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July 27, 2017

EIA report digest: Oil heads for new heights

EIA report digest: Oil heads for new heights

According to EIA weekly report for the week ending July 21, 2017, commercial oil reserves in the US fell by 7.208 mb (to 483.415 from 490.623 a week earlier). As we can see, decrease in inventories continued and even accelerated. At this time, the estimates of both the American Petroleum Institute (API) and experts’ forecasts for the past week on oil reserves turned out to be true in sign. According to API version for the week before July 21, crude oil reserves decreased by 10.2mb (gasoline reserves: +1.9 mb, reserves in Cushing: -2.57 mb, stocks of distillates: -0.111 mb). Experts polled by Bloomberg were less categorical. In their view, the decline in oil reserves in the US for the week should have been 3 mb.

The decline in reserves this year was very impressive (from the peak they have retreated 52.13 mb) and their amount fell below last year’s level. Decrease in inventories occurred despite an increase of 0.153 mb/d net imports of oil and oil products (thanks to the peak of travel season in the US). Strategic Petroleum Reserve again remained unchanged. The reserves of motor fuel have dropped by 1 mb. Total reserves of oil and oil products decreased by 9.5 mb. As a result, their curve is more confident “dodging” under the curve of last year. So, the efforts of OPEC + may not go away, even despite the continued growth of oil production in the US. We recall that OPEC reported a decrease in world oil reserves of 100 mb in the first half of the year.)

According to EIA estimates, the average daily production for the week ended July 21 fell 19,000 barrels per day (to 9,410 from 9,429 mb / d a week earlier). The trend to increase production gave a new small failure. This time, the decline in production was due to a decrease of 54 thousand barrels of production in Alaska. In other states, production growth continued.

The first reaction of oil prices was a recovery, which markets quickly tried to erase. The decline in inventory was not as dramatic as it was exaggerated in the API, but also very impressive. Yes, and a new decline in production volumes (albeit not very large, and which occurred solely at the expense of Alaska) is also a little bit down from the last autumn’s bravura mood. So we will wait for new calls to reduce production. And there we will probably see upward trend capped due to correction move ($50+ is “relatively” new zone for the barrel)

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