring energy prices in Europe and Asia. Strong oil market fundamentals, compounded by expectations of higher oil demand in the winter months from “gas to oil switching”, have supported both spot and futures prices. The OPEC Reference Basket (ORB) increased $8.23 or 11.1%, m-o-m, in October to average $82.11/b. Year-to-date, the ORB averaged $68.33/b, for a gain of $27.77, or 68.4%, compared to the same period last year. In the futures market, the ICE Brent front-month contract rose $8.87 or 11.8%, m-o-m, to average $83.75/b in October, while NYMEX WTI increased $9.68 or 13.5%, m-o-m, to average $81.22/b. Consequently, the Brent/WTI spread narrowed by 81¢ to stand at $2.53/b in October. The market structure of all three major oil benchmarks – Brent, WTI and Dubai – strengthened, moving deeper into backwardation on further declines in OECD commercial oil stocks in September and the prospect of stronger near-term market fundamentals. Hedge funds and other money managers boosted bullish positions related to NYMEX WTI in October as data showed ongoing drawdowns in inventories at the Cushing, Oklahoma, trading hub. However, speculators cut bullish positions related to ICE Brent.
World Economy
Global economic growth forecasts for both 2021 and 2022 remain unchanged from the last month’s assessment at 5.6% and 4.2%, respectively. For the US, lower-than-expected economic growth in 3Q21 has resulted in a downward revision for 2021. The US economy is now expected to grow by 5.5% in 2021 and by 4.1% in 2022. Euro-zone economic growth for 2021 is revised up slightly to 5.1%, after continued strong growth in 3Q21, and remains at 3.9% for 2022. Japan’s economic growth forecast for 2021 is revised down slightly to 2.5%, due to ongoing COVID-19-related social-distancing measures in 3Q21, while the forecast for 2022 remains at 2%. After a strong recovery in the first half of the year, China’s economic growth forecast remains at 8.3% in 2021 and 5.8% in 2022. Similarly, India’s economic growth forecast for 2021 is also unchanged at 9% for 2021 and 6.8% for 2022. Russia remains at 4% for 2021 at 2.7% for 2022. Brazil’s economic growth forecast is also unchanged for 2021, but was revised down slightly to 2% for 2022. The ongoing robust growth in the world economy continues to be challenged by uncertainties related to the spread of COVID-19 variants and the pace of vaccine rollouts worldwide, as well as ongoing global supply- chain bottlenecks.
Additionally, sovereign debt levels in many regions, together with rising inflationary pressures and potential central bank responses, remain key factors requiring close monitoring.
World Oil Demand
World oil demand growth in 2021 is revised lower by around 0.16 mb/d, compared to last month’s assessment, to stand at 5.7 mb/d. Revisions were mainly to account for slower than anticipated demand from China and India in 3Q21. Global oil demand is now estimated to reach 96.4 mb/d in 2021. For 2022, growth in global oil demand remains unchanged compared to the previous month’s assessment, to stand at 4.2 mb/d. World total demand in 2022 is now estimated to reach 100.6 mb/d, around 0.5 mb/d above 2019 levels. Marginal upward revisions in OECD Europe, due better economic views in some European countries, were offset by softer growth in industrial fuel demand, in OECD America and Latin America.
World Oil Supply
Non-OPEC liquids supply is expected to grow by 0.7 mb/d in 2021, unchanged from last month’s assessment, to average 63.6 mb/d. This is despite a marginal upward revision of 0.02 mb/d from the US, Canada, and Mexico, which were offset by a similar downward adjustment in the non-OECD. The main drivers of 2021 supply growth continue to be Canada, Russia, China, Norway, Brazil and Guyana. The forecast for non-OPEC liquids supply growth in 2022 is also unchanged at 3.0 mb/d to average 66.7 mb/d. Russia and the US are expected to be the main drivers of next year’s growth, contributing increments of 1.0 mb/d and 0.9 mb/d, respectively, followed by Brazil, Canada, Kazakhstan, Norway, Guyana and other countries in the DoC. OPEC NGLs are forecast to grow by 0.1 mb/d both in 2021 and 2022 to average 5.2 mb/d and 5.3 mb/d, respectively. In October, OPEC crude oil production increased by 0.22 mb/d m-o-m, to average 27.45 mb/d, according to available secondary sources.
Product Markets and Refining Operations
Product markets in all main trading hubs retained their previous month’s strength in October, as refining economics continued to trend upwards, posting solid gains. Further declines in refinery processing rates attributable to the peak maintenance season weighed on product inventory levels and continued to keep product balances tight. This drove middle distillates to retain their position as the strongest margin contributors in the Atlantic Basin. In Asia, sustained fuel demand, amid limited product exports from China as refiners focused on supplying the domestic market, provided considerable support to Asian fuel markets, particularly at the top and middle sections of the barrel.
Tanker Market
Dirty tanker spot freight rates gained some positive momentum in October, with increases across all classes. VLCCs and Suezmax enjoyed the highest rates so far this year, with gains averaging 16% and 29%, respectively, m-o-m, while Aframax rates were up 22% m-o-m. For VLCCs, the Middle East-to-East route gained 17% m-o-m. For Suezmax, the West Africa-to-US Gulf Coast increased 35%. In the clean market, spot freight rates strengthened, as a 22% gain West of Suez offset a 6% decline in the East. The tanker market’s performance is likely to improve through the end of the year, as concerns regarding an energy crunch in the power sector over winter support tonnage demand for crude and products, particularly in Asia.
Crude and Refined Products Trade
Preliminary data shows US crude imports in October eased from their summer highs to average 6.1 mb/d, while crude exports averaged 2.8 mb/d, supported by a pickup of flows to Europe. The latest data for September shows China’s crude imports fell back, averaging 10.0 mb/d as independent refiners remained on the sidelines, due to a lack of crude import quotas. In India, crude imports hit a five-month high, averaging 4.3 mb/d in September, as refiners boosted runs amid a recovery in economic activity. Japan’s crude imports declined from the previous month’s peak but still remained at a relatively good level of 2.5 mb/d in September as refiners looked toward preparations for winter. In OECD Europe, the latest data for July shows crude imports remaining strong at 8.6 mb/d, while crude exports continued to edge higher reaching 0.4 mb/d, amid a return of flows to Asia.
Commercial Stock Movements
Preliminary September data sees total OECD commercial oil stocks up by 18.5 mb, m-o-m. At 2,805 mb, inventories were 374 mb lower than the same month last year; 206 mb lower than the latest five-year average; and 163 mb lower than the 2015-2019 average. Within the components, crude and products stocks fell by 9.3 mb and 9.2 mb, m-o-m, respectively. At 1,334 mb, OECD crude stocks stood 118 mb below the latest five-year average and 103 mb below the 2015-2019 average. At 1,471 mb, OECD product stocks stood 89 mb below the latest five-year average, and were 60 mb below the 2015-2019 average. In terms of days of forward cover, OECD commercial stocks fell 0.2 days, m-o-m, in September to stand at 61.5 days. This is 12.4 days lower than the same month last year; 2.8 days below the latest five-year average; and 0.7 days lower than the 2015-2019 average.
Balance of Supply and Demand
Demand for OPEC crude in 2021 was revised slightly down by 0.1 mb/d from the previous month to stand at 27.6 mb/d, around 4.9 mb/d higher than in 2020. Demand for OPEC crude in 2022 was also revised slightly down by 0.1 mb/d from the previous month to stand at 28.7 mb/d, around 1.0 mb/d higher than in 2021.