highest refinery utilization rate since 2019, greatest refinery throughput in 11 months
RJS: Focus on Fracking
Summary: US oil exports at a 26 month high with SPR at a 34½ year low & US oil supplies at a 17 year low; total oil + products inventories at a 13½ year low even with highest refinery utilization rate since 2019, greatest refinery throughput in 11 months…
The Latest US Oil Supply and Disposition Data from the EIA
US oil data from the US Energy Information Administration for the week ending May 20th indicated that after another jump in our oil exports, another oil withdrawal from the SPR, and even after an increase in oil supplies that could not be accounted for, we had to pull oil out of our stored commercial crude supplies for the 3rd time in 8 weeks, and for the 26th time in the past 43 weeks. Our imports of crude oil fell by an average of 82,000 barrels per day to an average of 6,486,000 barrels per day, after rising by an average of 299,000 barrels per day during the prior week, while our exports of crude oil rose by 821,000 barrels per day to a 26 month high of 4,341,000 barrels per day during the week, which together meant that our trade in oil worked out to a net import average of 2,145,000 barrels of oil per day during the week ending May 20th, 903,000 fewer barrels per day than the net of our imports minus our exports during the prior week . . . over the same period, production of crude oil from US wells was reportedly unchanged at 11,900,000 barrels per day, and hence our daily supply of oil from the net of our international trade in oil and from domestic well production appears to have totaled an average of 14,045,000 barrels per day during the cited reporting week…
Meanwhile, US oil refineries reported they were processing an average of 16,269,000 barrels of crude per day during the week ending May 20th, an average of 334,000 more barrels per day than the amount of oil than our refineries processed during the prior week. While over the same period the EIA’s surveys indicated that a net of 999,000 barrels of oil per day were being pulled out of the supplies of oil stored in the US . . . so based on that reported & estimated data, this week’s crude oil figures from the EIA appear to indicate that our total working supply of oil from storage, from net imports and from oilfield production was 1,225,000 barrels per day less than what our oil refineries reported they used during the week…to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a (+1,225,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet in order to make the reported data for the daily supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there must have been an error or omission of that magnitude in this week’s oil supply & demand figures that we have just transcribed . . . moreover, since last week’s EIA fudge factor was at (-214,000) barrels per day, that means there was a 1,439,000 barrel per day difference between this week’s balance sheet error and the EIA’s crude oil balance sheet error from a week ago, and hence the week over week supply and demand changes indicated by this week’s report are completely worthless. However, since most everyone treats these weekly EIA reports as gospel, and since these figures often drive oil pricing, and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it’s published, and just as it’s watched & believed to be reasonably accurate by most everyone in the industry…(for more on how this weekly oil data is gathered, and the possible reasons for the “unaccounted for” oil, see this EIA explainer)….
Week’s 999,000 barrel per day decrease in our overall crude oil inventories left our total oil supplies at 951,814,000 barrels at the end of the week, our lowest oil inventory level since January 7th, 2005, and thus a 17 year low. This week’s oil inventory decrease came as 146,000 barrels per day were being pulled our commercially available stocks of crude oil, while 853,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve at the same time. That draw on the SPR would now include the initial emergency withdrawal under Biden’s “Plan to Respond to Putin’s Price Hike at the Pump”, that is expected to supply 1,000,000 barrels of oil per day to commercial interests from now up to the midterm elections in November, in the hope of keeping gasoline and diesel fuel prices from rising further up until that time, as well as the previous 30,000,000 million barrel release from the SPR to address Russian supply related shortfalls, and the administration’s earlier plan to release 50 million barrels from the SPR to incentivize US gasoline consumption . . . including other withdrawals from the Strategic Petroleum Reserve under recent release programs, a total of 124,136,000 barrels of oil have now been removed from the Strategic Petroleum Reserve over the past 22 months, and as a result the 532,013,000 barrels of oil still remaining in our Strategic Petroleum Reserve is now the lowest since September 4th, 1987, or at a 34 1/2 year low, as repeated tapping of our emergency supplies for non-emergencies or to pay for other programs has already drained those supplies considerably over the past dozen years. Furthermore, the total 180,000,000 barrel drawdown over the next six months will remove almost a third of what remains in the SPR, and leave us with what would be less than a 20 day supply of oil at today’s consumption rate, as the following graph illustrates…
The above graph comes from a post by oil and gas researcher Rory Johnston at Substack, wherein he discusses the implications of the million barrel per day SPR release. It shows the historical quantity of oil held in our Strategic Petroleum Reserve, beginning from its inception following the Arab Oil Embargo of 1973-74 to the present day. The graph is further annotated to indicate the reasons for major additions to and withdrawals from the SPR, most of which were due to disruptions to oil supplies following hurricanes in the Gulf (you can get a better view of those annotations by clicking on the graph, or even better yet, view the enlarged original at substack.com. On the far right, Rory has projected where the strategic petroleum Reserve will end up after the Biden withdrawals are complete, which will take the SPR back to its level of 1983, while it was still being filled . . . based on an estimated average daily US oil consumption of 18,000,000 barrels per day, the US will have roughly 18 1/2 days of oil supply left in the Strategic Petroleum Reserve this November, after all three of the Biden administration’s SPR withdrawal programs have run their course …
Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to an average of 6,414,000 barrels per day last week, which was 8.6% more than the 5,906,000 barrel per day average that we were importing over the same four-week period last year . . . this week’s crude oil production was reported to be unchanged at 11,900,000 barrels per day even though the EIA’s rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day lower at 11,400,000 barrels per day, because Alaska’s oil production was 13,000 barrels per day higher at 460,000 barrels per day and thus added 100,000 barrels per day to the final rounded national total (by the EIA’s math, not mine)…US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was 9.2% below that of our pre-pandemic production peak, but was 41.2% above the interim low of 8,428,000 barrels per day that US oil production had fallen to during the last week of June of 2016…
US oil refineries were operating at 93.2% of their capacity while using those 16,269,000 barrels of crude per day during the week ending May 20th, up from the 91.8% utilization rate of the prior week, and the highest refinery utilization rate since December 2019 . . . the 16,269,000 barrels per day of oil that were refined this week were the most in 11 months, 6.8% more barrels than the 15,239,000 barrels of crude that were being processed daily during week ending May 21st of 2021, and 25.2% more than the 12,991,000 barrels of crude that were being processed daily during the week ending May 22nd, 2020, when US refineries were operating at what was then a much lower than normal 71.3% of capacity during the first wave of the pandemic, but still 3.0% less than the 16,767,000 barrels that were being refined during the prepandemic week ending May 24th 2019, when refinery utilization was at a more normal 91.2% for the third weekend of May…
Even with the increase in the amount of oil being refined this week, gasoline output from our refineries was again lower, decreasing by 151,000 barrels per day to 9,423,000 barrels per day during the week ending May 20th, after our gasoline output had decreased by 142,000 barrels per day over the prior week . . . this week’s gasoline production was 3.3% less than the 9,748,000 barrels of gasoline that were being produced daily over the same week of last year, and 4.7% below our gasoline production of 9,883,000 barrels per day during the week ending May 17th, 2019, ie, the year before the pandemic impacted gasoline output . . . on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 267,000 barrels per day to 5,147,000 barrels per day, after our distillates output had decreased by 2,000 barrels per day over the prior week . . . and after other recent production increases, our distillates output was 10.3% more than the 4,665,000 barrels of distillates that were being produced daily during the week ending May 21st of 2021, but still 1.1% less that the 5,206,000 barrels of distillates that were being produced daily during the week ending May 10th, 2019…
With the decrease in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the fifteenth time in sixteen weeks, decreasing by 482,000 barrels to 219,707,000 barrels during the week ending May 20th,after our gasoline inventories had decreased by 4,779,000 barrels over the prior week . . . our gasoline supplies decreased by less this week than last because the amount of gasoline supplied to US users decreased by 229,000 barrels per day to 8,798,000 barrels per day, and because our exports of gasoline fell by 183,000 barrels per day to 774,000 barrels per day, while our imports of gasoline fell by 29,000 barrels per day to 847,000 barrels per day . . . but even with 15 inventory draw-downs over the past 16 weeks, our gasoline supplies were still only 5.5% lower than last May 21st’s gasoline inventories of 232,481,000 barrels, and 8% below the five year average of our gasoline supplies for this time of the year…
With the big jump in our distillates production, our supplies of distillate fuels increased for the 5th time in nineteen weeks and for the 12th time in thirty-eight weeks, rising by 1,657,000 barrels to 105,264,000 barrels during the week ending May 20th, after our distillates supplies had increased by1,235,000 barrels during the prior week….our distillates supplies rose this week even though the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 51,000 barrels per day to 3,867,000 barrels per day, and even though our exports of distillates rose by 122,000 barrels per day to 1,124,000 barrels per day, while our imports of distillates fell by 8,000 barrels per day to 114,000 barrels per day . . . but .after forty-one inventory withdrawals over the past fifty-eight weeks, our distillate supplies at the end of the week were 17.2% below the 129,082,000 barrels of distillates that we had in storage on May 21st of 2021, and about 21% below the five year average of distillates inventories for this time of the year…
Meanwhile, with this week’s big increase in our oil exports, our commercial supplies of crude oil in storage fell for the 16th time in 26 weeks and for the 33rd time in the past year, decreasing by 1,019,000 barrels over the week, from 420,820,000 barrels on May 13th to 419,801,000 barrels on May 20th, after our commercial crude supplies had decreased by 3,394,000 barrels over the prior week . . . with this week’s decrease, our commercial crude oil inventories remained about 14% below the most recent five-year average of crude oil supplies for this time of year, but were still about 18% above the average of our crude oil stocks as of the third weekend of May over the 5 years at the beginning of the past decade, with the disparity between those comparisons arising because it wasn’t until early 2015 that our oil inventories first topped 400 million barrels . . . since our crude oil inventories had jumped to record highs during the Covid lockdowns of spring 2020, and then jumped again after last year’s winter storm Uri froze off US Gulf Coast refining, our commercial crude oil supplies as of this May 13th were 13.3% less than the 484,349,000 barrels of oil we had in commercial storage on May 21st of 2021, and were also 21.4% less than the 534,422,000 barrels of oil that we had in storage on May 22nd of 2020, and 11.9% less than the 476,493,000 barrels of oil we had in commercial storage on May 24th of 2019…
Finally, with our inventories of crude oil and our supplies of all products made from oil remaining near multi year lows, we are also continuing to keep track of the total of all U.S. Stocks of Crude Oil and Petroleum Products, including those in the SPR . . . the EIA’s data shows that the total of our oil and oil product inventories, including those in the Strategic Petroleum Reserve and those held by the oil industry, and thus including everything from gasoline and jet fuel to propane/propylene and residual fuel oil, fell by 5,315,000 barrels this week, from 1,691,379,000 barrels on May 13th to 1,686,064,000 barrels on May 20th, after our total inventories had fallen by 7,939,000 barrels during the prior week . . . that left our total liquids inventories down by 102,369,000 barrels over the first 18 weeks of this year, and at the lowest since Nov 7th, 2008, or at a 13 1/2 year low…