First off, my apologies on the delay in this post. The EIA released their weekly report yesterday, which coincided with a fairly insane day in the areas where I serve clients. More on that in a bit.
The EIA report showed a draw of just 700,000/bbls for the week ending December 29th. That’s a much lower draw than the industry expected and for the second week in a row, the numbers make little sense and most in the industry are questioning them.
Exports were listed at just 534,000/bpd, down from last week’s 920,000/bpd and less than the expected 1M/bpd. IHS Markit suggested the holiday time frame led to some inaccuracies in the collection of some export and demand data.
Peter Fasullo of Evantage, Inc said the following to OPIS, pursuant to exports: “It (the export numbers) just stick out like a sore thumb. We track all ships out of terminals and we show over 1 million b/d was exported last week.”
On the demand data side, domestic demand was listed at 1.691M/bpd. While that figure is 158,000/bpd higher than the previous week, I believe it should have been much higher than was reported. Production numbers were also slightly higher, now at a very robust 1.939M/bpd.
The trading and supply industries depend on these reports from week to week, and I believe marketers do as well. I certainly do, as it’s the best snapshot we have for tracking fundamentals in our industry, which helps us all to make informed decisions. But when you have garbage in, you get garbage out…and you can get whipsawed.
We can collectively complain and question, but at the end of the day, these numbers are what they are going to be. You can try to outmaneuver them, which can lead to precarious situations.
At some point in the near future, the trading community is going to have to ‘pick a side’. Are you a bear or a bull? Yesterday’s bearish report send propane markets lower and we are lower still this morning, all the while crude oil once again set multi-year highs, closing over $61/bbl.
DEMAND: Most of us know how strong demand has been. I spent much of yesterday putting together allocation schedules at multiple terminals in the Ohio Valley. Rack demand in that region, the Chicago area, the Southeast and Northeast is as high as we have seen it in years. Folks are not getting as much gas as they would like to get because some production is faltering with the cold weather…and in some parts, record cold.
When you get the cold that we have seen for as long as we have seen it, things begin to break, and production flow rates begin to decrease. That’s when we have to allocate, as suppliers, to make sure the clients we have who have honored their commitments receive the same support from us.
There appears to be a warm up in the forecast between the 15th and 20th…overnight model runs showed the warm up increasing in it’s strength as well as its scope.
Here are a few opinions on the ‘thaw’ that is coming:
There will be transient thaw for a time next week, cold returns day 8-12 then the real thaw is Jan 16-Feb 5, Winter returns from west to east after that, A look at 1967 and 1968 evolution reveals a similar situation, Was that climate change?
— Joe Bastardi (@BigJoeBastardi) January 5, 2018
Wholesale changes are on the way in the tropical Pacific and higher latitudes. As Gulf of Alaska vortex deepens and high latitude blocking partially erodes, at least one shot of mild Pacific air will invade the US during mid-January. pic.twitter.com/qWg5HfDJY1
— John Homenuk (@jhomenuk) January 5, 2018
— Ryan | weather.us (@RyanMaue) January 4, 2018
We see a much milder pattern emerging across the central & eastern U.S. during mid Jan to early Feb. A significant mid-winter thaw in the cards as #LaNiña-like tropical forcing (i.e. MJO) returns. pic.twitter.com/XwPOmsiia1
— Ben Noll (@BenNollWeather) January 5, 2018
This, from BAMWx.com:
Given these looks, I don’t think allocation conditions are going to last that long, anywhere. However, it will take several days for retailers to catch back up on their HDD’s and home deliveries so demand won’t ease up overnight.
This looks to be a return to the pattern we experienced in late November and early December. Based on other reading I have been doing, a return to normal to below normal temps after this warm up is expected. What is unknown is the duration of the warm.
Here is how national GWHDD’s look since November 1st. Collectively, we are colder than the 30 year normal and this period has been the coldest since the same period, 2013-2014. This information comes from MDA: