More of the same this week on the EIA inventory front; Propane saw another expected build with crude oil seeing another larger than expected draw.
From the item, pursuant to crude:
U.S. crude inventories fell by 2.2 million barrels in the last week, compared with analysts’ expectations for an increase of 386,000 barrels, according to a report by the Energy Information Administration. Crude stocks at the Cushing, Oklahoma, delivery hub fell by 990,000 barrels, EIA said.
That said, global production is seen to be offsetting the increasingly bullish signals here in the states:
Many analysts, including the IEA, say that global oil market supply is rising as members of the Organization of the Petroleum Exporting Countries pump record levels in a battle for market share. “Despite tentatively bullish signals in the United States, and barring any unforeseen disruption elsewhere, the market’s short-term fundamentals still look relatively loose,” said the IEA, which coordinates energy policies of industrial nations.
Propane is another story, as in the same old story; we saw a 1.9MMbbl build this past week, with a 2.3MMbbl build in the Gulf with an odd 300Kbbl draw in the Midwest. Odd as in we typically don’t see PadII (Midwest) draws this time of year.
The reason? There is a sucking sound from the Gulf, propane prices at the Mt Belvieu, Texas hub are higher than they are at Conway. So propane is being shipped south out of Conway to Belvieu, hence the large build at Belvieu and the draw at Conway.
This is something to keep an eye on as we move through the spring and summer. Midwest Inventory levels are now at 18.1MMbbls, which is still 2.9MMbblss above the five-year average. Last week, we were 3.7MMbbls above the 5 year average.
That said, if we keep seeing modest builds to draws in the Midwest as the product keeps flowing south, Midwest inventory levels might lose traction against the five-year average. This would cause Conway prices to move up and get closer to Belvieu until the financial incentive to ship barrels south evaporates.
I am still more bearish related to crude and think we could see some more pullback in prices. My advice remains the same; buy on the dips, a little at a time, and keep your cost averaging plan moving forward.
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Propane inventories continued to build, increasing by 1.8 million this week for a current total of 66.5 million, as reported by the Energy Information Administration as of 5/1/15. Inventory is 31.3 million above 2014’s inventory level at this time and 22 million above the 5-year average of 44.5 million.
Builds on All Regional Inventories: Midwest up 100,000 to 18.4 million; Gulf up 1.1 million to 42.4 million; East up 500,000 to 3.2 million; and West up 100,000 to 2.5 million.
Historical Averages: Midwest is 6.7 million above last year’s inventory level and is up 3.7 million from the 5-year average of 14.7 million. Gulf Coast inventory is 23 million above last year and 16.9 million above the 5-year average of 25.5 million. East Coast is up 400,000 from last year and is up 400,000 from the 5-year average of 2.8 million.
Propane imports were down 25,000 bpd to 86,000 bpd. East Coast was flat at 30,000; Midwest was down 25,000 to 49,000; Gulf was flat at zero bpd and West was flat at 7,000. Propane exports were flat from last week at 470,000 bpd.
Other Inventory Numbers:
Crude Down: -3.9 mm to 1,178.0
Motor Gas Up: +0.4 mm to 227.9
Distillates Up: +1.5 mm to 130.8