Oil Inventories Drop by 3.4 Million Barrels as EIA Fudge Factor Swings by 664,000 Barrels Per Day

This Wednesday's Petroleum Status reports for the week ending May 6th from the Energy Information Administration indicated that our crude oil production fell a bit once again and that our imports of oil were virtually unchanged, while US refineries saw another modest increase in the amount of oil that they used. Production of crude oil from US wells fell for the 15th time in the past 16 weeks, dropping by 23,000 barrels per day, from an average of 8,825,000 barrels per day during the week ending April 29th to an average of 8,802,000 barrels per day during the week ending May 6th.  That's now 6.1% below the 9,373,000 barrels per day we were producing during the first week of May last year, and 8.4% below the 9,610,000 barrel per day peak of our oil production that was hit during the week ending June 10th of last year.

Meanwhile, our imports of crude oil rose by just 5,000 barrels per day, from an average of 7,660,000 barrels per day during the week ending April 29th to an average of 7,665,000 barrels per day during the week ending May 6th.  That was 11.2% more than the 6,881,000 barrels of oil per day we imported during the week ending May 8th a year ago, and the EIA's weekly Petroleum Status Report (62 pp pdf) reports that the 4 week moving average of our oil imports was still at the 7.8 million barrel per day level, which was still 8.4% more than our oil import rate of the same four-week period last year. 

At the same time, inputs of crude oil to US refineries averaged 16,179,000 barrels per day during the week ending May 6th, which was 193,000 barrels per day more than 15,986,000 barrels per day they used during the prior week.  While that happens to be 1.3% more than the 15,968,000 barrels per day that US refineries were using the same week last year, our refining over the past couple of months is still about one percent below last year's pace for this time of year.  In fact, the US refinery utilization rate actually fell to 89.1% of operable capacity last week, from the 89.7% capacity utilization rate of the week ending April 29th, and it remains well below the capacity utilization rate of 91.2% that we saw during the week ending May 8th of 2015.  That's in contrast to the average over 95% of capacity that US refineries operated at during a 10 week stretch in the middle of last summer.

However, in the face of just that modest increase in refining, the 2.8 million barrel surplus of crude oil that was reportedly built up last week was completely reversed, and the EIA has now reported that 3.4 million barrels of oil was withdrawn from storage to meet our needs this week.  Now, anyone with basic math skills knows that doesn't add up, but we never see any of the oil or energy news and analysis sites mention it, much less see it questioned by the regular media.  We understand that data for each of these oil metrics reported each week is gathered independently of the others; ie, some sources are responsible for the data on imports, some for the data on field production, some for consumption, some for the amount of oil and petroleum products in storage, and some for the inputs and outputs of our refineries.  Then on each Wednesday all these reports are published together, led by the weekly U.S. Petroleum Balance Sheet.  With independent sources of the data that is included on the balance sheet, it's almost always the case that the reports of oil arriving from several sources do not match the reports of oil used by several others.  The EIA resolves those differences with an "adjustment" entry on line 13 of the balance sheet (pdf), which is really no more than a fudge factor used to bring the oil inputs and oil outputs into balance (the footnote says the adjustment was "formerly known as Unaccounted-for Crude Oil, a balancing item").  This week's adjustment was minus 375,000 barrels of oil per day, meaning 375,000 barrels of oil that we appear to have produced or imported this week did not show up in the final figures.  Last week the adjustment was a positive 288,000 barrels per day, which means that the apparent oil that ended up in products or in storage at the end of the week was 288,000 barrels per day more than we should have had.   Thus the swing in this fudge factor from last week to this week was 664,000 barrels per day, certainly enough of an error factor to throw off any realistic analysis of what's happening with our crude oil supply nationally, and even worse, quite a bit more than would be needed to significantly move the global price of oil.  Since that weekly adjustment has become such a significant factor that no one else seems to be reporting, we're going to start including a report of that fudge factor in our own coverage every week henceforth.

Nonetheless, with more oil apparently being refined, our refinery production of gasoline rose by 240,000 barrels per day, averaging 10,051,000 barrels per day during the week ending May 6th, up from the average 9,811,000 barrels of gasoline per day produced during the week ending April 29th.  Turns out, that was the first time our gasoline output topped 10 million barrels per day for a week in any May, and the most gasoline we've produced in any week since the week ending August 14th of last year. At the same time, our refinery output of distillate fuels (diesel fuel and heat oil) also increased, rising by 21,000 barrels per day to 4,610,000 barrels per day during week ending the 6th, which was still 250,000 barrels per day, or 5.1% lower than our distillates production during the same week of 2015..    

However, even with that record output of gasoline, our gasoline inventories fell for the first time in 3 weeks, decreasing from 241,795,000 barrels on April 29th to 240,564,000 barrels on May 6th.  That was as our imports of gasoline fell by 167,000 barrels per day to 779,000 barrels per day during the week, and as the gasoline supplied to US markets rose by 156,000 barrels per day to 9,658,000 barrels per day, the most we've consumed in any week this year, and the highest weekly consumption level in early May since prior to the great recession.  Nonetheless, this week's gasoline supplies were still 6.1% higher than the 226,710,000 barrels of gasoline that we had stored on May 8th last year, which were at the time the highest for the first full week of May in the EIA records.  Thus our gasoline stores are still categorized as "well above the upper limit of the average range" for this time of year..

Meanwhile, our distillate fuel inventories fell by 1,647,000 barrels on continued elevated demand from the Midwest states, to end the week at 155,332,000 barrels.  This is a normal spring planting season drawdown on distillates, and since distillate inventories were already bloated after the warmer than normal winter reduced heat oil consumption, distillate inventories are still 21.1% higher than the 128,270,000 barrels of distillates we had stored at the same time last year.   Thus, like gasoline, stores of distillates are also characterized as "well above the upper limit of the average range" for this time of year... 

Lastly, after that 375,000 barrels of oil per day disappeared someplace this week, we found it necessary to withdraw 3,410,000 barrels of oil from our stockpiles of crude oil in storage to meet our needs, and hence our inventories of oil as of May 6th fell to 539,984,000 barrels, the first drop in 5 weeks and only the 2nd weekly decrease this year.   So although we didn't set a new record for oil stores this week, we've still increased our inventories of crude oil by nearly 57.7 million barrels since the beginning of this year.  Thus our oil supplies are still 11.4% higher than the 484,839,000 barrels of oil we had stored as of May 8th, 2015, and 35.5% higher than the 398,523,000 barrels of oil we had stored on May 9th of 2014.

(Note: the above was excerpted from my weekly post at Focus on Fracking)

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Comments

yet prices jump

I'm assuming the sudden 50¢ jump in prices is due to hope and greed for the summer driving months. Not actual demand.

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disruptions

there has also been several disruptions of global oil supply, such as rebels attacking pipelines in Nigeria and the massive wildfires in Alberta, that have brought it closer to global demand...

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rjs