May 10 EIA Data Analysis and Price Forecast

Crude Oil Capacity and Utilization Rates

Long term open interest in WTI crude oil remains high at 541,700 contracts, but the number of contracts peaked in April and has been falling since, down about 21,000 last week, indicating an expectation that crude oil prices will be falling.  Open contracts are running about 250,000 lower than this time last year.

EIA data reported on May 8, 2019 for the week ending May 3 shows total operable crude still capacity of 18.76 million barrels per day (MMBD). Weighted utilization decreased slightly from 89.3 percent to 88.93 percent, with California refineries operating at 83.5 percent operable capacity, marginally lower than last week. Refinery rates in California remain low, an indication that there is no rush by refiners to fill any real or perceived supply shortfall. West Coast gasoline prices remain high, but should be moving lower as all refineries are making spring blend and there is capacity to increase production. Gasoline prices across the country should decrease through summer.

Overall, Crude oil inventories in the US 4.5 million barrels (MMB) from 471 to 467 MMB. This decrease returns the level to the amount in storage two weeks ago, maintaining stocks in the mid-range of historical averages. If crude oil prices decrease, as projected by open contracts, refiners will continue to pull down inventories, using higher priced crude oil to make high priced products while they make room for lower priced crude oil .

U.S. crude oil imports dropped from 45.1 to 40.8 percent of crude oil supply and 59.2 percent came from local sources, including Alaska. Local crude oil production rates remain at 9.7 MMBD based on our weekly calculation.

The primary source of crude oil for the US is Canada at 3.6 MMBD. The second supplier is Saudi Arabia, a distant second at .5 MMBD. Note that while the US was NOT importing crude oil from Venezuela, those imports restarted in recent weeks and are up to .19 MMBD, making it the third largest supplier to the US.

Gasoline Supply

Total gasoline stocks decreased slightly from 226.8 to 226.1 million barrels, with an increase of 1.1 million barrels in PADD 1 (Eastern Region) and decreases in the other 4 regions. As prices decrease, refiners will draw down inventories to use up the more expensive stocks, making room for new product refined from lower priced crude. This strategy will tend to sustain higher market pricing for a few weeks. PADD 5 refiners do not have the luxury of excess gasoline stocks. As a result, theoretically, gasoline prices should decrease with crude oil prices.

Distillate Supply

EIA data shows a stable inventory of jet fuel (Kero Jet), heating oil, and diesel fuel going into the summer. By June, refiners will be building distillate inventories (primarily in PADD 1) in preparation for fall demand.

More data and charts can be found at this link:  Energy Information Administration